<PAGE>
FILED PURSUANT TO 424(b)(2)
REGISTRATION NO. 33-57011
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 20, 1996
U.S. $220,000,000
Ashland Inc.
Medium-Term Notes, Series H
Due Nine Months or More from Date of Issue
-------------
ASHLAND INC. (THE "COMPANY") MAY OFFER AND SELL FROM TIME TO TIME ITS
MEDIUM-TERM NOTES (ISSUABLE IN ONE OR MORE SERIES) WITHIN THE UNITED STATES OR
OUTSIDE THE UNITED STATES OR BOTH SIMULTANEOUSLY. THE MEDIUM-TERM NOTES,
SERIES H (THE "NOTES"), OFFERED BY THIS PROSPECTUS SUPPLEMENT ARE BEING
OFFERED IN THE UNITED STATES IN AN AGGREGATE PRINCIPAL AMOUNT OF U.S.
$220,000,000 (OR THE EQUIVALENT THEREOF IF ANY OF THE NOTES ARE DENOMINATED
IN FOREIGN CURRENCIES OR CURRENCY UNITS), SUBJECT TO REDUCTION AS A RESULT
OF THE SALE OF OTHER SECURITIES (OTHER THAN THE NOTES) PURSUANT TO THE
REGISTRATION STATEMENT OF WHICH THE ACCOMPANYING PROSPECTUS IS A PART.
SEE "DESCRIPTION OF THE MEDIUM-TERM NOTES--GENERAL" AND "PLAN OF
DISTRIBUTION". UNLESS OTHERWISE INDICATED IN A PRICING SUPPLEMENT TO
THIS PROSPECTUS SUPPLEMENT (A "PRICING SUPPLEMENT"), THE INTEREST
PAYMENT DATES FOR EACH NOTE WILL BE FEBRUARY 15 AND AUGUST 15 OF EACH
YEAR. EACH NOTE WILL MATURE ON A DAY NINE MONTHS OR MORE FROM ITS
DATE OF ISSUE, AS SET FORTH ON THE FACE OF SUCH NOTE (THE "STATED
MATURITY"). THE INTEREST PAYMENT DATES FOR EACH FLOATING RATE NOTE
WILL BE ESTABLISHED ON THE DATE OF SALE AND WILL BE SET FORTH IN
EACH SUCH NOTE AND IN THE APPLICABLE PRICING SUPPLEMENT. IF SO
INDICATED IN THE APPLICABLE PRICING SUPPLEMENT, SUCH NOTE WILL BE
SUBJECT TO REDEMPTION BY THE COMPANY, IN WHOLE OR IN PART, ON
AND AFTER THE REDEMPTION DATE, IF ANY, FIXED BY THE COMPANY AT
THE TIME OF SALE AND SET FORTH IN THE APPLICABLE PRICING
SUPPLEMENT (THE "REDEMPTION DATE"), AT 100% OF ITS PRINCIPAL
AMOUNT, UNLESS OTHERWISE SPECIFIED, TOGETHER WITH INTEREST TO
THE REDEMPTION DATE. THE NOTES MAY BE DENOMINATED IN U.S.
DOLLARS, OR IN SUCH FOREIGN CURRENCIES OR CURRENCY UNITS AS
MAY BE DESIGNATED BY THE COMPANY ("SPECIFIED CURRENCY"). THE
NOTES WILL BE ISSUED ONLY IN FULLY REGISTERED FORM, AND FOR
NOTES DENOMINATED IN U.S. DOLLARS, IN MINIMUM DENOMINATIONS
OF $1,000 AND ANY INTEGRAL MULTIPLE OF $1,000 IN EXCESS
THEREOF. TERMS RELATING TO NOTES NOT DENOMINATED IN U.S.
DOLLARS ("FOREIGN CURRENCY NOTES") OR TO THE REDEMPTION OF
THE NOTES WILL BE SET FORTH IN THE APPLICABLE PRICING
SUPPLEMENT. SEE "DESCRIPTION OF THE MEDIUM-TERM NOTES".
EACH NOTE WILL BE REPRESENTED BY EITHER A GLOBAL SECURITY (A "GLOBAL NOTE")
REGISTERED IN THE NAME OF A NOMINEE OF THE DEPOSITORY TRUST COMPANY, AS
DEPOSITARY (THE "DEPOSITARY") (EACH SUCH NOTE REPRESENTED BY A GLOBAL NOTE
BEING REFERRED TO HEREIN AS A "BOOK-ENTRY NOTE"), OR A CERTIFICATE ISSUED IN
DEFINITIVE FORM (A "CERTIFICATED NOTE"), AS SET FORTH IN THE APPLICABLE
PRICING SUPPLEMENT. INTERESTS IN BOOK-ENTRY NOTES WILL BE SHOWN ON, AND
TRANSFERS THEREOF WILL BE EFFECTED ONLY THROUGH, THE RECORDS
MAINTAINED BY THE DEPOSITARY AND ITS PARTICIPANTS. EXCEPT AS
DESCRIBED IN "DESCRIPTION OF THE MEDIUM-TERM NOTES--BOOK-ENTRY
NOTES", OWNERS OF BENEFICIAL INTERESTS IN GLOBAL SECURITIES (AS
DEFINED IN THE PROSPECTUS) WILL NOT BE ENTITLED TO RECEIVE NOTES
IN DEFINITIVE FORM AND WILL NOT BE
CONSIDERED THE HOLDERS THEREOF FOR
PURPOSES OF THE INDENTURE.
THE INTEREST RATE OR INTEREST RATE FORMULA, IF ANY, ISSUE PRICE AND STATED
MATURITY FOR EACH NOTE WILL BE ESTABLISHED BY THE COMPANY AT THE DATE OF SALE
OF SUCH NOTE AND WILL BE SET FORTH IN THE APPLICABLE PRICING SUPPLEMENT.
UNLESS OTHERWISE INDICATED IN THE APPLICABLE PRICING SUPPLEMENT, THE NOTES
WILL BEAR INTEREST AT A FIXED RATE (A "FIXED RATE NOTE") OR A RATE OR RATES
DETERMINED BY REFERENCE TO THE COMMERCIAL PAPER RATE, THE PRIME RATE,
LIBOR, THE TREASURY RATE, THE FEDERAL FUNDS RATE OR THE CD RATE (A
"FLOATING RATE NOTE"), AS ADJUSTED BY A SPREAD OR SPREAD MULTIPLIER (AS
SUCH TERMS ARE DEFINED HEREIN), IF ANY, APPLICABLE TO SUCH NOTES.
INTEREST RATES AND INTEREST RATE FORMULAE ARE SUBJECT TO CHANGE BY THE
COMPANY, BUT NO SUCH CHANGE WILL AFFECT THE INTEREST RATE ON ANY NOTE
THERETOFORE ISSUED OR WHICH THE COMPANY HAS
AGREED TO SELL. SEE "DESCRIPTION OF THE MEDIUM-TERM NOTES".
THE APPLICABLE PRICING SUPPLEMENT IN CONNECTION WITH EACH NOTE WILL INDICATE
WHETHER SUCH NOTE HAS ORIGINAL ISSUE DISCOUNT, AND IF SO, THE
YIELD TO MATURITY FOR SUCH NOTE. SEE "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES".
THE NOTES MAY BE ISSUED AS INDEXED NOTES THE PRINCIPAL AMOUNT OF WHICH, PAYABLE
AT STATED MATURITY, AND/OR THE INTEREST, PAYABLE ON EACH INTEREST PAYMENT DATE
AND AT STATED MATURITY, WILL BE DETERMINED BY REFERENCE TO CURRENCIES,
CURRENCY UNITS, COMMODITY PRICES, FINANCIAL OR NON-FINANCIAL INDICES OR
OTHER FACTORS (THE "INDEXED NOTES"), AS INDICATED IN THE APPLICABLE
PRICING SUPPLEMENT. SEE "DESCRIPTION OF THE
MEDIUM-TERM NOTES--INDEXED
NOTES".
UNLESS OTHERWISE INDICATED IN THE APPLICABLE PRICING SUPPLEMENT, A FOREIGN
CURRENCY NOTE WILL NOT BE SOLD IN, OR TO A RESIDENT OF, THE COUNTRY OF
THE SPECIFIED CURRENCY IN WHICH SUCH NOTE IS DENOMINATED. SEE "SPECIAL
PROVISIONS RELATING TO FOREIGN CURRENCY NOTES."
FOR A DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES, SEE
"CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES".
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PRICE TO AGENTS' NET PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) THE COMPANY(2)(3)
----------------- ---------------------------------- -------------------------------------------
<S> <C> <C> <C>
PER NOTE.................... 100% .125% -- .750% 99.875% -- 99.250%
TOTAL(4)(5)................. U.S.$220,000,000 U.S.$275,000 -- U.S.$1,650,000 U.S.$219,725,000 -- U.S.$218,350,000
(1) UNLESS OTHERWISE SPECIFIED IN A PRICING SUPPLEMENT, NOTES WILL BE ISSUED AT 100% OF THEIR PRINCIPAL AMOUNT.
(2) THE COMPANY WILL PAY TO EACH AGENT A COMMISSION RANGING FROM .125% TO .750% OF THE PRINCIPAL AMOUNT OF ANY NOTE, DEPENDING UPON
ITS STATED MATURITY, SOLD THROUGH SUCH AGENT. THE COMPANY MAY ALSO SELL NOTES TO ANY AGENT AT OR ABOVE PAR FOR RESALE TO ONE OR
MORE INVESTORS OR BROKER-DEALERS AT VARYING PRICES RELATED TO PREVAILING MARKET PRICES AT THE TIME OF RESALE, AS DETERMINED BY
SUCH AGENT, WITH AN APPROPRIATE CONCESSION BEING GIVEN TO SUCH AGENT FOR THE RESALE PRICE OF THE NOTES. THE COMMISSION PAYABLE
BY THE COMPANY TO THE AGENTS WITH RESPECT TO NOTES WITH MATURITIES GREATER THAN 30 YEARS WILL BE NEGOTIATED AT THE TIME THE
COMPANY ISSUES SUCH NOTES. IN EACH CASE, THE COMPANY HAS AGREED TO INDEMNIFY THE AGENTS AGAINST CERTAIN LIABILITIES, INCLUDING
LIABILITIES UNDER THE SECURITIES ACT OF 1933.
(3) ASSUMING NOTES ARE ISSUED AT 100% OF PRINCIPAL AMOUNT AND BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT
$150,000.
(4) IN U.S. DOLLARS OR THE EQUIVALENT THEREOF IN FOREIGN CURRENCIES OR CURRENCY UNITS.
(5) TO BE REDUCED AS A RESULT OF SALES OF OTHER SECURITIES (OTHER THAN THE NOTES) PURSUANT TO THE REGISTRATION STATEMENT OF WHICH
THE ACCOMPANYING PROSPECTUS IS A PART.
</TABLE>
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THE NOTES MAY BE OFFERED ON A CONTINUING BASIS BY THE COMPANY THROUGH CS
FIRST BOSTON CORPORATION, SALOMON BROTHERS INC AND CITICORP SECURITIES, INC.
(THE "AGENTS"), WHICH HAVE AGREED TO USE THEIR REASONABLE EFFORTS TO SOLICIT
OFFERS TO PURCHASE THE NOTES. THE NOTES MAY BE SOLD AT OR ABOVE PAR TO ANY AGENT
AS PRINCIPAL FOR RESALE TO INVESTORS AT VARYING PRICES RELATED TO PREVAILING
MARKET PRICES AT THE TIME OF RESALE AS DETERMINED BY SUCH AGENT. THE COMPANY MAY
FROM TIME TO TIME SELL NOTES DIRECTLY ON ITS OWN BEHALF AT OR ABOVE PAR TO
INVESTORS, AND ON SUCH SALES NO COMMISSION WILL BE PAID. THE NOTES WILL NOT BE
LISTED ON ANY SECURITIES EXCHANGE, AND THERE CAN BE NO ASSURANCE THAT THE NOTES
WILL BE SOLD OR THAT THERE WILL BE A SECONDARY MARKET FOR THE NOTES. THE COMPANY
RESERVES THE RIGHT TO WITHDRAW, CANCEL OR MODIFY THE OFFER OR SOLICITATION OF
OFFERS MADE HEREBY WITHOUT NOTICE. THE COMPANY, OR THE SOLICITING AGENT, MAY
REJECT ANY OFFER IN WHOLE OR IN PART. SEE "PLAN OF DISTRIBUTION".
CS FIRST BOSTON
SALOMON BROTHERS INC
Citicorp Securities, Inc.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS DECEMBER 23, 1996
<PAGE>
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.
-------------------
DESCRIPTION OF THE MEDIUM-TERM 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 of the Debt Securities set forth under the
heading "Description of Debt Securities" in the accompanying Prospectus, to
which description reference is made. The Notes are referred to in the Prospectus
as the "Debt Securities". Capitalized terms not defined under this heading have
the meanings ascribed to them in the Indenture.
GENERAL
The Notes offered hereby will be issued under the Indenture (the
"Indenture") referred to in the accompanying Prospectus with Citibank, N.A., as
Trustee (the "Trustee"). The Notes offered hereby constitute a single series for
purposes of the Indenture. The aggregate principal amount of the Notes offered
hereby is limited to U.S. $220,000,000 (or the equivalent thereof in foreign
currencies or currency units), less an amount equal to the proceeds from the
sale of other Securities (other than the Notes) pursuant to the Registration
Statement of which the accompanying Prospectus is a part. See "Plan of
Distribution". Unless otherwise indicated in the applicable Pricing Supplement,
currency amounts in this Prospectus Supplement, the accompanying Prospectus and
any Pricing Supplement are stated in United States dollars ("$", "dollars",
"U.S. dollars" or "U.S.$").
Each Note will mature on a day nine months or more from the date of issue,
as selected by the initial purchaser and agreed to by the Company and as
specified in the applicable Pricing Supplement. "Business Day" means any day,
other than a Saturday or Sunday, that meets each of the following applicable
requirements: the day is (a) not a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of New
York, (b) if the Note is denominated in a Specified Currency other than the
European Currency Unit ("ECU"), the unit of account from time to time of the
Council of the European Communities, or United States dollars, not a day on
which banking institutions are authorized or required by law or regulation to
close in the financial center of the country issuing the Specified Currency, (c)
if the Note is denominated in ECU, any day that is designated as an ECU
settlement day by the ECU Banking Association in Paris or otherwise generally
regarded in the ECU interbank market as a day on which payments in ECU are made,
and (d) with respect to LIBOR Notes, a London Banking Day. "London Banking Day"
means any day on which dealings in deposits in United States dollars are
transacted in the London interbank market.
The Notes will be issuable only in fully registered form, and if denominated
in U.S. dollars, in denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The authorized denominations of Notes not denominated in U.S.
dollars will be set forth in the applicable Pricing Supplement.
The Notes are unsecured obligations of the Company and will rank on a parity
with the Company's other unsecured and unsubordinated indebtedness and senior to
the Company's subordinated indebtedness. Except as described in the accompanying
Prospectus under the headings "Description of Debt Securities-- Certain
Covenants of Ashland With Respect to Senior Securities--LIMITATIONS ON LIENS"
and
"--LIMITATIONS ON SALE AND LEASE-BACK," the Indenture does not contain any
provision that restricts or otherwise regulates the Company's ability to incur
additional indebtedness ranking senior, PARI PASSU or junior to the Notes.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. See "Book-Entry Notes".
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Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal, premium, if any,
and any interest on the Notes will be made in U.S. dollars. If any of the Notes
are to be denominated in a foreign currency (one other than U.S. dollars) or
currency unit, or if the principal, premium, if any, and any interest on any of
the Notes is to be payable at the option of the holder or the Company in a
currency, including a currency unit, other than that in which such Note is
denominated, the applicable Pricing Supplement will provide additional
information, including applicable exchange rate information, pertaining to the
terms of such Notes and other matters of interest to the holders thereof. See
also "Special Provisions Relating to Foreign Currency Notes".
A Note is not subject to redemption by the Company prior to the Redemption
Date fixed at the time of sale and set forth in the applicable Pricing
Supplement. If no Redemption Date is indicated with respect to a Note, such Note
is not redeemable prior to its Stated Maturity. Unless otherwise indicated in
the applicable Pricing Supplement, on or after the indicated Redemption Date,
the related Note will be redeemable in whole or in part in increments of $1,000
at the option of the Company at a redemption price equal to 100% of the
principal amount to be redeemed, together with interest thereon payable to the
date of redemption, on notice given not more than 60 nor less than 30 days prior
to the Redemption Date. The Notes will not have a sinking fund unless otherwise
specified in the applicable Pricing Supplement.
The Company may provide that any Note will be repayable at the option of the
holder thereof, at such times and on such terms and conditions as are set forth
in such Note and described in the applicable Pricing Supplement.
Payments of principal, premium, if any, and interest on Book-Entry Notes
will be made to the Depositary, or its nominee, as Holder thereof, in accordance
with arrangements then in effect between the Trustee and the Depositary. Unless
otherwise specified in the applicable Pricing Supplement, payments of principal,
premium, if any, and interest on Certificated Notes will be made in immediately
available funds at the office of the Paying Agent in the Borough of Manhattan,
The City of New York, or such other office or agency as the Company may
designate, provided that payments in such funds will be made only if such
Certificated Notes are presented to the Paying Agent in time for the Paying
Agent to make such payments in such funds in accordance with its normal
procedures. The Company has initially designated Citibank, N.A., acting through
its principal corporate trust office in the Borough of Manhattan, The City of
New York, as its Paying Agent for the Certificated Notes. The Company, at its
option, may pay interest on the Notes (other than interest payable at Maturity)
by check mailed to the person entitled thereto (which, in the case of Book-Entry
Notes, will be a nominee of the Depositary).
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.
Except as described in the accompanying Prospectus under the heading
"Certain Rights to Require Purchase of Securities by Ashland Upon Unapproved
Change in Control and Decline in Debt Rating", the Indenture does not contain
any covenants or provisions designed to protect the holders of the Notes in the
event that the Company enters into a transaction that adversely affects the
Company's debt-to-equity ratio.
For a description of the rights attaching to different series of Debt
Securities under the Indenture, see "Description of Debt Securities" in the
Prospectus.
BOOK-ENTRY NOTES
Upon issuance, all Notes in book-entry form having the same original
issuance date, Stated Maturity and otherwise having identical terms and
provisions will be represented by a Global Note.
Each Global Note representing Book-Entry Notes will be deposited with, or on
behalf of, the Depositary, and registered in the name of a nominee of the
Depositary. Book-Entry Notes will not be exchangeable at the option of the
holder for Certificated Notes and, except under the circumstances described in
the accompanying Prospectus, will not otherwise be issuable in definitive form.
The Depositary has advised the Company and the Agents as follows: The
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
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"clearing agency" registered pursuant to the provisions of section 17A of the
Securities Exchange Act of 1934. The Depositary was created to hold securities
of its participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations, and certain other organizations, some of whom
(and/or their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly.
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". The
Depositary has confirmed to the Company, the Agents and the Trustee that it
intends to follow such procedures.
INTEREST
Each interest bearing Note will bear interest from and including the date of
issuance, or from and including the most recent Interest Payment Date (or, if
such Note is a Floating Rate Note and the Interest Reset Date (as defined
herein) is daily or weekly, the day following the most recent regular record
date (a "Regular Record Date")) to which interest on such Note has been paid or
duly provided for, at the fixed rate per annum, or at the rate per annum
determined pursuant to the interest rate formula, stated therein and in the
applicable Pricing Supplement, until the principal thereof is paid or made
available for payment. Interest payments, if any, will be in the amount of
interest accrued from and including the next preceding Interest Payment Date in
respect of which interest has been paid or duly provided for, or from and
including the date of issue, if no interest has been paid with respect to such
Note, to but excluding the applicable Interest Payment Date. However, unless
otherwise specified in the applicable Pricing Supplement, in the case of
Floating Rate Notes on which the interest rate is reset daily or weekly, the
interest payments (other than interest payments on any date on which principal
is payable) will include interest accrued from but excluding the second
preceding Regular Record Date, or from and including the date of issue, if no
interest has been paid with respect to such Note, through and including the
Regular Record Date next preceding the applicable Interest Payment Date, except
that interest paid at Maturity will include interest accrued to but excluding
such date. "Maturity" means the date on which the principal of a Note becomes
due, whether at Stated Maturity, upon redemption or otherwise.
Interest, if any, will be payable at each Interest Payment Date and at
Maturity. See "Description of Debt Securities--Payment and Paying Agents" in the
Prospectus. Interest will be payable to the Person (which, in the case of a
Book-Entry Note, shall be the Depositary) in whose name a Note is registered at
the close of business on the Regular Record Date next preceding each Interest
Payment Date; PROVIDED, HOWEVER, that interest payable at Maturity or, if
applicable, upon redemption, will be payable to the Person (which, in the case
of a Book-Entry Note, shall be the Depositary) to whom principal shall be
payable. Unless otherwise specified in the applicable Pricing Supplement, the
first payment of interest on any Note (other than a Floating Rate Note on which
interest is reset daily or weekly) originally issued between a Regular Record
Date and an Interest Payment Date will be made on the Interest Payment Date
following the next succeeding Regular Record Date to the registered owner on
such Regular Record Date.
The Company will select an interest rate or interest rate formula for each
issue of Notes based on market conditions at the time of issuance, taking into
account, among other things, expectations concerning the level of interest rates
that will prevail during the period the Notes will be outstanding, the relative
attractiveness of such interest rate or interest rate formula to prospective
investors and the Company's financial needs. Unless otherwise provided in the
applicable Pricing Supplement, Citibank, N.A., will be the calculation agent
(the "Calculation Agent") with respect to the Floating Rate Notes.
Interest rates, or interest rate formulas, are subject to change by the
Company from time to time, but no such change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
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FIXED RATE NOTES
The applicable Pricing Supplement relating to a Fixed Rate Note will
designate a fixed rate of interest per annum payable on such Fixed Rate Note.
Unless otherwise indicated in the applicable Pricing Supplement, the Interest
Payment Dates with respect to Fixed Rate Notes will be February 15 and August 15
of each year and at Maturity and the Regular Record Dates for such Notes will be
the February 1 and August 1 next preceding the February 15 and August 15
Interest Payment Dates. Unless otherwise indicated in the applicable Pricing
Supplement, interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months.
If any Interest Payment Date or the Maturity of a Fixed Rate Note falls on a
day that is not a Business Day, the related payment of principal, premium, if
any, or interest will be made on the next succeeding Business Day as if made on
the date such payment was due, and no interest will accrue on the amount so
payable for the period from and after such Interest Payment Date or Maturity, as
the case may be.
FLOATING RATE NOTES
The applicable Pricing Supplement relating to a Floating Rate Note will
designate an interest rate basis for such Floating Rate Note, which may be
adjusted by adding or subtracting the Spread or multiplying by the Spread
Multiplier (as defined below) as specified in the applicable Pricing Supplement.
Such basis may be: (a) the Commercial Paper Rate, in which case such Note will
be a Commercial Paper Rate Note, (b) the Prime Rate, in which case such Note
will be a Prime Rate Note, (c) LIBOR, in which case such Note will be a LIBOR
Note, (d) the Treasury Rate, in which case such Note will be a Treasury Rate
Note, (e) the Federal Funds Rate, in which case such Note will be a Federal
Funds Rate Note, (f) the CD Rate, in which case such Note will be a CD Rate
Note, or (g) such other interest rate formula as is set forth in such Pricing
Supplement. In addition, a Floating Rate Note may bear interest at the lowest or
highest or average of two or more interest rate formulae. The applicable Pricing
Supplement for a Floating Rate Note also will specify the Spread or Spread
Multiplier, if any, applicable to each Note. In addition, such Pricing
Supplement will define or particularize for each Note the following terms, if
applicable: Calculation Date, Initial Interest Rate, Interest Payment Dates,
Regular Record Dates, Index Maturity (as defined below), Interest Determination
Dates and Interest Reset Dates with respect to such Note. The "Spread" is the
number of basis points specified in the applicable Pricing Supplement as being
applicable to the interest rate for such Note and the "Spread Multiplier" is the
percentage specified in the applicable Pricing Supplement as being applicable to
the interest rate for such Note. "Index Maturity" means, with respect to a
Floating Rate Note, the period to maturity of the instrument or obligation on
which the interest rate formula is based, as specified in the applicable Pricing
Supplement.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each 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, in the case
of Floating Rate Notes which reset daily, each Business Day; in the case of
Floating Rate Notes (other than Treasury Rate Notes) which reset weekly, the
Wednesday of each week; in the case of Treasury Rate Notes which reset weekly,
except as provided below, the Tuesday of each week; in the case of Floating Rate
Notes which reset monthly, the third Wednesday of each month; in the case of
Floating Rate Notes which reset quarterly, the third Wednesday of March, June,
September and December; in the case of Floating Rate Notes which reset
semi-annually, the third Wednesday of two months of each year, as specified in
the applicable Pricing Supplement; and 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. The rate of interest on a Floating Rate Note
in effect on any day will be (i) if such day is an Interest Reset Date with
respect to such Floating Rate Note, the interest rate on such Floating Rate Note
determined as of the Interest Determination Date pertaining to such Interest
Reset Date, or (ii) if such day is not an Interest Reset Date with respect to
such Floating Rate Note, the interest on such Floating Rate Note determined as
of the Interest Determination Date pertaining to the immediately preceding
Interest Reset Date with respect to such Floating Rate Note; PROVIDED, HOWEVER,
that (a) the interest rate in effect from the date of issue to but excluding the
first Interest Reset Date with respect to a Floating Rate Note will be the
Initial Interest Rate (as set forth in the applicable Pricing Supplement) and
(b) the interest rate in effect for the ten days immediately prior to Maturity
will be that in effect on the tenth day preceding such Maturity. If any Interest
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Reset Date for any Floating Rate Note would otherwise be a day that is not a
Business Day for such Floating Rate Note, the Interest Reset Date for such
Floating Rate Note shall be postponed to the next day that is a Business Day for
such Floating Rate Note, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Reset Date
shall be the immediately preceding Business Day.
The Interest Determination Date pertaining to an Interest Reset Date for a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination Date"),
for a Prime Rate Note (the "Prime Rate Interest Determination Date"), for a
Federal Funds Rate Note (the "Federal Funds Interest Determination Date") and
for a CD Rate Note (the "CD Interest Determination Date") will be the second
Business Day preceding the Interest Reset Date with respect to such Note. The
Interest Determination Date pertaining to an Interest Reset Date for a LIBOR
Note (the "LIBOR Interest Determination Date") 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 (the "Treasury
Interest Determination Date") will be the day of the week in which such Interest
Reset Date falls on which Treasury bills would normally be auctioned. Treasury
bills are usually sold at auction on the Monday of each week, unless that day is
a legal holiday, in which case the auction is usually held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week. If an auction date
shall fall on any Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the first Business Day immediately
following such auction date.
A Floating Rate Note may also have either or both of the following: (a) a
maximum numerical interest rate limitation, or ceiling, on the rate of interest
which may accrue during any interest period; and (b) a minimum numerical
interest rate limitation, or floor, on the rate of interest which may accrue
during any interest period, as specified in the applicable Pricing Supplement.
In addition to any maximum interest rate which may be applicable to any Floating
Rate Note pursuant to the above provisions, assuming that a court would enforce
the provisions of the Notes and the Indenture specifying New York law as the
governing law, the interest rate on the Floating Rate Notes will in no event be
higher than the maximum rate permitted by New York law, as the same may be
modified by United States law of general application. Under present New York law
the maximum rate of interest per annum on a simple interest basis is 16% on
investments below $250,000 and 25% on investments from $250,000 to $2,500,000.
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate Notes
which reset weekly, on the third Wednesday of March, June, September and
December of each year, in the case of Floating Rate Notes which reset daily or
monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year (as indicated in the applicable
Pricing Supplement); in the case of Floating Rate Notes which reset quarterly,
on the third Wednesday of March, June, September and December of each year, in
the case of Floating Rate Notes which reset semi-annually, on the third
Wednesday of the two months of each year specified in the applicable Pricing
Supplement; and in the case of Floating Rate Notes which reset annually, on the
third Wednesday of the month specified in the applicable Pricing Supplement
(each an "Interest Payment Date"), and in each case, at Maturity. If an Interest
Payment Date (other than an Interest Payment Date at Maturity) with respect to
any Floating Rate Note would otherwise fall on a day that is not a Business Day
with respect to such Note, such Interest Payment Date will be the following day
that is a Business Day with respect to such Note, except that in the case of a
LIBOR Note, if such day falls in the next calendar month, such Interest Payment
Date will be the preceding day that is a Business Day with respect to such LIBOR
Note. If the Maturity of a Floating Rate Note falls 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 from and after such Maturity. Unless otherwise indicated in the
applicable Pricing Supplement, the Regular Record Date with respect to Floating
Rate Notes shall be the date 15 calendar days prior to each Interest Payment
Date, whether or not such date shall be a Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the
interest accrued from and including the date of issue, or from and including the
last date to which interest has been paid or duly provided for,
S-6
<PAGE>
is calculated by multiplying the face amount of such Floating Rate Note by an
accrued interest factor. Such accrued interest factor is computed by adding the
interest factor calculated for each day in such period from and including 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 but excluding the date for
which accrued interest is being calculated. The interest factor for each such
day is computed by dividing the interest rate applicable to such date by 360, in
the case of Commercial Paper Rate Notes, LIBOR Notes, Federal Funds Rate Notes
or CD Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes and Prime Rate Notes. The interest factor for Notes for
which two or more interest rate formulae are applicable will be calculated in
each period in the same manner as if only the lowest, highest or average of, as
the case may be, such interest rate formulae applied.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation on Floating Rate Notes will be
rounded, upwards if necessary, to the nearest one-hundred thousandth of a
percentage point, with five one-millionths of a percentage point rounded upwards
(e.g., 9.876545% (or .9876545) being rounded to 9.87655% (or .987655) and
9.876544% (or .9876544) being rounded to 9.87654% (or .987654)), and all dollar
amounts used in or resulting from such calculation on Floating Rate Notes will
be rounded to the nearest cent or, in the case of Foreign Currency Notes, the
nearest unit (with one-half cent or five one-thousandths of a unit being rounded
upwards).
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 which will become effective as a result of a determination made on
the most recent Interest Determination Date with respect to such Floating Rate
Note.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date", if applicable, pertaining to any Interest Determination
Date, will be the earlier of (i) the tenth calendar day after such Interest
Determination Date, or, if such day is not a Business Day, the next suceeding
Business Day or (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity, as the case may be.
COMMERCIAL PAPER RATE NOTES. Commercial Paper Rate Notes will bear interest
at the interest rates (calculated with reference to the Commercial Paper Rate
and the Spread or Spread Multiplier, if any), and will be payable on the dates,
specified on the face of the Commercial Paper Rate Note and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (as defined below) of the rate on such date for
commercial paper 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 "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 Commercial Paper Interest Determination Date, then the
Commercial Paper Rate will be the Money Market Yield of the rate on such
Commercial Paper Interest Determination Date for commercial paper having 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" ("Composite
Quotations") under the heading "Commercial Paper". If such rate is not published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Commercial Paper Interest Determination Date, then the Commercial Paper Rate for
such Commercial Paper Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent as of 11:00 A.M., New York City time,
on such Commercial Paper Interest Determination Date for commercial paper having
the Index Maturity designated in the applicable Pricing Supplement placed for an
industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized rating agency; PROVIDED, HOWEVER, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate will be the Commercial Paper Rate then
in effect on such Commercial Paper Interest Determination Date.
S-7
<PAGE>
"Money Market Yield" means a yield (expressed as a percentage rounded to the
next higher one-hundred thousandth of a percentage point) calculated in
accordance with the following formula:
<TABLE>
<S> <C> <C>
D X 360
Money Market Yield = ------------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank-discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
PRIME RATE NOTES. Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread or Spread
Multiplier, if any), and will be payable on the dates, specified on the face of
the Prime Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Rate Interest Determination Date, the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 365 or 366 days, as the case may be, as of the close
of business on such Prime Rate Interest Determination Date by three major money
center banks in The City of New York selected by the Calculation Agent. If fewer
than three such quotations are provided, the Prime Rate shall be determined on
the basis of the rates furnished in The City of New York by three substitute
banks or trust companies organized and doing business under the laws of the
United States, or any state thereof, having total equity capital of at least
$500 million and being subject to supervision or examination by Federal or state
authority, selected by the Calculation Agent to provide such rate or rates;
PROVIDED, HOWEVER, that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate will be the Prime Rate then in effect
on such Prime Rate Interest Determination Date.
LIBOR NOTES. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread or Spread Multiplier, if
any), and will be payable on the dates, specified on the face of such LIBOR Note
and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions: On each LIBOR Interest Determination Date, LIBOR will be determined
on the basis of the offered rate for deposits in U.S. dollars having the Index
Maturity specified in the applicable Pricing Supplement, commencing on the
second London Banking Day immediately following such LIBOR Interest
Determination Date, which appears on the Telerate Page 3750 as of 11:00 A.M.,
London time, on that LIBOR Interest Determination Date. If such rate does not so
appear on the Telerate Page 3750, the rate in respect of such LIBOR Interest
Determination Date will be determined on the basis of the rates at which
deposits in U.S. dollars are offered by four major banks in the London interbank
market, selected by the Calculation Agent at approximately 11:00 A.M., London
time, on the LIBOR Interest Determination Date next preceding the relevant
Interest Reset Date, to prime banks in the London interbank market for a period
of the Index Maturity commencing on that Interest Reset Date and in a principal
amount equal to an amount not less than $1,000,000 that is representative for a
single transaction in such market at such time. In such case, the Calculation
Agent will request the principal London office of each of the aforesaid major
banks to provide a quotation of such rate. If at least two such quotations are
provided in respect of such LIBOR Interest Determination Date, the rate for that
Interest Reset Date will be the arithmetic mean of the quotations, and, if fewer
than two quotations are provided as requested in respect of such LIBOR Interest
Determination Date, the rate for that Interest Reset Date will be the arithmetic
mean of the rates quoted by three major banks in The City of New York, selected
by the Calculation Agent (which may include one or more of the Agents or their
affiliates), at approximately 11:00 A.M., New York City time, on that LIBOR
Interest Determination Date for loans in U.S. dollars to leading European banks
for a period of the Index Maturity commencing on that Interest Reset Date and in
a principal amount equal to an amount not less than $1,000,000 that is
representative for a single transaction in such market at such time; PROVIDED,
HOWEVER, if the aforesaid rate cannot be determined by the Calculation Agent,
LIBOR in respect of such LIBOR Interest Determination Date will be LIBOR then in
effect on such LIBOR Interest Determination Date.
S-8
<PAGE>
"Telerate Page 3750" means the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that service,
or such other service as may be nominated as the information vendor, for the
purpose of displaying rates or prices relating to LIBOR).
TREASURY RATE NOTES. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any), and will be payable on the dates, specified on the face of
such Treasury Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction 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 "U.S. Government
Securities--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 Treasury Interest Determination Date, the Treasury Rate will be the
auction average rate, expressed as a Bond Equivalent Yield (calculated as
described below), for such auction as otherwise announced by the United States
Department of the Treasury. If the results of the auction of Treasury bills
having the Index Maturity designated in the applicable Pricing Supplement are
not published or announced as provided above by 3:00 P.M., New York City time,
on such Calculation Date or if no such auction is held in a particular week,
then the Treasury Rate will be calculated by the Calculation Agent and will be a
yield to maturity, expressed as a Bond Equivalent Yield of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury 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 the dealers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Treasury Rate with respect to such
Treasury Interest Determination Date will be the Treasury Rate then in effect on
such Treasury Interest Determination Date.
"Bond Equivalent Yield" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C>
D X N
Bond Equivalent Yield = ------------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for Treasury bills, quoted on a
bank-discount basis and expressed as a decimal; "N" refers to the actual number
of days in the year for which interest is being calculated; and "M" refers to
the actual number of days in the interest period for which interest is being
calculated.
FEDERAL FUNDS RATE NOTES. Federal Funds Rate Notes will bear interest at
the interest rates (calculated with reference to the Federal Funds Rate and the
Spread or Spread Multiplier, if any), and will be payable on the dates,
specified in the Federal Funds Rate Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Federal Funds Interest Determination
Date, the rate on that day 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 Federal Funds
Interest Determination Date, the Federal Funds Rate will be the rate on such
Federal Funds Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If such rate is not published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Federal Funds Interest Determination Date, then the Federal Funds Rate for such
Federal Funds Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the rates prior to 9:00 A.M., New York
City time, on such Federal Funds Interest Determination Date for the last
transaction in overnight Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by the Calculation
Agent; PROVIDED, HOWEVER, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate with respect to such Federal Funds Interest Determination Date will
be the Federal Funds Rate in effect on such Federal Funds Interest Determination
Date.
S-9
<PAGE>
CD RATE NOTES. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread or Spread Multiplier,
if any), and will be payable on the dates, specified in the CD Rate Note and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD 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 in 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 CD Interest Determination Date,
the CD Rate will be the rate on such CD Interest Determination Date for
negotiable certificates of deposit of the Index Maturity designated in the
applicable Pricing Supplement as published in Composite Quotations under the
heading "Certificates of Deposit". If such rate is not published by 3:00 P.M.,
New York City time, on such Calculation Date, then the CD Rate on such CD
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the secondary market offered rates as of the opening
of business, New York City time, on such CD Interest Determination Date, of
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the Calculation Agent for negotiable
certificates of deposit of major United States money market banks of the highest
credit standing (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the applicable
Pricing Supplement in a denomination of $5,000,000; PROVIDED, HOWEVER, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the CD Rate with respect to such CD Interest
Determination Date will be the CD Rate in effect on such CD Interest
Determination Date.
INDEXED NOTES
Notes may be issued as 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 Note 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 tax considerations will be described in the applicable
Pricing Supplement.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal of and interest on
the Notes will be made in U.S. dollars. If any of the Notes are to be
denominated in a currency or currency unit other than U.S. dollars, the
following provisions shall apply, which are in addition to, and to the extent
inconsistent therewith replace, the description of general terms and provisions
of Notes set forth in the accompanying Prospectus and elsewhere in this
Prospectus Supplement.
Foreign Currency Notes are issuable in registered form only, without
coupons. The denominations for particular Foreign Currency Notes will be
specified in the applicable Pricing Supplement.
Unless otherwise provided in the applicable Pricing Supplement, payment of
the purchase price of Foreign Currency Notes will be made in immediately
available funds.
Notes denominated in Specified Currencies other than ECUs will not be sold
in, or to residents of, the country of the Specified Currency in which
particular Notes are denominated except as otherwise specified in the applicable
Pricing Supplement.
CURRENCIES
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for Foreign Currency Notes in the Specified Currency. At the
present time there are limited facilities in the United States for the
conversion of U.S. dollars into the Specified Currencies and vice versa, and
banks do not generally offer non-U.S. dollar checking or savings account
facilities in the United States. However, if
S-10
<PAGE>
requested on or prior to the fifth Business Day preceding the date of delivery
of the Notes, or by such other day as determined by the Agent who presented such
offer to purchase Notes to the Company, such Agent may at its discretion arrange
for the conversion of U.S. dollars into the Specified Currency set forth in the
applicable Pricing Supplement to enable the purchasers to pay for the Notes.
Each such conversion, if any, will be made on such terms and subject to such
conditions, limitations and charges as the person making such conversion may
from time to time establish in accordance with its regular foreign exchange
practices. All costs of exchange will be borne by the purchasers of the Notes.
Specific information about the foreign currency or currency units in which a
particular Foreign Currency Note is denominated, including historical exchange
rates and a description of the currency and any exchange controls, will be
contained in the applicable Pricing Supplement.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of and interest on Foreign Currency Notes are payable by the
Company in U.S. dollars. However, unless otherwise specified in the applicable
Pricing Supplement, the holder of a Foreign Currency Note may elect to receive
such payments in the Specified Currency as described below. Unless otherwise
specified in the applicable Pricing Supplement, the Exchange Rate Agent will
determine the rate of conversion for all payments of principal of and interest
on Foreign Currency Notes to U.S. dollars. "Exchange Rate Agent" means the agent
appointed by the Company to make such determinations. Unless otherwise specified
in a Pricing Supplement, the Exchange Rate Agent shall be Citibank, N.A.
Unless otherwise specified in the applicable Pricing Supplement, any U.S.
dollar amount to be received by a holder of a Foreign Currency Note will be
based on the indicative spot quotation which will yield the largest number of
U.S. dollars upon conversion of the Specified Currency, out of indicative spot
quotations 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) obtained from Reuters or,
if quotes from Reuters are not available, the Telerate foreign exchange
quotation service for the purchase by the quoting dealer of the Specified
Currency for U.S. dollars for settlement on such payment date; PROVIDED HOWEVER,
that if fewer than three such quotes are available, such dollar amount shall be
based on an applicable rate published by the Federal Reserve Bank of New York.
If such bid quotations and such rate published by the Federal Reserve Bank are
not available, payments will be made in the Specified Currency. Unless otherwise
specified in the applicable Pricing Supplement, all currency exchange costs will
be borne by the holder of the Foreign Currency Note by deductions from such
payments.
Unless otherwise specified in the applicable Pricing Supplement, a holder of
Foreign Currency Notes may elect to receive payment of the principal of and
interest on the Notes in the Specified Currency by transmitting a written
request for such payment to the corporate trust department of Citibank, N.A. in
the Borough of Manhattan, The City of New York on or prior to the Regular Record
Date or at least sixteen days prior to Maturity, as the case may be. Such
request shall be in writing (mailed or hand delivered) or by cable, telex or
other form of facsimile transmission. A holder of a Foreign Currency Note may
elect to receive payment in the Specified Currency for all principal and
interest payments and need not file a separate election for each payment. Such
election will remain in effect until revoked by written notice to Citibank, N.A.
in the Borough of Manhattan, The City of New York, but written notice of any
such revocation must be received by Citibank, N.A. in the Borough of Manhattan,
The City of New York on or prior to the Regular Record Date or at least sixteen
days prior to Maturity, as the case may be. Holders of Foreign Currency Notes
whose Foreign Currency Notes are to be held in the name of a broker or nominee
should contact such broker or nominee to determine whether and how an election
to receive payments in the Specified Currency may be made.
Interest on and principal of Foreign Currency Notes paid in U.S. dollars
will be paid in the manner specified in the accompanying Prospectus and
elsewhere in this Prospectus Supplement for interest on and principal of Notes
denominated in U.S. dollars. Interest on Foreign Currency Notes paid in the
Specified Currency will be paid by a check drawn on an account maintained at a
bank outside the United States, unless other arrangements have been made. The
principal of Foreign Currency Notes paid in the Specified Currency, together
with interest accrued and unpaid thereon, due at Maturity will be paid in
immediately
S-11
<PAGE>
available funds by wire transfer to such account maintained with a bank outside
the United States (unless other arrangements have been made) as shall have been
designated at least sixteen days prior to Maturity by the holders thereof so
long as such Foreign Currency Notes are presented to the Trustee or the Paying
Agents designated in the applicable Pricing Supplement in time for the Trustee
or such Paying Agents to make such payments in such funds. Any payment of
principal or interest required to be made on an Interest Payment Date or at
Maturity of a Foreign Currency Note which is not a Business Day need not be made
on such day, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date or at Maturity, as the
case may be, and no interest shall accrue for the period from and after such
Interest Payment Date or Maturity.
PAYMENT CURRENCY
If a Specified Currency is not available for the payment of principal or
interest with respect to a Foreign Currency Note due to the imposition of
exchange controls or other circumstances beyond the control of the Company, the
Company will be entitled to satisfy its obligations to holders of Foreign
Currency Notes by making such payment in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment, or if such Market Exchange Rate is
not then available, on the basis of the most recently available Market Exchange
Rate. See "Foreign Currency Risks--Exchange Rates and Exchange Controls".
"Market Exchange Rate" for any Specified Currency means the noon buying rate in
The City of New York for cable transfers for such Specified Currencies as
certified for customs purposes by the Federal Reserve Bank of New York.
FOREIGN CURRENCY RISKS
GENERAL
EXCHANGE RATES AND EXCHANGE CONTROLS. An investment in Notes that are
denominated in a Specified Currency 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
and the possibility of the imposition or modification of foreign 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 of the currency specified in a Note
against the U.S. dollar 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.
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS DO NOT DESCRIBE ALL
THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN A FOREIGN CURRENCY OR A
CURRENCY UNIT AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE
PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT
OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE INVESTORS SHOULD
CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN
INVESTMENT IN NOTES DENOMINATED IN CURRENCIES OTHER THAN U.S. DOLLARS. 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 and interest
on the Notes. Such persons should consult their own counsel with regard to such
matters.
GOVERNING LAW AND JUDGMENTS. The Notes will be governed by and construed in
accordance with the laws of the State of New York. An amendment to the Judiciary
Law of the State of New York adopted in 1987
S-12
<PAGE>
provides that a judgment or decree in an action based upon an obligation
denominated in a currency other than U.S. dollars will be rendered in the
foreign currency of the underlying obligation converted into U.S. dollars at a
rate of exchange prevailing on the date of entry of the judgment or decree.
EXCHANGE CONTROLS AND AVAILABILITY OF SPECIFIED CURRENCY. 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, and 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 would not be
available at such Note's Maturity. 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 most recently available Market Exchange Rate. See "Special
Provisions Relating to Foreign Currency Notes--Payment Currency."
Information concerning exchange rates for the Specified Currency in which
principal of, premium, if any, and interest on the Notes is payable, as against
the U.S. dollar at selected times during the last five years, as well as
exchange controls affecting such currencies, will be set forth in the applicable
Pricing Supplement. The information concerning exchange rates will be 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.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States Federal income tax
consequences resulting from the beneficial ownership of Notes by certain
persons. This summary does not purport to consider all the possible United
States Federal 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 and currencies or composite
currencies other than U.S. dollars ("Foreign Currency") held as capital assets.
Moreover, except as expressly indicated, it addresses initial purchasers and
does not address beneficial owners that may be subject to special tax rules,
such as banks, insurance companies, dealers in securities or currencies,
purchasers that hold Notes (or Foreign Currency) 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 purchasers that have a
"functional currency" other than the U.S. dollar. Except to the extent discussed
below under "Non-United States Holders", this summary is not applicable to
non-United States persons not subject to United States Federal income tax on
their worldwide income. This 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, any
of 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, and it does not discuss the tax treatment of
Notes denominated in certain hyperinflationary currencies or dual currency
Notes. 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.
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) or (iii) a person
otherwise subject to United States Federal income taxation on its worldwide
income (a "United States 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.
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ORIGINAL ISSUE DISCOUNT
The following discussion summarizes the United States Federal income tax
consequences to United States Holders of Notes issued with original issue
discount ("OID") for Federal income tax purposes. United States Holders of a
Note issued with OID generally will be subject to special tax accounting rules
provided in the Internal Revenue Code of 1986, as amended (the "Code"). On
February 4, 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 is greater than a DE MINIMIS amount (as set forth in the Code and the OID
Regulations). 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 (other than to 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 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 United States 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, among other things, (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 maximum or minimum rate, as the
case may be; (ii) a Floating Rate Note provides for significant front-loading or
back-loading of interest; or (iii) a Note bears interest at a floating rate in
combination with one or more other floating or fixed rates. Notice will be given
in the applicable Pricing Supplement when the Company determines that a
particular Note, including any Floating Rate Note, will be a Discount Note.
The Code and the OID Regulations provide rules that require a United States
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 United States 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 United States 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
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Note may be any set of periods (which may be of varying lengths) selected by the
United States 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 issue price may be decreased 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 Discount Note (other
than any payment of qualified stated interest) over the Discount 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 Discount 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.
United States 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 United States Holder that purchases a Discount 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 United States Holder's purchase price for the Note
over the issue price, and the denominator of which is the excess of the sum of
all amounts payable on the Note after the purchase date, other than payments of
qualified stated interest, over the Note's issue price. Alternatively, a United
States Holder may elect to compute OID accruals as described under "Original
Issue Discount--General" above, treating the United States Holder's purchase
price as the issue price.
OPTIONAL REDEMPTION. If the Company has an option to redeem a Discount
Note, or the Holder has an option to cause a Discount Note to be repurchased,
prior to the Discount Note's stated maturity, such option will be presumed to be
exercised if, by utilizing any date on which such Discount Note may be redeemed
or repurchased as the maturity date and the amount payable on such date in
accordance with the terms of such Discount Note (the "redemption price") as the
stated redemption price at maturity, the yield on the Discount 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
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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 Discount 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 issuance ("Short-Term
Notes"). In general, a cash basis United States 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 United States
Holders and certain other United States Holders, including banks, regulated
investment companies, dealers in securities and cash basis United States Holders
who so elect, are required to include OID in income as it accrues on Short-Term
Notes on a straight-line basis or, at the election of the United States Holder,
under the constant yield method (based on daily compounding). In the case of
United States Holders not required and not electing to include OID in income
currently, any gain realized on the sale or retirement of Short-Term Notes will
be ordinary income to the extent of the OID accrued on a straight-line basis
(unless an election is made to accrue the OID under the constant yield method)
through the date of sale or retirement. United States 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 United States 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 United States Holder's purchase price
therefor. Acquisition discount will be treated as accruing on a ratable basis
or, at the election of the United States Holder, on a constant-yield basis.
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 United States Holder that purchases a Note for an amount
in excess of its stated redemption price at maturity will not be subject to the
OID rules and may elect to treat such excess as "amortizable bond premium", in
which case the amount of qualified stated interest required to be included in
the United States 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 is applicable to all bonds (other than bonds the interest on which is
excludible from gross income) held by the United States Holder at the beginning
of the first taxable year to which the election applies or thereafter acquired
by the United States Holder, and may not be revoked without the consent of the
Internal Revenue Service ("IRS"). See also "Original Issue Discount--Election to
Treat All Interest as Original Issue Discount".
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 United States
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 partial payment of principal or 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 United States 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 United States 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.
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Market discount accrues on a straight-line basis unless the United States
Holder elects to accrue such discount on a constant yield to maturity basis.
Such an election is applicable only to the Market Discount Note with respect to
which it is made and is irrevocable. A United States Holder of a Market Discount
Note that 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 United States 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, acquisition discount, DE MINIMIS market discount
and unstated interest, as adjusted by any amortizable bond 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
United States 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 United States Holder, and no payments on the Note will be treated
as payments of qualified stated interest. This election is generally applicable
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, the electing United States 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
United States Holder as of the beginning of the taxable year in which the
election is made or any such debt instruments acquired thereafter. 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 United States 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 United States Holder.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A United States Holder's tax basis in a Note generally will equal 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 United States Holder's income
with respect to the Note and the amount, if any, of income attributable to DE
MINIMIS OID included in the United States 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 (ii) the amount of any amortizable bond
premium applied to reduce interest on the Note. A United States 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 United
States Holder's tax basis in 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 United States 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
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whether the payment is in fact converted into U.S. dollars. Accrual basis United
States Holders may determine the amount of income recognized with respect to
such interest payment 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 United
States 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 United States 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 five business days of the last day of the
accrual period or taxable year, an accrual basis United States 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 United States Holder at the
beginning of the first taxable year to which the election applies or thereafter
acquired by the United States Holder and may not be revoked 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 United States Holder. Upon receipt of an
amount attributable to OID (whether in connection with a payment of interest or
the sale or retirement of a Note), a United States 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 United
States 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 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 United States Holder is translated
into U.S. dollars at the average exchange rate for the accrual period (or the
partial accrual period during which the United States 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 United States 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 currency indexed notes or
other indexed Notes.
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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 Holder (a "Non-United States Holder") will not be subject to
United States Federal withholding tax, provided, in the case of interest
(including OID), that (i) the Non-United States 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) the Non-United States Holder is
not a controlled foreign corporation for United States tax purposes that is
related to the Company (directly or indirectly) through stock ownership and
(iii) either (A) the Non-United States Holder 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 Non-United States Holder by it or by
another financial institution and furnishes the payor with a copy thereof.
If a Non-United States 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, the Non-United States Holder,
although exempt from the withholding tax discussed in the preceding paragraph
(provided that such Holder timely furnishes the required certification to claim
such exemption), may be subject to United States Federal income tax on such
interest (or OID) in the same manner as if it were a United States Holder. In
addition, if the Non-United States 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 United States 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-United States
Holder will not be subject to United States Federal income or withholding taxes
if (i) such gain is not effectively connected with a United States trade or
business of the Non-United States Holder and (ii) in the case of an individual,
such Non-United States 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 United States Federal tax purposes at the time of such
individual's death will not be subject to United States Federal estate tax,
provided that the income from such Notes was not or would not have been
effectively connected with a United States trade or business of such individual
and that such individual qualified for the exemption from United States Federal
withholding tax (without regard to the certification requirements) described
above.
Recently proposed Treasury regulations, generally effective for payments
made after December 31, 1997, could affect the procedures to be followed by a
Non-United States Holder in establishing eligibility for a withholding tax
reduction or exemption.
PURCHASERS OF NOTES THAT ARE NON-UNITED STATES 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, the Company is
required to provide the Internal Revenue Service (the "IRS") with certain
information, including the Holder's name, address and taxpayer identification
number (either the Holder's Social Security number or its employer
identification
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number, as the case may be), the aggregate amount of principal and interest paid
(including OID, if any) to that Holder during the calendar year and the amount
of tax withheld, if any. This obligation, however, does not apply with respect
to certain United States Holders, including corporations, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts.
In the event that a United States Holder subject to the reporting
requirements described above fails to supply its correct taxpayer identification
number in the manner required by applicable law or underreports its tax
liability, the Company, its agents or paying agents or a broker may be required
to "backup" withhold a tax equal to 31% of each payment of interest (including
OID) and principal (and premium, if any) on the Notes. This backup withholding
is not an additional tax and may be credited against the United States Holder's
United States Federal income tax liability, provided that the required
information is furnished to the IRS.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a Non-United States Holder of a Note if such Holder
has provided the required certification that it is not a United States person as
set forth in clause (iii) in the first paragraph under "Non-United States
Holders" above, or has otherwise established an exemption (provided that neither
the Company nor its agent has actual knowledge that the Holder is a United
States person or that the conditions of any exemption are not in fact
satisfied).
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that if the broker is a United States person, a controlled
foreign corporation for United States tax purposes or a foreign person 50
percent or more of whose gross income from all sources for the three-year period
ending with the close of its taxable year preceding the payment was effectively
connected with a United States trade or business, information reporting may
apply to such payments. Payment of the proceeds from a sale of a Note to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the Holder or beneficial owner certifies as to its
taxpayer identification number or otherwise establishes an exemption from
information reporting and backup withholding.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING
THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Under the terms of a Distribution Agreement to be entered into by the
Company and the Agents (the "Distribution Agreement"), the Notes may be offered
on a continuing basis by the Company through the Agents, which have agreed to
use reasonable efforts to solicit purchases of the Notes. The Company will pay
an Agent a commission ranging from .125% to .750% of the principal amount of
each Note, depending on its Stated Maturity, sold through such Agent, as agent.
The commission payable by the Company to the Agents with respect to Notes with
maturities greater than thirty years will be negotiated at the time the Company
issues such Notes. The Company will have the sole right to accept offers to
purchase Notes and may reject any such offer, in whole or in part. Each Agent
will have the right, in its discretion reasonably exercised, without notice to
the Company, to reject any offer to purchase Notes received by it, in whole or
in part. The Company reserves the right to sell Notes at or above par directly
on its own behalf to investors. No commission will be payable to the Agents on
any such sales. The Company may also sell Notes at or above par to any Agent,
acting as principal, for resale to one or more investors at varying prices
related to prevailing market prices at the time of such resale, as determined by
such Agent, or for resale to broker-dealers, with a concession being given to
such Agent for the resale price of the Notes. The offering and selling terms for
such resale may be varied by such Agent. The Company may appoint other persons
to act as its agents pursuant to the Distribution Agreement for purposes of
soliciting offers to purchase Notes. The Company also reserves the right to sell
Notes through agents other than pursuant to the Distribution
S-20
<PAGE>
Agreement where offers to purchase are received through such agents on an
unsolicited basis. Settlement of such sales will be on substantially the same
terms and conditions as contained in the Distribution Agreement, including
commissions.
Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes will be required to be in The City of New York in
immediately available funds.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933. The Company has agreed to indemnify the Agents against
and contribute toward certain liabilities, including liabilities under such Act.
The Company has agreed to reimburse the Agents for certain expenses.
Each of the Agents may, from time to time, purchase and sell Notes in the
secondary market, but is not obligated to do so, and there can be no assurance
that there will be a secondary market for the Notes or liquidity in the
secondary market if one develops. From time to time, each of the Agents may make
a market in the Notes.
The Agents and certain of their affiliates have engaged and may engage in
the future in transactions (including investment banking and commercial banking
transactions) with and perform services for the Company and certain of its
affiliates in the ordinary course of business. In addition, Citicorp Securities,
Inc., one of the Agents, is an affiliate of the Trustee.
S-21
<PAGE>
PROSPECTUS
ASHLAND INC.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK AND RELATED PREFERRED STOCK PURCHASE RIGHTS
WARRANTS
------------------
Ashland Inc. ("Ashland" 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 cumulative preferred stock, without par value (the
"Preferred Stock"), (iv) depositary shares representing entitlement to all
rights and preferences of a fraction of a share of Preferred Stock of a
specified series ("Depositary Shares"), (v) warrants to purchase shares of
Preferred Stock ("Preferred Stock Warrants"), (vi) shares of common stock, par
value $1.00 per share (the "Common Stock"), and related preferred stock purchase
rights, and (vii) 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 $600,000,000 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, Depositary Shares, 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 of 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, and whether the Company has elected to offer
the Preferred Stock in the form of Depositary Shares; (iii) in the case of
Common Stock, the initial public 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,
concerning 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, 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 or commissions 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".
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE 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 December 20, 1996
<PAGE>
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT
DELIVERED HEREWITH AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OFFERED
SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH THE OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
AVAILABLE INFORMATION
Ashland 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 Ashland 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 Ashland can also be
inspected at the offices of The New York Stock Exchange, 20 Broad Street, New
York, New York 10005, and The Chicago Stock Exchange, 440 South LaSalle Street,
Chicago, Illinois 60605. Ashland files such material with the Commission
electronically. The Commission maintains a Web Site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission. The address of such site is:
http://www.sec.gov.
Ashland has filed with the Commission a Registration Statement on Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. For further information with respect
to Ashland 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
The following documents filed pursuant to Section 13 or 15(d) of the
Exchange Act (File No. 1-2918) are hereby incorporated by reference into this
Prospectus:
(i) Ashland's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996;
(ii) Ashland's Current Reports on Form 8-K filed with the Commission on
November 14, 1996, and December 9, 1996, respectively;
(iii) the description of its Common Stock, par value $1.00 per share, set
forth in the Registration Statement on Form 10, as amended in its entirety
by the Form 8 filed with the Commission on May 1, 1983;
(iv) the description of its Rights to Purchase Series A Participating
Cumulative Preferred Stock, set forth in the Registration Statement on Form
8-A dated May 16, 1996; and
(v) the description of its Cumulative Preferred Stock, without par
value, set forth in the Registration Statement on Form 8-A, as amended by
Amendment No. 1 thereto, filed with the Commission on April 30, 1993.
2
<PAGE>
All documents filed by Ashland 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.
ASHLAND 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, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE.
COPIES OF THE INDENTURES SUMMARIZED BELOW ARE ALSO AVAILABLE UPON REQUEST.
REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE SECRETARY, ASHLAND INC., P.O.
BOX 391, ASHLAND, KENTUCKY 41114 (TELEPHONE: (606) 329-3333).
THE COMPANY
Ashland's businesses are grouped into seven industry segments: Petroleum,
SuperAmerica, Valvoline, Chemical, APAC, Coal and Exploration.
Ashland Petroleum is one of the nation's largest independent petroleum
refiners and a leading supplier of petroleum products to the transportation and
commercial fleet industries, other industrial customers and independent
marketers, and to SuperAmerica for retail distribution. In addition, Ashland
Petroleum gathers and transports crude oil and petroleum products and
distributes petroleum products under the Ashland-Registered Trademark- brand
name. SuperAmerica operates combination gasoline and merchandise stores under
the SuperAmerica-Registered Trademark- and Rich-Registered Trademark- brand
names. Valvoline is a marketer of branded, packaged motor oil and automotive
chemicals, antifreeze, filters, rust preventives and coolants. In addition,
Valvoline is engaged in the "fast oil change" business through outlets operating
under the Valvoline Instant Oil Change-Registered Trademark- and Valvoline Rapid
Oil Change-Registered Trademark- names.
Ashland Chemical distributes industrial chemicals, solvents, thermoplastics
and resins, and fiberglass materials, and manufactures a wide variety of
specialty chemicals and certain petrochemicals. APAC performs contract
construction work, including highway paving and repair, excavation and grading,
and bridge and sewer construction, and produces asphaltic and ready-mix
concrete, crushed stone and other aggregate, concrete block and certain
specialized construction materials in the southern United States.
Ashland's coal operations are conducted by 56% owned, publicly traded
Ashland Coal, Inc., a producer of low-sulfur, bituminous coal in central
Appalachia for sale to domestic and foreign electric utility and industrial
customers. Ashland also holds a 50% interest in Arch Mineral Corporation, a
producer of low sulfur coal and steam and metallurgical coal in Illinois,
Kentucky, Virginia, West Virginia and Wyoming. Ashland Exploration explores for,
develops, produces and sells crude oil and natural gas principally in the
Appalachian Basin and Gulf Coast areas of the United States and also crude oil
in Nigeria for export.
At September 30, 1996, Ashland and its consolidated subsidiaries had
approximately 36,100 employees (excluding contract employees).
Ashland is a Kentucky corporation, organized on October 22, 1936, with its
principal executive offices located at 1000 Ashland Drive, Russell, Kentucky
41169 (Mailing Address: P.O. Box 391, Ashland, Kentucky 41114) (Telephone: (606)
329-3333).
3
<PAGE>
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 and debt repurchases, repayment of indebtedness and
acquisitions.
RATIOS
The following table sets forth the consolidated ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred stock dividends for
the Company:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........... * 1.84 2.51 1.13 2.28
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............... * 1.76 2.19 1.07 2.05
<FN>
- ------------------------
*Fixed charges exceeded earnings (as defined) by $174 million as a result of
special charges and the current year impact of accounting changes.
</TABLE>
The above ratios are computed on a total enterprise basis including Ashland
and its consolidated subsidiaries, plus their share of significant affiliates
accounted for on the equity method that are 50% owned or whose indebtedness has
been directly or indirectly guaranteed by Ashland or its consolidated
subsidiaries. Earnings consist of income before income taxes, minority interest
and the cumulative effect of accounting changes, adjusted to exclude fixed
charges (excluding capitalized interest) and undistributed earnings of equity
method affiliates excluded from the total enterprise. Fixed charges consist of
interest incurred on indebtedness, the portion of operating lease rentals deemed
representative of the interest factor and the amortization of debt expense.
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 and the
identity of the Trustee for any Debt Securities, reference must be made to both
the Prospectus Supplement relating thereto and to the following description.
The Debt Securities will be general obligations of the Company and may be
subordinated to "Superior Indebtedness" (as defined below) of the Company to the
extent set forth in the Prospectus Supplement relating thereto. See
"Subordination of Subordinated Securities" below. Unless otherwise set forth in
the applicable Prospectus Supplement, Senior Securities will be issued under an
Indenture dated as of August 15, 1989, as amended and restated as of August 15,
1990, between the Company and Citibank, N.A., as Trustee, pursuant to which the
Company has issued an aggregate of $1,299,990,000 senior debt securities.
Subordinated Securities will be issued under an Indenture between the Company
and a commercial bank to be selected as Trustee. A copy of the form of each
Indenture has been filed as an exhibit to the Registration Statement filed with
the Commission. The following discussion of certain provisions of the Indentures
is a summary only and does not purport to be a complete description of the terms
and provisions of the Indentures. Accordingly, the following discussion is
qualified in its entirety by reference to the provisions of the Indentures,
including the definition therein of the terms used below with their initial
letters capitalized.
4
<PAGE>
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 Ashland. Reference
is made to the applicable Prospectus Supplement for the following terms of the
Debt Securities: (i) the title and the limit on the aggregate principal amount
of the Debt Securities; (ii) the date or dates on which the Debt Securities will
mature; (iii) 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; (iv) the date or dates from which such interest
shall accrue and the date or dates on which such interest will be payable; (v)
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; (vi) whether such Debt Securities are to be Senior Securities or
Subordinated Securities; (vii) any redemption or sinking fund terms or certain
other specific terms; (viii) any Event of Default or covenant with respect to
the Debt Securities of a particular series, if not set forth herein; (ix)
whether the Debt Securities will be issued as Registered Securities (as defined
below) or as Bearer Securities (as defined below); (x) whether the Debt
Securities are to be issued in whole or in part in the form of one or more
Global Securities (as defined below) and, if so, the identity of the depositary
for such Global Security or Securities; and (xi) 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 Ashland 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 Ashland.
Subordinated Securities will be subordinated to certain present and future
superior indebtedness of Ashland. See "Subordination of Subordinated Securities"
below.
The Debt Securities may be issued in fully registered form without coupons
("Registered Securities") or in bearer form with or without coupons ("Bearer
Securities"). Debt Securities denominated in U.S. dollars will be issued, unless
otherwise set forth in the applicable Prospectus Supplement, in denominations of
$1,000 or an integral multiple thereof for Registered Securities, and in
denominations of $5,000 or an integral multiple thereof for Bearer Securities.
Unless otherwise indicated in the applicable Prospectus Supplement, the Debt
Securities will be only Registered Securities. No service charge will be made
for any transfer or exchange of such Debt Securities, but Ashland 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.
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.
EXCHANGE, REGISTRATION AND TRANSFER
Registered Securities (other than Global Securities) of any series will be
exchangeable for other Registered Securities of the same series and of a like
aggregate principal amount and tenor of different authorized denominations. In
addition, if Debt Securities of any series are issuable as both Registered
Securities and Bearer Securities, at the option of the holder upon request
confirmed in writing, and
5
<PAGE>
subject to the terms of the Indenture, Bearer Securities (with all unmatured
coupons, except as provided below, and all matured coupons in default) of such
series will be exchangeable into Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount and tenor.
Bearer Securities with coupons appertaining thereto surrendered in exchange for
Registered Securities between a Regular Record Date or a Special Record Date and
the relevant date for payment of interest shall be surrendered without the
coupon relating to such date for payment of interest and interest will not be
payable in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the holder of such coupon when due in
accordance with the terms of the Indenture. Bearer Securities will not be issued
in exchange for Registered Securities.
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed), at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose with respect to any series of Debt Securities and referred to in an
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. Such
transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. The Company has appointed the
Trustee as Security Registrar for the Indenture. If a Prospectus Supplement
refers to any transfer agents (in addition to the Security Registrar) initially
designated by the Company with respect to any series of Debt Securities, the
Company may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that, if Debt Securities of a series are issuable solely as Registered
Securities, the Company will be required to maintain a transfer agent in each
Place of Payment for such series, and if Debt Securities of a series are
issuable as Bearer Securities, the Company will be required to maintain (in
addition to the Security Registrar) a transfer agent in a Place of Payment for
such series located in Europe. The Company may at any time designate additional
transfer agents with respect to any series of Debt Securities.
In the event of any redemption in part, the Company shall not be required
to: (i) issue, register the transfer of or exchange Debt Securities of any
series during a period beginning at the opening of business 15 days before any
selection of Debt Securities of that series to be redeemed and ending at the
close of business on (a) if Debt Securities of the series are issuable only as
Registered Securities, the day of mailing of the relevant notice of redemption
and (b) if Debt Securities of the series are issuable only as Bearer Securities,
the day of the first publication of the relevant notice of redemption or (c) if
Debt Securities of the series are issuable as Registered Securities and Bearer
Securities and there is no publication of the relevant notice of redemption, the
day of mailing of the relevant notice of redemption, otherwise the date of such
publication; (ii) register the transfer of or exchange any Registered Security,
or portion thereof, called for redemption, except the unredeemed portion of any
Registered Security being redeemed in part; or (iii) exchange any Bearer
Security called for redemption, except to exchange such Bearer Security for a
Registered Security of that series and like tenor which is immediately
surrendered for redemption.
For a discussion of restrictions on the exchange, registration and transfer
of Global Securities, see "Global Securities".
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal, premium, if any, and interest on Bearer Securities will be
payable, subject to any applicable laws and regulations, at the offices of such
Paying Agents outside the United States as the Company may designate from time
to time, and payment of interest on Bearer Securities with coupons appertaining
thereto on any Interest Payment Date will be made only against surrender of the
coupon relating to such Interest Payment Date. No payment with respect to any
Bearer Security will be made at any
6
<PAGE>
office or agency of the company in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a bank
located in the United States. Notwithstanding the foregoing, payments of
principal, premium, if any, and interest on Bearer Securities denominated and
payable in U.S. dollars will be made at the office of the Company's Paying Agent
in the Borough of Manhattan, The City of New York, if (but only if) payment of
the full amount thereof in U.S. dollars at all offices or agencies outside the
United States is illegal or effectively precluded by exchange controls or other
similar restrictions.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal, premium, if any, and any interest on Registered Securities will be
made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time, except that at the option of the Company, payment
of any interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of any
installment of interest on Registered Securities will be made to the Person in
whose name such Registered Security is registered at the close of business on
the Regular Record Date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of
New York, will be designated as the Company's sole Paying Agent for payments
with respect to Debt Securities that are issuable solely as Registered
Securities and as the Company's Paying Agent in the Borough of Manhattan, The
City of New York, for payments with respect to Debt Securities (subject to the
limitation described above in the case of Bearer Securities) that are issuable
solely as Bearer Securities or as both Registered Securities and Bearer
Securities. Any Paying Agents outside the United States and any other Paying
Agents in the United States initially designated by the Company for the Debt
Securities will be named in an applicable Prospectus Supplement. The Company may
at any time designate additional Paying Agents or rescind the designation of any
Paying Agent or approve a change in the office through which any Paying Agent
acts, except that, if Debt Securities of a series are issuable solely as
Registered Securities, the Company will be required to maintain a Paying Agent
in each Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Securities, the Company will be required to maintain (i) a
Paying Agent in the Borough of Manhattan, The City of New York, for payments
with respect to any Registered Securities of the series (and for payments with
respect to Bearer Securities of the series in the circumstances described above,
but not otherwise), and (ii) a Paying Agent in a Place of Payment located
outside the United States where Debt Securities of such series and any coupons
appertaining thereto may be presented and surrendered for payment; provided that
if the Debt Securities of such series are listed on The International Stock
Exchange of the United Kingdom and the Republic of Ireland Limited or the
Luxembourg Stock Exchange or any other stock exchange located outside the United
States and such stock exchange shall so require, the Company will maintain a
Paying Agent in London or Luxembourg or any other required city located outside
the United States, as the case may be, for the Debt Securities of such series.
All moneys paid by the Company to a Paying Agent for the payment of
principal, premium, if any, or interest on any Debt Security or coupon that
remains unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company and the
holder of such Debt Security or coupon will thereafter look only to the Company
for payment thereof.
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 in either registered or bearer form and in
either temporary or permanent form. Unless and until it is exchanged in whole or
in part for the individual Debt Securities
7
<PAGE>
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. Ashland anticipates that the following provisions will generally apply
to depositary arrangements.
Upon the issuance of a Global Security in registered form, 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 Ashland if such Debt Securities are offered and sold directly
by Ashland. 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.
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 Ashland, 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 Depositary 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.
Ashland 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. Ashland 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 Ashland within 90 days,
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Ashland will issue individual Debt Securities of such series in exchange for the
Global Security or Securities representing such series of Debt Securities. In
addition, Ashland may at any time 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 Ashland 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 Ashland, 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 Ashland,
of $1,000 and integral multiples thereof.
If so specified in an applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series that are issuable as Bearer Securities
initially will be represented by one or more temporary Global Securities, with
or without interest coupons, to be deposited with a Common Depositary in London
for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of
the Euroclear System ("Euroclear") and Centrale de Livraison de Valeurs
Mobilieres S.A. ("CEDEL") for credit to the respective accounts of the
beneficial owners of such Debt Securities (or to such other accounts as they may
direct). On and after the exchange date determined as provided in any such
temporary Global Security and described in an applicable Prospectus Supplement,
each such temporary Global Security will be exchangeable for definitive Debt
Securities in bearer form, registered form, or definitive global form
(registered or bearer), or any combination thereof, as specified in an
applicable Prospectus Supplement. No Bearer Security (including a Debt Security
in definitive global bearer form) delivered in exchange for a portion of a
temporary Global Security shall be mailed or otherwise delivered to any location
in the United States in connection with such exchange.
Unless otherwise specified in an applicable Prospectus Supplement, Ashland
or its agent must receive a certificate signed by Euroclear or CEDEL, as the
case may be, prior to the delivery of a definitive Bearer Security, and prior to
the actual payment of interest in respect of the applicable portion of the
temporary Global Security payable in respect of an Interest Payment Date
occurring prior to the delivery of a definitive Debt Security. Such certificate
must be based on statements provided to Euroclear or CEDEL by its member
organizations. Such certificate must be dated on the date of the earlier of the
first actual payment of interest on the Debt Security and the date of delivery
of the Debt Security in definitive form, and must state that on such date the
Debt Security is owned by (i) a person that is not a United States person and is
not a financial institution holding the obligation for purposes of resale during
the Restricted Period, (ii) a United States person that is either (A) the
foreign branch of a United States financial institution purchasing for its own
account and not for resale during the Restricted Period or (B) a United States
person who acquired its interest through the foreign branch of a United States
financial institution and who holds the obligation through such financial
institution, provided that in either case (A) or (B) the United States financial
institution either provides a certificate stating that it agrees to comply with
the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder or has provided a valid
blanket certificate stating that the financial institution will comply with such
requirements or (iii) a financial institution holding for purposes of resale
during the Restricted Period, and such financial institution certifies in
addition that it has not acquired the obligation for purposes of resale directly
or indirectly to a United States person or to a person within
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the United States or its possessions. As used herein, the term "Restricted
Period" means (i) the period from the closing date until 40 days thereafter or
(ii) any time if the obligation is held as part of an unsold allotment or
subscription.
Each of Euroclear and CEDEL will in such circumstances credit the interest
received by it in respect of such temporary Global Security to the accounts of
the beneficial owners thereof (or to such other accounts as they may direct).
The beneficial owner of a Debt Security represented by a definitive Global
Security in bearer form may, upon not less than 30 days' written notice to the
Trustee, given by it through either Euroclear or CEDEL, exchange its interest in
such definitive Global Security for a definitive Bearer Security or Securities,
or a definitive Registered Security or Securities of any authorized
denomination. No individual definitive Bearer Security will be delivered in or
to the United States.
CERTAIN COVENANTS OF ASHLAND WITH RESPECT TO SENIOR SECURITIES
LIMITATIONS ON LIENS. Unless otherwise provided in the applicable Prospectus
Supplement, Ashland will agree that neither it nor any Subsidiary (as defined in
the Senior Indenture) 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 of its property or any property of such Subsidiary, real or personal,
located in the continental United States of America without effectively
providing that the Senior Securities (together with, if Ashland so determines,
any other indebtedness or obligation then existing and any other indebtedness or
obligation, thereafter created, ranking equally with the Senior Securities)
shall be secured equally and ratably with (or, at the option of Ashland, prior
to) such Debt so long as such Debt shall be so secured, except that the
foregoing provisions shall not apply to: (a) Mortgages existing on the date of
the Senior Indenture, (b) Mortgages affecting property of a corporation existing
at the time it becomes a Subsidiary or at the time it is merged into or
consolidated with Ashland or a Subsidiary, (c) Mortgages on property (i)
existing at the time of acquisition thereof, (ii) to secure payment of all or
part of the purchase price thereof, (iii) to secure Debt incurred prior to, at
the time of or within 24 months after acquisition thereof for the purpose of
financing all or part of the purchase price thereof or (iv) assumed or incurred
in connection with the acquisition thereof, (d) 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 any such purpose, (e) Mortgages on (i) pipelines, gathering
systems, pumping or compressor stations, pipeline storage facilities or other
related facilities, (ii) tank cars, tank trucks, tank vessels, barges, tow boats
or other vessels or boats, drilling barges, drilling platforms, or other movable
railway, automotive, aeronautic or marine facilities, (iii) office buildings,
laboratory and research facilities, retail service stations, retail or wholesale
sales facilities, terminals, bulk plants, warehouses or storage or distribution
facilities, (iv) manufacturing facilities other than units for the refining of
crude oil, (v) the equipment of any of the foregoing or (vi) any "margin stock"
or "margin security" within the meaning of Regulation U or Regulation G of the
Board of Governors of the Federal Reserve System as amended from time to time,
(f) Mortgages on current assets or other personal property (other than shares of
stock or indebtedness of Subsidiaries) 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, (g) Mortgages which secure
indebtedness owing by a Subsidiary to Ashland or a Subsidiary, (h) Mortgages on
property of any Subsidiary principally engaged in a financing or leasing
business, (i) Mortgages upon the oil, gas or other minerals produced or to be
produced (or proceeds thereof) from properties which shall have been acquired or
shall have become producing subsequent to August 15, 1977, if, in respect to
each such Mortgage it shall have been given to secure indebtedness incurred to
pay or to reimburse the cost (incurred subsequent to the date of the acquisition
of such property or August 15, 1977, whichever shall be later) of drilling or
equipping such property and (j) any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
Mortgage referred to in the foregoing clauses (a) to (i) inclusive or of any
Debt secured thereby,
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PROVIDED that the principal amount of Debt secured thereby shall not 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).
Notwithstanding the above, Ashland and any one or more Subsidiaries may issue,
assume or guarantee Debt secured by Mortgages which would otherwise be subject
to the foregoing restrictions in an aggregate principal amount which, together
with the aggregate outstanding principal amount of all other Debt of Ashland and
its Subsidiaries which would otherwise be subject to the foregoing restrictions,
does not at any one time exceed 5% of the stockholders' equity in Ashland and
its consolidated subsidiary companies as shown on the audited consolidated
balance sheet contained in the latest annual report to stockholders of Ashland.
The following types of transactions, among others, shall not be deemed to create
Debt secured by Mortgages: (1) the sale or other transfer of oil, gas or other
minerals in place for a period of time until, or in an amount such that, the
transferee will realize therefrom a specified amount (however determined) of
money or such minerals, or the sale or other transfer of any other interest in
property of the character commonly referred to as an oil payment or a production
payment and (2) Mortgages required by any contract or statute in order to permit
Ashland or a Subsidiary to perform any contract or subcontract made by it with
or at the request of the United States, any State or any department, agency or
instrumentality of either.
LIMITATIONS ON SALE AND LEASE-BACK. Unless otherwise provided in the
applicable Prospectus Supplement, Ashland will agree that neither it nor any
Subsidiary will enter into any arrangement with any bank, insurance company or
other lender or investor, or to which any such lender or investor is a party,
providing for the leasing to Ashland or a Subsidiary for a period of more than
three years of any real property located in the continental United States
(except a lease for a temporary period not to exceed three years by the end of
which it is intended that the use of such real property by the lessee will be
discontinued) which has been or is to be sold or transferred by Ashland or a
Subsidiary to such lender or investor or to any Person or organization to which
funds have been or are to be advanced by such lender or investor on the security
of the leased property ("Sale and Lease-Back Transactions") unless either: (a)
Ashland or such Subsidiary would be entitled to create Debt secured by a
Mortgage on the property to be leased, without equally and ratably securing the
Senior Securities or (b) Ashland (and in any such case Ashland covenants and
agrees that it will do so), within four months after the effective date of such
Sale and Lease-Back Transaction (whether made by Ashland or a Subsidiary),
applies to the retirement of Debt of Ashland maturing by the terms thereof more
than one year after the original creation thereof ("Funded Debt"), an amount
equal to the greater of (i) the net proceeds of the sale of the real property
leased pursuant to such arrangement or (ii) the fair value of the real property
so leased at the time of entering into such arrangement (as determined by the
Board of Directors); PROVIDED that the amount to be applied to the retirement of
Funded Debt shall be reduced by an amount equal to the sum of (a) the principal
amount of Senior Securities delivered, within four months after the effective
date of such arrangement, to the Trustee for retirement and cancellation and (b)
the principal amount of other Funded Debt voluntarily retired by Ashland within
such four-month period, excluding retirements of Senior Securities and other
Funded Debt pursuant to mandatory sinking fund or prepayment provisions or by
payment at maturity.
LIMITATION ON CONSOLIDATIONS AND MERGERS. The Senior Indenture provides
that Ashland will not consolidate with or merge into any other corporation or
convey or transfer its properties and assets substantially as an entirety to any
entity (other than a wholly owned subsidiary of Ashland, except in the event
that such a subsidiary is the surviving corporation in a consolidation or
merger) unless the successor or transferee is a domestic corporation that
assumes Ashland's obligations under the Senior Securities and the Senior
Indenture and certain other conditions are met.
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, will be
subordinated in right of payment, as set forth in the
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Subordinated Indenture, to the prior payment in full of all Superior
Indebtedness of Ashland. 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 Ashland for money borrowed (other than
the Subordinated Securities), (ii) guarantees by Ashland 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
Ashland is responsible or liable, by guarantees or otherwise, (iv) obligations
of Ashland 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 and (v) obligations of Ashland 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 Ashland'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 created 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 obligations of
Ashland to any subsidiary and (ii) any other indebtedness, guarantee or
obligation of Ashland of the type set forth above which is subordinate or junior
in ranking in any respect to any other indebtedness, guarantee or obligation of
Ashland.
No payment by Ashland 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 Ashland to pay principal or interest on any
instrument constituting Superior Indebtedness) written notice thereof shall have
been given to the Trustee by Ashland or to Ashland 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). Ashland
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 Ashland 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 Ashland 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 take 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 distribution of
assets of Ashland applicable to Superior Indebtedness until the Subordinated
Securities are paid in full.
By reason of such subordination, in the event of insolvency, creditors of
Ashland who are Holders of Superior Indebtedness, as well as certain general
creditors of Ashland, may recover more, ratably, than the Holders of the
Subordinated Securities.
The Subordinated Indenture will not limit the amount of Superior
Indebtedness or Debt Securities which may be issued by Ashland or any of its
subsidiaries.
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MODIFICATION OF THE INDENTURES
The Indentures provide that the Company and the Trustee thereunder may,
without the consent of any Holders of Debt Securities, enter into supplemental
indentures for the purposes, among other things, of adding to the Company's
covenants, adding additional Events of Default, establishing the form or terms
of the Debt Securities as permitted under the Indentures or, provided such
action shall not adversely affect the interests of the Holders of Debt
Securities in any material respect, curing ambiguities or inconsistencies in
such Indentures or making other provisions.
The Indentures contain provisions permitting the Company, with the consent
of the Holders of not less than 66 2/3% in principal amount of the Outstanding
Securities (as defined in the Indentures) of each affected series, to execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the Indentures or modifying the rights of the Holders of
Debt Securities of such series, except that no such supplemental indenture may,
without the consent of the Holders of all of the Outstanding Securities affected
thereby, among other things: (i) change the maturity of the principal of, or any
installment of principal of or interest on, any of the Debt Securities; (ii)
reduce the principal amount thereof (or any premium thereon) or the rate of
interest thereon; (iii) change the currency, currencies or currency unit or
units in which, any of the Debt Securities or any premium or interest thereon is
payable; (iv) change any obligation of the Company to maintain an office or
agency in the places and for the purposes required by such Indentures; (v)
impair the right to institute suit for the enforcement of any such payment on or
after the applicable maturity date; (vi) reduce the percentage in principal
amount of the Outstanding Securities of any series, the consent of the Holders
of which is required for any such supplemental indenture or for any waiver of
compliance with certain provisions of, or of certain defaults under, such
Indentures; or (vii) with certain exceptions, modify the provisions for the
waiver of certain covenants and defaults and any of the foregoing provisions.
WAIVER OF CERTAIN COVENANTS
The Indentures provide that the Company will not be required to comply with
certain restrictive covenants (including those described above under "Certain
Restrictive Provisions") if the Holders of not less than 66 2/3% in principal
amount of each series of Outstanding Securities affected thereby waive
compliance with such restrictive covenants.
EVENTS OF DEFAULT, NOTICE AND WAIVER
An Event of Default in respect of any series of Debt Securities (unless it
is either inapplicable to a particular series or has been modified or deleted
with respect to any particular series) is defined in the Indentures to be: (i) a
default for 30 days in the payment of any installment of interest upon any of
the Debt Securities of such series when due; (ii) a default in the payment of
principal of (or premium, if any, on) any of the Debt Securities of such series
when due; (iii) a default for 30 days in the deposit of any sinking fund payment
when the same becomes due by the terms of the Debt Securities of such series;
(iv) a default by the Company in the performance, or breach, of any of its other
covenants or warranties in the applicable Indentures which shall not have been
remedied for a period of 60 days after notice from the Trustee thereunder or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of such series; (v) certain events of bankruptcy, insolvency or reorganization
of the Company; and (vi) any other Event of Default provided with respect to
Debt Securities of that series.
The Indentures provide that if an Event of Default specified therein in
respect of any series of Outstanding Securities issued under such Indentures
shall have happened and be continuing, either the Trustee thereunder or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of such series may declare the principal of all of the Outstanding Securities of
such series to be immediately due and payable.
The Indentures provide that the Holders of not less than a majority in
principal amount of the Outstanding Securities of any series may direct the
time, method and place of conducting any
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proceeding for any remedy available to the Trustee thereunder, or exercising any
trust or power conferred on such Trustee, with respect to the Debt Securities of
such series, provided that such Trustee may act in any way that is not
inconsistent with such directions and may decline to act if any such direction
is contrary to law or to such Indentures or would involve such Trustee in
personal liability.
The Indentures provide that the Holders of not less than a majority in
principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all of the Outstanding Securities of such series waive any past
default under the Indentures with respect to such series and its consequences,
except a default (i) in the payment of the principal of (or premium, if any) or
interest on any of the Debt Securities of such series or (ii) in respect of a
covenant or provision of such Indentures which, under the terms of such
Indentures, cannot be modified or amended without the consent of the Holders of
all of the Outstanding Securities of such series affected thereby.
The Indentures contain provisions entitling the Trustee, subject to the duty
of the Trustee during an Event of Default in respect of any series of Debt
Securities to act with the required standard of care, to be indemnified by the
Holders of the Debt Securities of such series before proceeding to exercise any
right or power under such Indentures at the request of the Holders of the Debt
Securities of such series.
The Indentures provide that the Trustee will, within 90 days after the
occurrence of a default in respect of any series of Debt Securities, give to the
Holders of the Debt Securities of such series notice of such uncured and
unwaived default known to it; PROVIDED, HOWEVER, that, except in the case of a
default in the payment of the principal of (or premium, if any) or interest on,
or any sinking fund installment with respect to, any of the Debt Securities of
such series, such Trustee will be protected in withholding such notice if it in
good faith determines that the withholding of such notice is in the interest of
the Holders of the Debt Securities of such series; and PROVIDED FURTHER, that
such notice shall not be given until at least 30 days after the occurrence of an
Event of Default regarding the performance, or breach, of any covenant or
warranty of the Company under such Indentures other than for the payment of the
principal of (or premium, if any) or interest on, or any sinking fund
installment with respect to, any of the Debt Securities of such series. The term
"default" for the purpose of this provision only means any event that is, or
after notice or lapse of time, or both, would become, an Event of Default with
respect to the Debt Securities of such series.
The Indentures require the Company to file annually with the Trustee
thereunder a certificate, executed by an officer of the Company, indicating
whether such officer has knowledge of any default under such Indentures.
MEETINGS
The Indentures contain provisions for convening meetings of the Holders of
Debt Securities of a series if Debt Securities of that series are issuable as
Bearer Securities. A meeting may be called at any time by the Trustee, and, if
the Trustee fails to call a meeting within 21 days after receipt of a request
from the Company or the Holders of at least 10% in principal amount of the
Outstanding Securities of such series, the Company or such Holders may call a
meeting upon notice given in accordance with "Notices" below. Persons entitled
to vote a majority in principal amount of the Outstanding Securities of a series
shall constitute a quorum at a meeting of the Holders of Debt Securities of such
series; PROVIDED, HOWEVER, that if any action is to be taken at such meeting
with respect to a consent or waiver which is required to be given by the Holders
of not less than 66 2/3% in principal amount of the Outstanding Securities of a
series, the persons entitled to vote 66 2/3% in principal amount of the
Outstanding Securities of such series shall constitute a quorum. In the absence
of a quorum, a meeting called by the Company or the Trustee shall be adjourned
for a period of not less than 10 days, and in the absence of a quorum at any
such adjourned meeting, the meeting shall be further adjourned for a period of
not less than 10 days. Any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the
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Holders of a specified percentage in principal amount of Outstanding Securities
of a series may be adopted at a meeting or adjourned meeting duly reconvened at
which a quorum is present by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of that
series. Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the Indentures will
be binding on all Holders of Securities of that series and the related coupons.
With respect to any consent, waiver or other action which the Indentures
expressly provide may be given by the Holders of a specified percentage of
Outstanding Securities of any series affected thereby (acting as one class),
only the principal amount of Outstanding Securities of any series represented at
a meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid and voting in favor of such action shall be counted for purposes of
calculating the aggregate principal amount of Outstanding Securities of all
series affected thereby favoring such action.
NOTICES
Except as otherwise provided in the applicable Prospectus Supplement,
notices to Holders of Bearer Securities will be given by publication at least
once in a daily newspaper in The City of New York and London and in such other
city or cities as may be specified in such Bearer Securities and will be mailed
to such Persons whose names and addresses were previously filed with the Trustee
within the last two years under the Indentures, within the time prescribed for
the giving of such notice. Notices to Holders of Registered Securities will be
given by mail to the address of such Holders as they appear in the Security
Register.
TITLE
Title to any Bearer Securities (including Bearer Securities in temporary or
definitive global bearer form) and any coupons appertaining thereto will pass by
delivery. The Company, the appropriate Trustee and any agent of the Company or
such Trustee may treat the bearer of any Bearer Security and the bearer of any
coupon and registered owner of any Registered Security as the absolute owner
thereof (whether or not such security or coupon shall be overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all other purposes.
REPLACEMENT OF SECURITIES AND COUPONS
Any mutilated Debt Security and any Debt Security with a mutilated coupon
appertaining thereto will be replaced by the Company at the expense of the
Holder upon surrender of such mutilated Debt Security or Debt Security with a
mutilated coupon to the appropriate Trustee. Debt Securities or coupons that
become destroyed, stolen or lost will be replaced by the Company at the expense
of the Holder upon delivery to the appropriate Trustee of evidence of the
destruction, loss or theft thereof satisfactory to the Company and such Trustee;
in the case of any coupon which becomes destroyed, stolen or lost, such coupon
will be replaced (upon surrender to the appropriate Trustee of the Debt Security
with all appurtenant coupons not destroyed, stolen or lost) by issuance of a new
Debt Security in exchange for the Debt Security to which such coupon appertains.
In the case of a destroyed, lost or stolen Debt Security or coupon an indemnity
satisfactory to the appropriate Trustee and the Company may be required at the
expense of the Holder of such Debt Security or coupon before a replacement Debt
Security will be issued.
DEFEASANCE
Unless the Prospectus Supplement relating to the Offered Securities provides
otherwise, the Company at its option (a) will be Discharged (as such term is
defined in the Indentures) from any and all obligations in respect of the
Offered Securities (except for certain obligations to register the transfer or
exchange of Debt Securities, replace stolen, lost or mutilated securities and
coupons, maintain paying agencies and hold moneys for payment in trust) or (b)
need not comply with certain restrictive covenants of the Indentures (including
those described above under "Certain Restrictive Provisions"), if there are
deposited with the Trustee, in the case of Debt Securities and coupons
denominated in U.S. dollars, U.S. Government Obligations (as defined in the
Indentures) or, in the case of Debt Securities and coupons denominated in a
foreign currency, Foreign Government Securities (as defined in the Indentures),
which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money or a combination
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of money and U.S. Government Obligations or Foreign Government Securities, as
the case may be, in an amount sufficient to pay in the currency, currencies or
currency unit or units in which the Offered Securities are payable all the
principal of, and interest on, the Offered Securities on the dates such payments
are due in accordance with the terms of the Offered Securities. As a condition
to the Company's exercise of either such option, the Company is required to
deliver to the Trustee an opinion of counsel to the effect that Holders of the
Offered Securities will not recognize income, gain or loss for Federal income
tax purposes as a result of the deposit and related defeasance and will be
subject to Federal income tax in the same amount, in the same manner and at the
same times as would have been the case if such deposit and related defeasance
had not occurred. The deposit and the Discharge or release from compliance with
certain covenants described in the preceding sentence may result in the Holders
of the Offered Securities recognizing income, gain or loss for Federal income
tax purposes as a result of such deposit and Discharge or release, and may
result in the Holders recognizing income in a manner or at times different than
would have been the case if such deposit and Discharge or release had not
occurred.
CERTAIN RIGHTS TO REQUIRE PURCHASE OF SECURITIES BY ASHLAND UPON UNAPPROVED
CHANGE IN CONTROL AND DECLINE IN DEBT RATING
In the event that (a) there occurs any Change in Control (as hereinafter
defined) of Ashland and (b) the prevailing rating of any series of the Debt
Securities issued under the Indentures on a date within 90 days following public
notice of such Change in Control shall be less than the rating on a specified
earlier date by the equivalent of at least one full rating category (as defined
in the Indentures), each Holder of Debt Securities of such series shall have the
right, at the Holder's option, to require Ashland to purchase all or any part of
the Holder's Debt Securities on the date (the "Repurchase Date") that is 100
days after the last to occur of (i) public notice of such Change in Control and
(ii) the rating decline, at 100% of the principal amount on the Repurchase Date,
plus accrued and unpaid interest to the Repurchase Date. Notwithstanding the
foregoing, if such a rating decline applies to less than all series of the Debt
Securities, the repurchase rights described above will apply only to those
series with respect to which there has been a rating decline.
On or before the twenty-eighth day after the last to occur of public notice
of the Change in Control and the decrease in the rating of such Debt Securities,
Ashland is obligated to mail or cause to be mailed to all Holders of record of
such Debt Securities a notice regarding the Change in Control, the decrease in
the rating of the Debt Securities and the repurchase right. The notice shall
state the Repurchase Date, the date by which the repurchase right must be
exercised, the applicable price for such Debt Securities and the procedure which
the Holder must follow to exercise this right. Ashland shall cause a copy of
such notice to be published in a newspaper of general circulation in the Borough
of Manhattan, The City of New York. To exercise this right, the Holder of a Debt
Security must deliver on or before the tenth day before the Repurchase Date
written notice to Ashland (or an agent designated by Ashland for such purpose)
of the Holder's exercise of such right, together with the Debt Security with
respect to which the right is being exercised, duly endorsed for transfer. The
Company will comply with Rules 13e-4 and 14e-1 under the Exchange Act and any
other applicable securities laws in connection with any such repurchase of Debt
Securities.
As used herein, a "Change in Control" shall be deemed to have occurred at
such time as (i) a "person" or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of more than 50% of the then outstanding voting
stock of Ashland, otherwise than through a transaction consummated with the
prior approval of the Board of Directors of Ashland or (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute Ashland's Board of Directors (together with any new director whose
election by Ashland's Board of Directors or whose nomination for election by
Ashland's shareholders was approved by a vote of at least two-thirds of the
Directors then still in office who either were Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Directors then in
office. In considering whether to approve a transaction which might otherwise
constitute a Change in Control, the Board of Directors of Ashland will be
required to consider the interests of stockholders, employees and other
creditors of Ashland which may not necessarily
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be consistent with the interests of Holders of Debt Securities. In considering
whether to pursue a transaction which might otherwise constitute a Change in
Control, a potential acquirer of the Company will be required to consider that,
to the extent the repurchase right becomes exercisable and is exercised by
Holders of Debt Securities of any series, sufficient funds must be made
available to make payment to such Holders. The Company cannot presently predict
the source of such funds, but expects that the source would be determined in the
context of the overall consideration of such a transaction.
GOVERNING LAW
The Indentures, the Debt Securities and the coupons will be governed by, and
construed in accordance with, the laws of the State of New York.
THE TRUSTEE
Citibank, N.A. is Trustee under the Senior Indenture and one other indenture
pursuant to which unsecured debt obligations of the Company are outstanding and
has other customary banking relationships with the Company and its affiliates.
DESCRIPTION OF CAPITAL STOCK
The authorized stock of the Company consists of 150,000,000 shares of Common
Stock and 30,000,000 shares of Preferred Stock, issuable in series. On October
31, 1996, there were 64,599,228 shares of Common Stock and 6,000,000 shares of
Preferred Stock outstanding. 500,000 shares of Series A Participating Cumulative
Preferred Stock (the "Series Preferred Stock") have been authorized and are
reserved for issuance upon exercise of rights issued pursuant to the Rights
Agreement described below. As of October 31, 1996, an aggregate of 25,098,211
shares of Common Stock were reserved for issuance upon conversion of the
Company's 6 3/4% Convertible Subordinated Debentures, the Company's $3.125
Cumulative Convertible Preferred Stock (the "$3.125 Preferred Stock") and
issuance under the Company's various stock and compensation incentive plans.
The following statements with respect to the capital stock of the Company
are subject to the detailed provisions of the Company's Second Restated Articles
of Incorporation, as amended (the "Restated Articles"), and By-laws, as amended
(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, which
are filed as Exhibits to the Registration Statement of which this Prospectus is
a part.
DESCRIPTION OF COMMON STOCK
The holders of Common Stock are entitled to receive dividends as may be
declared from time to time by the Board of Directors of the Company (the "Board
of Directors") out of funds legally available therefor. The holders of Common
Stock are entitled to one vote per share on all matters submitted to a vote of
shareholders and have cumulative voting rights. Under cumulative voting, a
shareholder may multiply the number of shares owned by the number of directors
to be elected and cast this total number of votes for any one nominee or
distribute the total number of votes, in any proportion, among as many nominees
as the shareholder desires. Holders of Common Stock are entitled to receive,
upon any liquidation of the Company, all remaining assets available for
distribution to shareholders after satisfaction of the Company's liabilities and
the preferential rights of any Preferred Stock that may then be issued and
outstanding. The outstanding shares of Common Stock are, and the shares of
Common Stock issuable upon conversion of the $3.125 Preferred Stock and the
6 3/4% Convertible Subordinated Debentures will be, fully paid and
nonassessable. The holders of Common Stock have no preemptive, conversion or
redemption rights. The Transfer Agent and Registrar of Ashland's Common Stock is
Harris Trust and Savings Bank, Chicago, Illinois.
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PREFERRED STOCK PURCHASE RIGHTS
On May 16, 1996, the Company entered into a Rights Agreement with Harris
Trust and Savings Bank, as Rights Agent (the "Rights Agreement"), which is a
shareholder rights plan providing for a dividend of one Preferred Stock purchase
right for each outstanding share of Common Stock of the Company (the "Rights").
The dividend was issued to shareholders of record on the date of the adoption of
the Rights Agreement, and holders of shares of Common Stock issued subsequent to
that date are issued Rights with their shares. The Rights trade automatically
with shares of Common Stock and become exercisable only under certain
circumstances as described below. The Rights are designed to protect the
interests of the Company and its shareholders against coercive takeover tactics.
The purpose of the Rights is to encourage potential acquirers to negotiate with
the Company's Board of Directors prior to attempting a takeover and to provide
the Board with leverage in negotiating on behalf of all shareholders the terms
of any proposed takeover. The Rights may have certain anti-takeover effects. The
Rights should not, however, interfere with any merger or other business
combination approved by the Board of Directors.
Until a Right is exercised, the holder of a Right, as such, will have no
rights as a shareholder of the Company including, without limitation, the right
to vote or to receive dividends. Upon becoming exercisable, each Right will
entitle the holder thereof to purchase from the Company one-thousandth of a
share of Series A Participating Cumulative Preferred Stock, without par value,
at a purchase price of $140 per Right, subject to adjustment (the "Purchase
Price"). In general, the Rights will not be exercisable until the earlier of (a)
such time as the Company learns that a person or group (including any affiliate
or associate of such person or group) has acquired, or has obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding Common Stock
(such person or group being an "Acquiring Person"), unless provisions preventing
accidental triggering of the Rights apply and (b) the close of business on such
date, if any, as may be designated by the Board of Directors of the Company
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer for 15% or more of the outstanding Common
Stock (the earlier of such dates being called the "Distribution Date").
In the event that, following Distribution Date, the Company is acquired in a
merger or other business combination by an Acquiring Person or an associate or
affiliate of an Acquiring Person that is a publicly traded corporation or 50% or
more of the Company's assets or assets representing 50% or more of the Company's
revenues or cash flow are sold, leased, exchanged or otherwise transferred (in
one or more transactions) to an Acquiring Person or an associate or affiliate of
an Acquiring Person that is a publicly traded corporation, each Right will
entitle its holder (subject to the next paragraph) to purchase, for the Purchase
Price, that number of common shares of such corporation which at the time of the
transaction would have a market value of twice the Purchase Price. In the event
the Company is acquired in a merger or other business combination by an
Acquiring Person or an associate or affiliate of an Acquiring Person that is not
a publicly traded entity or 50% or more of the Company's assets or assets
representing 50% or more of the Company's revenues or cash flow are sold,
leased, exchanged or otherwise transferred (in one or more transactions) to an
Acquiring Person or an associate or affiliate of an Acquiring Person that is not
a publicly traded entity, each Right will entitle its holder (subject to the
next paragraph) to purchase, for the Purchase Price, at such holder's option,
(a) that number of shares of the surviving corporation in the transaction with
such entity (which surviving corporation could be the Company) which at the time
of the transaction would have a book value of twice the Purchase Price, (b) that
number of shares of such entity which at the time of the transaction would have
a book value of twice the Purchase Price or (c) if such entity has an affiliate
which has publicly traded common shares, that number of common shares of such
affiliate which at the time of the transaction would have a market value of
twice the Purchase Price.
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Any Rights that are at any time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring Person) will be null and void and
nontransferable and any holder of any such Right (including any purported
transferee or subsequent holder) will be unable to exercise or transfer any such
Right.
The Rights will expire at the close of business on May 16, 2006 (the
"Expiration Date"), unless earlier redeemed. At any time prior to the earlier of
(a) such time as a person or group becomes an Acquiring Person and (b) the
Expiration Date, the Board of Directors may redeem the Rights in whole, but not
in part, at a price of $.01 per Right (which amount is subject to adjustment as
provided in the Rights Agreement).
The foregoing description of the Rights does not purport to be complete and
is qualified in its entirety by the description of the Rights contained in the
Rights Agreement.
DESCRIPTION OF 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 is authorized,
without further shareholder action, to provide for the issuance of up to
30,000,000 shares of Preferred Stock, in one or more series, and to fix the
designations, terms, and relative rights and preferences, including the dividend
rate, voting rights, conversion rights, redemption and sinking fund provisions
and liquidation values of each such series. The Company may amend from time to
time its Restated Articles to increase the number of authorized shares of
Preferred Stock. Any such amendment would require the approval of the holders of
66 2/3% 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 one series of preferred stock outstanding.
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 and 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; (vi) the voting
rights, if any, of such Preferred Stock; and (vii) 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.
DIVIDEND RIGHTS. The Preferred Stock will be preferred over the Common
Stock as to payment of dividends. Before any dividends or distributions (other
than dividends or distributions payable in Common Stock) on the Common Stock
shall be declared and set apart for payment or paid, the holders of shares of
each series of Preferred Stock shall be entitled to receive dividends (either in
cash, shares of Common Stock or Preferred Stock, or otherwise) when, as and if
declared by the Board of Directors, at the rate and on the date or dates as set
forth in the Prospectus Supplement. With respect to each
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series of Preferred Stock, the dividends on each share of such series shall be
cumulative from the date of issue of such share unless some other date is set
forth in the Prospectus Supplement relating to any such series. Accruals of
dividends shall not bear interest.
RIGHTS UPON LIQUIDATION. The Preferred Stock shall be preferred over the
Common Stock as to assets so that the holders of each series of Preferred Stock
shall be entitled to be paid, upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company and before any distribution is made to
the holders of Common Stock, the amount set forth in the Prospectus Supplement
relating to any such series, but in such case the holders of such series of
Preferred Stock shall not be entitled to any other or further payment. If upon
any such liquidation, dissolution or winding up of the Company its net assets
shall be insufficient to permit the payment in full of the respective amounts to
which the holders of all outstanding Preferred Stock are entitled, the entire
remaining net assets of the Company shall be distributed among the holders of
each series of Preferred Stock in amounts proportionate to the full amounts to
which the holders of each such series are respectively so entitled.
REDEMPTION. All shares of any series of Preferred Stock shall be redeemable
to the extent set forth in the Prospectus Supplement relating to any such
series. All shares of any series of Preferred Stock shall be convertible into
shares of Common Stock or into shares of any other series of Preferred Stock to
the extent set forth in the Prospectus Supplement relating to any such series.
VOTING RIGHTS. Unless otherwise provided in the Prospectus Supplement, the
holders of shares of Preferred Stock shall be entitled to one vote for each
share of Preferred Stock held by them on all matters properly presented to
shareholders, the holders of Common Stock and the holders of all series of
Preferred Stock voting together as one class.
$3.125 CUMULATIVE PREFERRED STOCK
In May 1993, the Company issued 6,000,000 shares of $3.125 Preferred Stock
of which all such shares are currently outstanding. Annual cumulative dividends
of $3.125 per share are payable quarterly as and if declared by the Board of
Directors. Each share of $3.125 Preferred Stock is convertible at any time at
the option of the holder thereof into 1.546 shares of Common Stock, equivalent
to an initial conversion price of $32.343 for each share of Common Stock,
subject to adjustment in certain circumstances. The $3.125 Preferred Stock is
not redeemable prior to March 25, 1997. On and after such date, the $3.125
Preferred Stock is redeemable, in whole or in part, at the option of the
Company, at $51.88 per share during the period from March 25, 1997 to March 14,
1998, and declining ratably annually to $50 per share on or after March 15,
2003, plus in each case accrued and unpaid dividends to the redemption date. The
holders of $3.125 Preferred Stock generally have no voting rights, but have the
right to elect two additional directors of the Company if the equivalent of six
quarterly dividends payable on the $3.125 Preferred Stock are in arrears. In the
case of the voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of shares of $3.125 Preferred Stock are entitled to receive
the liquidation preference of $50 per share, plus an amount equal to any accrued
and unpaid dividends to the payment date.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL. The Company may, at its option, elect to offer fractional shares
of Preferred Stock, rather than full shares of Preferred Stock. In the event
such option is exercised, the Company will issue to the public receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock) of
a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a
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combined capital and surplus of at least $50,000,000 (the "Depositary"). Subject
to the terms of the Deposit Agreement, each owner of a Depositary Share will be
entitled, in proportion to the applicable fraction of a share of Preferred Stock
represented by such Depositary Share, to all the rights and preferences of the
Preferred Stock represented thereby (including dividend, voting, redemption and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt will be filed as exhibits to
the Registration Statement in connection with the offering of any such
Depositary Shares and the following summary is qualified in its entirety by
reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the Preferred Stock
to the record holders of Depositary Shares relating to such Preferred Stock in
proportion to the number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
REDEMPTION OF DEPOSITARY SHARES. If a series of Preferred Stock represented
by Depositary Shares is subject to redemption, the Depositary Shares will be
redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of such series of Preferred Stock held by the
Depositary. The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price per share payable with respect to
such series of the Preferred Stock. Whenever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing the shares of
Preferred Stock so redeemed. If fewer than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or PRO
RATA as may be determined by the Depositary.
VOTING THE PREFERRED STOCK. Upon receipt of notice of any meeting at which
the holders of the Preferred Stock are entitled to vote, the Depositary will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each record holder of
such Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Depositary
as to the exercise of the voting rights pertaining to the amount of the
Preferred Stock represented by such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the amount of the Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Company will agree to take all actions which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of the Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Shares representing
such Preferred Stock.
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AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Depositary. However, any amendment which materially and adversely alters
the rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
the Company or the Depositary only if (i) all outstanding Depositary Shares have
been redeemed or (ii) there has been a final distribution in respect of the
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Receipts.
CHARGES OF DEPOSITARY. The Company will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. The Company will pay charges of the Depositary in connection with
the initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges, including a fee for the
withdrawal of shares of Preferred Stock upon surrender of Depositary Receipts,
as are expressly provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS. The Depositary will forward to holders of Depositary
Receipts all reports and communications from the Company which are delivered to
the Depositary and which the Company is required to furnish to the holders of
the Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or upon information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Receipts or other
persons believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may resign at any
time by delivering to the Company notice of its election to do so, and the
Company may at any time remove the Depositary, any such resignation or removal
to take effect upon the appointment of a successor Depositary and its acceptance
of such appointment. Such successor Depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank or
trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
CERTAIN PROVISIONS OF ASHLAND'S RESTATED ARTICLES
In the event of a proposed merger or tender offer, proxy contest or other
attempt to gain control of Ashland not approved by the Board of Directors, it
would be possible, subject to any limitations imposed by applicable law, the
Restated Articles and the applicable rules of the stock exchanges upon which the
Common Stock is listed, for the Board of Directors to authorize the issuance of
one or more series of preferred stock with voting rights or other rights and
preferences which would impede the success of the proposed merger, tender offer,
proxy contest or other attempt to gain control of Ashland. The consent of the
holders of Common Stock would not be required for any such issuance of preferred
stock.
The Restated Articles incorporate in substance certain provisions of the
Kentucky Business Corporation Act to require approval of the holders of at least
80% of Ashland's voting stock, plus two-thirds of the voting stock other than
voting stock owned by a 10% shareholder, as a condition to mergers and certain
other business combinations involving Ashland and such 10% shareholder unless
(a) the transaction is approved by a majority of the continuing directors (as
defined) of Ashland or
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(b) certain minimum price and procedural requirements are met. In addition, the
Kentucky Business Corporation Act includes a standstill provision which
precludes a business combination from occurring with a 10% shareholder,
notwithstanding any vote of shareholders or price paid, for a period of five
years after the date such 10% shareholder becomes a 10% shareholder, unless a
majority of the independent directors (as defined) of Ashland approves such
combination before the date such shareholder becomes a 10% shareholder.
The Restated Articles also provide that (i) the Board of Directors is
classified into three classes, (ii) a director may be removed from office
without "cause" (as defined) only by the affirmative vote of the holders of at
least 80% of the voting power of the then outstanding voting stock of Ashland,
(iii) the Board of Directors may adopt By-laws concerning the conduct of, and
matters considered at, meetings of shareholders, including special meetings,
(iv) the By-laws and certain provisions of the Restated Articles may be amended
only by the affirmative vote of the holders of at least 80% of the voting power
of the then outstanding voting stock of Ashland and (v) the By-laws may be
adopted or amended by the Board of Directors, subject to amendment or repeal
only by affirmative vote of the holders of at least 80% of the voting power of
the then outstanding voting stock of Ashland.
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
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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 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
Ashland 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. This Prospectus or an
appropriate Prospectus Supplement (which will be included in a Post-Effective
Amendment to the Registration Statement with respect to the Offered Securities
when required) will set forth the terms of the offering of the Offered
Securities, which will include when applicable the name or names of any
underwriters, dealers or agents, the price of the Offered Securities and the net
proceeds to Ashland 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 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, Ashland 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 Ashland to one or more
institutional purchasers, or through agents at a fixed price or prices, which
may be changed, or at varying prices determined at the time of sale. 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, Ashland will authorize agents,
underwriters or dealers to solicit offers by certain specified institutions to
purchase Offered Securities from Ashland at
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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.
Underwriters and agents may be entitled under agreements entered into with
Ashland to indemnification by Ashland 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. Underwriters and agents may be customers of, engage in other
transactions with or perform services for Ashland in the ordinary course of
business.
LEGAL MATTERS
The validity of the issuance of the Offered Securities will be passed upon
for Ashland by Cravath, Swaine & Moore, New York, New York, who will rely as to
matters of Kentucky law upon the opinion of Thomas L. Feazell, Esq., Senior Vice
President, General Counsel and Secretary of Ashland. Cravath, Swaine & Moore has
in the past represented and continues to represent the Company in other matters
on a regular basis. Samuel C. Butler is a director of Ashland and a partner in
the law firm of Cravath, Swaine & Moore and owns beneficially 8,293 shares of
Common Stock of Ashland. Thomas L. Feazell owns beneficially 111,560 shares of
Common Stock and 200 shares of $3.125 Preferred Stock of Ashland.
EXPERTS
The consolidated financial statements and schedule of Ashland appearing or
incorporated by reference in Ashland's Annual Report on Form 10-K for the fiscal
year ended September 30, 1996 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO AND THE ACCOMPANYING PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT. THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT HERETO AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO OR THE ACCOMPANYING
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Description of the Medium-Term Notes............. S-2
Special Provisions Relating to Foreign Currency
Notes........................................... S-10
Foreign Currency Risks........................... S-12
Certain United States Federal Income Tax
Consequences.................................... S-13
Plan of Distribution............................. S-20
PROSPECTUS
Available Information............................ 2
Incorporation of Certain Documents by
Reference....................................... 2
The Company...................................... 3
Use of Proceeds.................................. 4
Ratios........................................... 4
Description of Debt Securities................... 4
Description of Capital Stock..................... 17
Description of Securities Warrants............... 23
Plan of Distribution............................. 24
Legal Matters.................................... 25
Experts.......................................... 25
</TABLE>
Ashland Inc.
U.S. $220,000,000
Medium-Term Notes,
Series H
PROSPECTUS SUPPLEMENT
CS First Boston
Salomon Brothers Inc
Citicorp Securities, Inc.
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