<PAGE>
As filed with the Securities and Exchange Commission on January 15, 1999
Registration Statement No. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
Under
the Securities Act of 1933
----------------
ASHLAND INC.
(Exact name of Registrant as specified in its charter)
----------------
Kentucky 61-0122250
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
50 E. RiverCenter Boulevard
Covington, KY 41012
(606) 815-3333
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------
Thomas L. Feazell, Esq.
Senior Vice President, General Counsel and Secretary
1000 Ashland Drive
Russell, KY 41169
(606) 329-3333
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
Susan Webster, Esq. Francis S. Morison, Esq.
Cravath, Swaine & Moore Davis Polk & Wardwell
825 Eighth Avenue 450 Lexington Avenue
New York, NY 10019 New York, NY 10017
(212) 474-1000 (212) 450-4000
----------------
Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. [_]
(Continued on following page)
<PAGE>
(Continued from previous page)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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- --------------------------------------------------------------------------------------
Proposed
Maximum
Offering
Title of Each Class of Price Proposed Maximum Amount of
Securities Amount to be Per Aggregate Registration
to be Registered(1) Registered(2) Unit(3)(4) Offering Price(4)(5) Fee(6)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities, Debt
Warrants, Preferred
Stock, Depositary
Shares, Preferred
Stock Warrants, Common
Stock and related
Rights and Common
Stock Warrants....... -- -- $231,311,000 $64,304
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</TABLE>
(1) This Registration Statement also covers (i) Debt Securities, Preferred
Stock and Common Stock and related Rights which may be issued upon
exercise of Securities Warrants and (ii) such indeterminate amount of
securities as may be issued in exchange for or upon conversion of, as the
case may be, the securities registered hereunder. In addition, any other
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(2) In no event will the aggregate initial offering price of Debt Securities,
Debt Warrants, Preferred Stock, Depositary Shares, Preferred Stock
Warrants, Common Stock and related Rights and Common Stock Warrants issued
under this Registration Statement exceed $231,311,000, or the equivalent
thereof in one or more foreign currencies or composite currencies.
(3) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3 under the Securities Act of 1933.
(4) The proposed maximum offering price per unit will be determined from time
to time by the Registrant in connection with, and at the time of, the
issuance by the Registrant of the securities registered hereunder.
(5) Estimated solely for the purposes of computing the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933.
(6) The prospectus included in this Registration Statement also relates to
$368,689,000 in Debt Securities, Debt Warrants, Preferred Stock,
Depositary Shares, Preferred Stock Warrants, Common Stock and Common Stock
Warrants previously registered pursuant to Registration Statement No. 33-
57011. A registration fee of $206,897 was paid in connection with
Registration Statement No. 33-57011, of which $127,134 related to such
securities. In the event that any such previously registered securities
are offered and sold prior to the effective date of this Registration
Statement, the amount of such securities so offered and sold will not be
included in a prospectus hereunder.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included in this Registration Statement also relates to the securities of the
Registrant previously registered under the Registrant's Statement on Form S-3
(No. 33-57011). This Registration Statement constitutes Post-Effective
Amendment No. 3 to the Registrant's Registration Statement on Form S-3 (No.
33-57011).
----------------
Pursuant to Rule 429 of the rules and regulations of the Commission under
the Securities Act of 1933, the prospectus included in this Registration
Statement is a combined prospectus and relates to the Registration Statement
on Form S-3 (No. 33-57011) that was previously filed by Ashland Oil, Inc.
Ashland Oil, Inc. changed its name to Ashland Inc. on January 27, 1995.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+This information in this prospectus supplement is not complete and may be +
+changed. We may not sell these Securities until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+prospectus supplement is not an offer to sell these securities and it is not +
+soliciting an offer to buy these Securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion Dated January 15, 1999
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1999
U.S. $220,000,000
Ashland Inc.
50 E. RiverCenter Boulevard
Covington, Kentucky 41012
(606) 815-3333
Medium-Term Notes, Series H
Due Nine Months or more from Date of Issue
-----------
Ashland Inc. (the "Company", which may be referred to as "we" or "us") may
offer from time to time up to $220,000,000 of its Medium-Term Notes, Series H.
Each Note will mature on a date nine months or more from its date of original
issuance. Unless otherwise indicated in the applicable pricing supplement to
this prospectus supplement, interest on Fixed Rate Notes will be payable on
each February 15 and August 15 and at Maturity. Interest on Floating Rate
Notes will be payable on the dates specified in the applicable pricing
supplement. Notes may be subject to optional redemption or may obligate
the Company to repay at the option of the holder. Generally, there will
not be a sinking fund. The specific terms of each Note will be
established by the Company and will be described in a pricing
supplement.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
Price to Agents' Proceeds
Public Commissions to Company
---------------- -------------------- --------------------------
<S> <C> <C> <C>
Per Note...... 100% .125%--.750% 99.875%--99.250%
Total(1)...... U.S.$220,000,000 $275,000--$1,650,000 $219,725,000--$218,350,000
</TABLE>
- -----
(1) Or the equivalent thereof in other currencies or currency units.
-----------
The Notes are being offered on a continuing basis by the Company through
Credit Suisse First Boston Corporation, Salomon Smith Barney Inc, and Chase
Securities Inc. (the "Agents"). Each Agent has agreed to use reasonable efforts
to solicit offers to purchase the Notes. The Company may also sell Notes at or
above par to any Agent, acting as principal, for a commission as set forth in
the table above. The Notes will not be listed on any securities exchange. You
cannot be assured that the Notes offered by this prospectus supplement will be
sold or that there will be a secondary market for the Notes.
Credit Suisse First Boston
Salomon Smith Barney
Chase Securities Inc.
Prospectus Supplement dated , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement
About this Prospectus Supplement; Pricing Supplements...................... S-3
Description of the Notes................................................... S-4
Special Provisions Relating to Foreign Currency Notes...................... S-11
Certain United States Federal Income Tax Consequences...................... S-13
Plan of Distribution....................................................... S-18
Legal Opinions............................................................. S-20
Glossary................................................................... S-21
Prospectus
Summary.................................................................... 1
The Company................................................................ 5
Use of Proceeds............................................................ 5
Description of Debt Securities............................................. 5
Description of Preferred Stock............................................. 18
Description of Depositary Shares........................................... 21
Description of Common Stock................................................ 22
Description of Securities Warrants......................................... 23
Plan of Distribution....................................................... 24
Legal Matters.............................................................. 25
Experts.................................................................... 25
</TABLE>
----------------
You should rely only on the information incorporated by reference or provided
in this prospectus supplement, the attached prospectus and the attached pricing
supplement. We have authorized no one to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus supplement, the attached prospectus or the attached pricing
supplement is accurate as of any date other than the date on the front of the
applicable document.
S-2
<PAGE>
ABOUT THIS PROSPECTUS SUPPLEMENT; PRICING SUPPLEMENTS
The Company may use this prospectus supplement, together with the attached
prospectus and an attached pricing supplement, to offer our senior Medium-Term
Notes, Series H (the "Notes"), at various times. The total initial public
offering price of Notes that may be offered by use of this prospectus
supplement is $220,000,000 (or the equivalent in foreign or composite
currencies).
This prospectus supplement sets forth certain terms of the Notes that we may
offer. It supplements the description of the Debt Securities and Senior
Securities contained in the attached prospectus. If information in this
prospectus supplement is inconsistent with the prospectus, this prospectus
supplement will apply and will supersede that information in the prospectus.
Each time we issue Notes we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the Notes being offered and the terms of the offering. The
pricing supplement may also add, update or change information in this
prospectus supplement or the attached prospectus. Any information in the
pricing supplement, including any changes in the method of calculating interest
on any Note, that is inconsistent with this prospectus supplement will apply
and will supersede that information in this prospectus supplement.
It is important for you to read and consider all information contained in
this prospectus supplement and the attached prospectus and pricing supplement
in making your investment decision. You should also read and consider the
information in the documents we have referred you to in "Where You Can Find
More Information About the Company" on page 3 of the attached prospectus.
S-3
<PAGE>
DESCRIPTION OF THE NOTES
General
The following summary of certain terms of the Notes is not complete. You
should refer to the Senior Indenture (the "Indenture") with Citibank, N.A., as
Trustee (the "Trustee"), under which the Notes will be issued, a copy of which
is incorporated as an exhibit to the Registration Statement. The definitions of
certain capitalized terms used in this prospectus supplement are provided in
the Glossary beginning on page S-21. Capitalized terms used in this prospectus
supplement but not defined in this prospectus supplement (including the
Glossary) have the meanings assigned in the Indenture.
The Notes will be "Senior Securities" as described in the attached
prospectus. The Notes will constitute one series of Senior Securities issued
under the Indenture. They will have the same rank as all other Senior
Securities of the Company. See "Description of Debt Securities" in the attached
prospectus.
We will offer the Notes on a continuing basis. Each Note will mature 9 months
or more from its date of issue, as agreed between us and the initial purchaser.
We will not redeem any Note prior to the redemption date fixed at the time of
sale and set forth in the attached pricing supplement. If the pricing
supplement does not indicate a redemption date for a Note, we will not redeem
the Note before its stated maturity. Unless the attached pricing supplement
indicates otherwise, on or after the indicated redemption date, the related
Note will be redeemable wholly or partially in increments of $1,000 at our
option at a redemption price equal to the entire principal amount to be
redeemed, together with interest payable to the date of redemption. We must
give notice of this redemption not more than 60 nor less than 30 days prior to
the redemption date. The Notes will not have a sinking fund unless the attached
pricing supplement specifies otherwise.
We may provide that any Note will be repayable at the holder's option, at the
times and on the terms and conditions set forth in the Note and described in
the attached pricing supplement.
The Notes may bear interest at (a) a fixed rate (a "Fixed Rate Note") or (b)
a floating rate (a "Floating Rate Note"). Interest on Floating Rate Notes will
be determined, and adjusted periodically, by reference to an interest rate
basis or quotation, adjusted by a Spread or Spread Multiplier, if any. See
"Interest and Interest Rates" below.
Unless the attached pricing supplement specifies otherwise, 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 denominated in U.S. dollars, the Notes
will be issued in denominations of U.S. $1,000 and integral multiples of U.S.
$1,000 in excess of U.S. $1,000. The attached pricing supplement will set forth
the authorized denominations of Notes not denominated in U.S. dollars and
additional information, including applicable exchange rate information,
relevant for these Notes and Notes for which principal, premium, if any, and
interest may be payable at the holder's or the Company's option in a
denomination different from that of the Note. See "Special Provisions Relating
to Foreign Currency Notes" below.
Each Note will be issued in fully registered form without coupons. Each Note
will be issued initially either in definitive form (a "Certificated Note") or
in global form and deposited with, or on behalf of, DTC, as depositary (a
"Book-Entry Note"), as described in the attached prospectus under the caption
"Description of Debt Securities--Global Securities". Unless the attached
pricing supplement specifies otherwise, each Note will be issued in book-entry
form. Beneficial interests in a Book-Entry Note will be shown on, and transfers
of those interests will be effected only through, records maintained by DTC or
its participants. Holders may not exchange Book-Entry Notes for Certificated
Notes and, except under circumstances described in the attached prospectus,
Book-Entry Notes will not be issuable in definitive form. Payments of
principal, premium, if any, and interest on Book-Entry Notes will be made to
DTC or its nominee. Payments to beneficial owners of interests in Book-Entry
Notes will be made through DTC and its participants. A further description of
the depositary's procedures regarding global securities representing Book-Entry
Notes is set forth in the attached
S-4
<PAGE>
prospectus under "Description of Debt Securities--Global Securities". DTC has
confirmed to the agents, the trustee and us that it intends to follow the
procedures.
Certificated Notes may be presented for registration of transfer or exchange
at the corporate trust office of Citibank, N.A. in the Borough of Manhattan,
New York City. Unless the attached pricing supplement indicates otherwise,
payments of principal, premium, if any, and interest on Certificated Notes will
be made in immediately available funds at the Paying Agent's office in the
Borough of Manhattan, New York City, or another office or agency we may choose.
However, payments in these funds will be made only if the Certificated Notes
are presented to the Paying Agent in time for the Paying Agent to make the
payments through normal procedures. At our option, we may pay interest on the
Certificated Notes (other than interest payable at Maturity) by check to the
person in whose name a Certificated Note is registered at the close of business
on the applicable Record Date before each Interest Payment Date. However, a
holder of $10,000,000 or more in aggregate principal amount of Notes
denominated and payable in U.S. dollars and having the same Interest Payment
Date will be entitled to receive the payments by wire transfer of immediately
available funds to an account maintained by that holder with a bank located in
the U.S. if the holder has provided appropriate payment instructions in writing
to the Trustee on or before the relevant Regular Record Date.
We have initially designated Citibank, N.A., acting through its principal
corporate trust office in the Borough of Manhattan, New York City, as Paying
Agent for the Certificated Notes.
Except as described in the attached 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 if we
enter into a transaction that adversely affects our 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.
Interest and Interest Rates
The applicable pricing supplement will designate whether a particular Note is
a Fixed Rate Note or a Floating Rate Note. In the case of a Floating Rate Note,
the attached pricing supplement will also specify whether the Note will bear
interest based on the Commercial Paper Rate (a "Commercial Paper Rate Note"),
the Prime Rate (a "Prime Rate Note"), LIBOR (a "LIBOR Note"), the Treasury Rate
(a "Treasury Rate Note"), the Federal Funds Rate (a "Federal Funds Rate Note"),
the CD Rate (a "CD Rate Note") or on another interest rate quotation set forth
in the attached pricing supplement. In addition, a Floating Rate Note may bear
interest at the lowest, highest or average of two or more interest rate
quotations.
We will select an interest rate or interest rate quotations 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 the interest rate or interest rate quotation to prospective
investors and our financial needs. Unless the attached pricing supplement
provides otherwise, Citibank, N.A. will be the Calculation Agent with respect
to the Floating Rate Notes.
We may change the interest rates, or interest rate quotations at various
times, but no such change will affect any Note already issued or for which we
have accepted an offer to purchase.
The rate of interest on Floating Rate Notes will reset daily, weekly,
monthly, quarterly, semi-annually or annually. The Interest Reset Dates will be
specified in the attached pricing supplement and on the face of each Note. In
addition, the pricing supplement will specify the Spread or Spread Multiplier,
if any, and the Maximum Interest Rate or Minimum Interest Rate, if any,
applicable to each Floating Rate Note. The pricing supplement relating to an
offering of Notes may also specify, to the extent applicable, the Calculation
Dates,
S-5
<PAGE>
Index Maturity, Initial Interest Rate, Interest Determination Dates, Interest
Payment Dates, Interest Reset Dates and Regular Record Dates with respect to
each Note. See "Glossary" on page S-21 for definitions of certain of the above
terms. The interest rate on the Notes will in no event be higher than the
maximum rate permitted by applicable law. Under New York law as in effect on
the date of this prospectus supplement, the maximum rate of interest per annum
on a simple interest basis is 25%. The limit may not apply to Notes in which
$2,500,000 or more has been invested.
Each interest bearing Note will accrue interest from and including the date
of issue or the most recent Interest Payment Date for which interest has been
paid or duly provided until the principal is paid or made available for
payment. Interest payments, if any, will be in the amount of interest accrued
from and including the date of issue or the next preceding Interest Payment
Date for which interest has been paid or duly provided, as the case may be, to
but excluding the applicable Interest Payment Date.
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, for Book-Entry
Notes, 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. However, interest payable at Maturity will be payable to the person
(which, for Book-Entry Notes, shall be the depositary) to whom principal is
payable. Interest on a Note will be payable on the first Interest Payment Date
following its date of issue. However, if the date of a Note's issue is on or
after the Regular Record Date for that Interest Payment Date, interest will be
payable beginning on the second Interest Payment Date following the Note's
issue.
Fixed Rate Notes
The applicable pricing supplement relating to a Fixed Rate Note will
designate a fixed rate of interest per year payable on the Fixed Rate Note.
Unless the attached pricing supplement indicates otherwise, the Interest
Payment Dates for the Fixed Rate Notes will be February 15 and August 15 of
each year and at Maturity. The Regular Record Dates for the Fixed Rate Notes
will be the February 1 and August 1 next preceding the February 15 and August
15 Interest Payment Dates. Unless the attached pricing supplement indicates
otherwise, interest on Fixed Rate Notes will be computed on the basis of a 360-
day year of twelve 30-day months.
Floating Rate Notes
Upon the request of a registered holder of a Floating Rate Note, the
Calculation Agent will provide the interest rate then in effect and, if
different, the interest rate which will become effective as a result of a
determination made on the most recent Interest Determination Date with respect
to that Floating Rate Note.
Accrued interest on a Floating Rate Note will be calculated by multiplying
the principal amount of the Note by an accrued interest factor. The accrued
interest factor will be computed by adding the interest factors calculated for
each day in the period for which accrued interest is being calculated. Unless
otherwise specified in the attached pricing supplement, the interest factor for
each day is computed by dividing the interest rate in effect on that day by (a)
the actual number of days in the year, in the case of Treasury Rate Notes or
(b) 360, in the case of all other Floating Rate Notes.
The interest rate on a Floating Rate Note in effect on any day will be (a) if
the day is an Interest Reset Date, the interest rate with respect to the
Interest Determination Date relating to that Interest Reset Date, or (b) if the
day is not an Interest Reset Date, the interest rate with respect to the
Interest Determination Date relating to the preceding Interest Reset Date.
However, the interest rate on a Floating Rate Note from its issue date up to
but not including the first Interest Reset Date for the Note will be the
Initial Interest Rate as set forth in the attached pricing supplement. The
interest rate is subject to adjustment by a Spread or a Spread Multiplier, if
any, and to any Maximum Interest Rate or Minimum Interest Rate limitation.
However, the interest rate in effect for the ten calendar days prior to the
date of Maturity will be that in effect on the tenth calendar day prior to the
date of Maturity.
S-6
<PAGE>
All percentages resulting from any calculation of floating rate notes will be
rounded, 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 .09876545) being rounded to 9.87655% (or .0987655), and 9.876544%
(or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts
used in or resulting from this calculation will be rounded to the nearest cent
(with one-half cent being rounded upwards).
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) specified on the face of the
Commercial Paper Rate Note and in the attached pricing supplement.
Unless the attached pricing supplement indicates otherwise, the "Commercial
Paper Rate" for any Commercial Paper Interest Determination Date is the Money
Market Yield of the rate on that date for commercial paper having the Index
Maturity specified in the pricing supplement as published in H.15(519) prior to
3:00 P.M., New York City time, on the Calculation Date relating to that
Commercial Paper Interest Determination Date under the heading "Commercial
Paper--Nonfinancial".
The following procedures will be followed if the Commercial Paper Rate cannot
be determined as described above:
. If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the Calculation Date, the Commercial Paper Rate will be the
Money Market Yield of the rate on that Commercial Paper Interest
Determination Date for commercial paper having the Index Maturity
designated in the pricing supplement, as published in H.15 Daily Update
under the heading "Commercial Paper--Nonfinancial".
. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the Calculation Date, then the Calculation Agent will
determine the Commercial Paper Rate to be the Money Market Yield of the
average of the offered rates of three leading dealers of commercial paper
in New York City (which may include the Agents or their affiliates) as of
11:00 A.M., New York City time, on that Commercial Paper Interest
Determination Date for commercial paper having the Index Maturity specified
in the pricing supplement placed for a non-financial issuer whose bond
rating is "Aa", or the equivalent, from a nationally recognized rating
agency. The Calculation Agent will select the three dealers referred
to above.
. If fewer than three dealers selected by the Calculation Agent are
quoting as mentioned above, the Commercial Paper Rate will be the
Commercial Paper Rate in effect on that Commercial Paper Interest
Determination Date.
Prime Rate Notes. A Prime Rate Note will bear interest at the interest rate
(calculated with reference to the Prime Rate and the Spread or Spread
Multiplier, if any) specified on the face of the Prime Rate Note and in the
attached pricing supplement.
Unless the attached pricing supplement indicates otherwise, the "Prime Rate"
for any Prime Rate Interest Determination Date is the prime rate on that date,
as published in H.15(519) by 3:00 P.M., New York City time, on the Calculation
Date relating to that Prime Rate Interest Determination Date under the heading
"Bank Prime Loan".
The following procedures will be followed if the Prime Rate cannot be
determined as described above:
. If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the Calculation Date, then the Prime Rate will be the rate on
that Prime Interest Determination Date as published in H.15 Daily Update
opposite the caption "Bank Prime Loan".
. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the Calculation Date, then the Calculation Agent will
determine the Prime Rate to be the average of the interest rates publicly
announced by each bank that appears on the Reuters Screen USPRIME1 Page as
that bank's prime rate or base lending rate as in effect for that Prime
Rate Interest Determination Date at 11:00 A.M. New York City time.
S-7
<PAGE>
. If fewer than four of those rates appear on the Reuters Screen USPRIME1
Page for that Prime Rate Interest Determination Date, then the Prime Rate
will be the average of the announced prime rates quoted (on the basis of
the actual number of days in the year divided by 360) as of the close of
business on that Prime Rate Interest Determination Date by at least three
major money center banks in New York City selected by the Calculation Agent
(which may include the Agents or their affiliates).
. If fewer than two quotations are provided as mentioned in the previous
item, the Prime Rate shall be determined on the basis of the rates
furnished in New York City by the appropriate number of substitute banks or
trust companies organized and doing business under the laws of the United
States, or any state, having total equity capital of at least $500 million
and subject to supervision or examination by Federal or state authority.
The Calculation Agent will select the banks or trust companies referred to
above.
. If the banks or trust companies described in the previous item are not
quoting as mentioned above, the Prime Rate will be the Prime Rate in effect
on that Prime Rate Interest Determination Date.
LIBOR Notes. A LIBOR Note will bear interest at the interest rate (calculated
with reference to LIBOR and the Spread or Spread Multiplier, if any) specified
on the face of the LIBOR Note and in the attached pricing supplement.
Unless the attached pricing supplement indicates otherwise, the Calculation
Agent will determine LIBOR as follows:
On each LIBOR Interest Determination Date:
. If "LIBOR Reuters" is specified in the attached pricing supplement,
LIBOR will be the average of the offered rates for deposits in the Index
Currency having the Index Maturity specified in the pricing supplement
beginning on the applicable Interest Reset Date, as those rates appear on
the Designated LIBOR Page as of 11:00 A.M., London time, on that LIBOR
Interest Determination Date, if at least two of those offered rates appear
on the Designated LIBOR Page. If the Designated LIBOR Page by its terms
provides only for a single rate, that single rate will be used regardless
of the foregoing provisions requiring more than one rate.
. If "LIBOR Telerate" is specified in the attached pricing supplement,
LIBOR will be the rate for deposits in the Index Currency having the Index
Maturity specified in the pricing supplement beginning on that Interest
Reset Date, as that rate appears on the Designated LIBOR Page as of 11:00
A.M., London time, on that LIBOR Interest Determination Date.
. If neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
attached pricing supplement as the method for calculating LIBOR, LIBOR will
be calculated as if "LIBOR Telerate" had been specified.
On any LIBOR Interest Determination Date on which fewer than two of those
offered rates appear, or no rate appears, as applicable, on the Designated
LIBOR Page, the Calculation Agent will determine LIBOR as follows:
. LIBOR will be determined on the basis of the offered rates at which
deposits in the Index Currency having the Index Maturity specified in the
applicable pricing supplement beginning on the applicable Interest Reset
Date and in a principal amount that is representative for a single
transaction in that Index Currency in that market at that time by four
major banks in the London interbank market (which may include the Agents or
their affiliates) at approximately 11:00 A.M., London time, on that LIBOR
Interest Determination Date to prime banks in the London interbank market.
The Calculation Agent will select the four banks and request the principal
London office of each of those banks to provide a quotation of its rate. If
at least two quotations are provided, LIBOR on that LIBOR Interest
Determination Date will be the average of those quotations.
. If fewer than two of those quotations are provided as mentioned above,
LIBOR on that LIBOR Interest Determination Date will be the average of the
rates quoted at approximately 11:00 A.M., in the
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applicable Principal Financial Center, on that LIBOR Interest Determination
Date by three major banks in that Principal Financial Center (which may
include the Agents or their affiliates) for loans in the Index Currency to
leading European banks, having the Index Maturity specified in the
applicable pricing supplement and in a principal amount representative for
a single transaction in that Index Currency in that market at that time.
The Calculation Agent will select the three banks referred to above.
. If the banks selected by the Calculation Agent are not quoting as
mentioned above, LIBOR will be LIBOR in effect on the LIBOR Interest
Determination Date.
Treasury Rate Notes. A Treasury Rate Note will bear interest at the interest
rate (calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any) specified on the face of the Treasury Rate Note and in the
attached pricing supplement.
Unless the attached pricing supplement indicates otherwise, "Treasury Rate"
for any Treasury Interest Determination Date means the rate from the most
recent auction of direct obligations of the United States ("Treasury bills")
having the Index Maturity specified in the pricing supplement as that rate
appears on the display designated as Page 56 or the display designated as Page
57 on the Dow Jones Telerate Service under the heading "AVGE INVEST YIELD", or
any successor publication or heading.
The following procedures will be followed if the Treasury Rate cannot be
determined as described above:
. If the above rate is not displayed on the relevant page by 3:00 P.M.,
New York City time, on the Calculation Date, the Treasury Rate will be the
auction average rate (expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) for that
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 specified in the pricing supplement are not published or reported
as provided above by 3:00 P.M., New York City time, on the Calculation
Date, or if no auction is held in a particular week, then the Treasury Rate
will be the rate as published in H.15(519) under the heading "U.S.
Government Securities/Treasury Bills/Secondary Market", or any successor
publication or heading.
. If the rate described in the previous item is not published by 3:00
P.M., New York City time, on the Calculation Date, then the Calculation
Agent will determine the Treasury Rate to be a yield to maturity (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the average of the secondary
market bid rates, as of approximately 3:30 P.M., New York City time, on
that Treasury Interest Determination Date, of three leading primary U.S.
government securities dealers in New York City (which may include the
Agents or their affiliates) for the issue of Treasury bills with a
remaining maturity closest to the Index Maturity specified in the pricing
supplement. The Calculation Agent will select the three dealers referred to
above.
. If fewer than three dealers selected by the Calculation Agent are
quoting as mentioned above, the Treasury Rate will be the Treasury Rate in
effect on that Treasury Interest Determination Date.
Federal Funds Rate Notes. A Federal Funds Rate Note will bear interest at the
interest rate (calculated with reference to the Effective Rate and the Spread
or Spread Multiplier, if any) specified in the Federal Funds Rate Note and in
the attached pricing supplement.
Unless the attached pricing supplement indicates otherwise, the "Federal
Funds Rate" for any Federal Funds Interest Determination Date is the rate on
that day for Federal Funds, as published in H.15(519) prior to 3:00 P.M., New
York City time, on the Calculation Date relating to that Federal Funds Interest
Determination Date under the heading "Federal Funds (Effective)".
The following procedures will be followed if the Federal Funds Rate cannot be
determined as described:
. If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the Calculation Date, the Federal Funds Rate will be the rate
on that Federal Funds Interest Determination Date for U.S. dollar Federal
Funds, as published in H.15 Daily Update under the heading "Federal Funds
(Effective)".
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. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the Calculation Date, then the Calculation Agent will
determine the Federal Funds Rate to be the average of the rates for the
last transaction in overnight Federal funds arranged by three leading
brokers of Federal funds transactions in New York City as of 9:00 A.M., New
York City time, on that Federal Funds Interest Determination Date. The
Calculation Agent will select the three brokers referred to above.
. If fewer than three brokers selected by the Calculation Agent are
quoting as mentioned above, the Federal Funds Rate will be the Federal
Funds Rate in effect on that Federal Funds Interest Determination Date.
CD Rate Notes. A CD Rate Note will bear interest at the interest rate
(calculated with reference to the CD Rate and the Spread or Spread Multiplier,
if any) specified in the CD Rate Note and in the attached pricing supplement.
Unless the attached pricing supplement indicates otherwise, the "CD Rate" for
any CD Interest Determination Date is the rate on that date for negotiable
certificates of deposit having the Index Maturity specified in the pricing
supplement, as published in H.15(519) prior to 3:00 P.M., New York City time,
on the Calculation Date relating to that CD Interest Determination Date under
the heading "CDs (Secondary Market)".
The following procedures will be followed if the CD Rate cannot be determined
as described above:
. If the above rate is not published by 3:00 P.M., New York City time, on
the Calculation Date, the CD Rate will be the rate on that CD Interest
Determination Date for negotiable certificates of deposit of the Index
Maturity specified in the pricing supplement as published in H.15 Daily
Update under the caption "CDs (Secondary Market)".
. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the Calculation Date, then the Calculation Agent will
determine the CD Rate to be the average of the secondary market offered
rates as of 10:00 A.M., New York City time, on that CD Interest
Determination Date, quoted by three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in New York City for negotiable
certificates of deposit in a denomination of $5,000,000 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. The
Calculation Agent will select the three dealers referred to above.
. If fewer than three dealers are quoting as mentioned above, the CD Rate
will be the CD Rate in effect on that CD Interest Determination Date.
Indexed Notes
We may issue Notes as Indexed Notes, as indicated in the attached pricing
supplement. Holders of Indexed Notes may receive a principal amount at Maturity
that is greater than or less than the face amount of any of these Notes
depending upon the fluctuation of the relative value, rate or price of the
specified index. The attached pricing supplement will describe specific
information relating 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.
Other Provisions; Addenda
Any provisions relating to any Note, including the determination of an
interest rate basis, the calculation of the interest rate applicable to a
Floating Rate Note, and the specification of one or more interest rate bases,
the Interest Payment Dates, the Maturity or any other variable term relating to
that Floating Rate Note, may be modified as specified under "Other Provisions"
on the face of that Note or in an addendum relating to the Floating Rate Note,
if specified on the face of the Floating Rate Note and in the applicable
pricing supplement.
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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
General
Unless the attached pricing supplement indicates otherwise, 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 we designate any of the Notes to be
denominated in a currency or currency unit other than U.S. dollars ("Specified
Currency"), the following provisions shall apply, which are in addition to and,
where inconsistent, replace the description of general terms and provisions of
Notes set forth in the attached prospectus and elsewhere in this prospectus
supplement.
Notes not denominated in U.S. dollars ("Foreign Currency Notes") are issuable
in registered form only, without coupons. The pricing supplement will specify
the denominations for particular Foreign Currency Notes.
Unless the attached pricing supplement provides otherwise, you are required
to pay the purchase price of Foreign Currency Notes in immediately available
funds.
Notes denominated in Specified Currencies other than Euros will not be sold
in, or to residents of, the country of the Specified Currency in which
particular Notes are denominated unless the pricing supplement specifies
otherwise.
Currencies
Unless the attached pricing supplement specifies otherwise, you 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 accounts in the United
States. However, you may ask the Agent who presented your offer to purchase
Foreign Currency Notes to us to use its reasonable best efforts to arrange for
the exchange of U.S. dollars into the relevant Specified Currency to enable you
to pay for the Notes. You must make this request on or before the third
Business Day preceding the delivery date for the Note or by a later date if
allowed by the Agent. Each exchange will be made on the terms and conditions
established by the Agent in accordance with its regular foreign exchange
practices and all costs will be paid by you.
The attached pricing supplement will contain 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.
Payment of Principal and Interest
The principal of and interest on Foreign Currency Notes are payable by us in
U.S. dollars. However, unless the attached pricing supplement specifies
otherwise, the holder of a Foreign Currency Note may elect to receive the
payments in the Specified Currency as described below. 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 us to make such determinations. Unless otherwise
specified in a pricing supplement, the Exchange Rate Agent shall be Citibank,
N.A.
Unless the attached pricing supplement specifies otherwise, any U.S. dollar
amount to be received by a holder of a Foreign Currency Note will be based on
the following:
. The highest bid quotation in New York City 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 or an
Agent) for the purchase by the quoting dealer of the Specified Currency for
U.S. dollars for settlement on that payment date in the aggregate amount of
the Specified Currency payable to all holders
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of Foreign Currency Notes scheduled to receive U.S. dollar payments and at
which the applicable dealer commits to execute a contract. The Exchange
Rate Agent will select and we will approve that selection of the three
dealers referred to above.
. If fewer than three of these bid quotations are available, payments
will be made in the Specified Currency.
All of these currency exchange costs will be borne by the holder of the
Foreign Currency Note by deductions from the payments.
Unless the attached pricing supplement specifies otherwise, 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 request for
the payment to the corporate trust department of Citibank, N.A. in the Borough
of Manhattan, New York City, on or before the Regular Record Date or at least
sixteen days before Maturity, as the case may be. The 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. The election
will remain in effect until revoked by written notice to Citibank, N.A. in the
Borough of Manhattan, New York City, but written notice of any revocation of
this kind must be received by Citibank, N.A. in the Borough of Manhattan, New
York City on or before the Regular Record Date or at least sixteen days before
Maturity, as the case may be. Holders of Foreign Currency Notes whose Foreign
Currency Notes will be held in the name of a broker or nominee should contact
that 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 attached 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 U.S., unless other arrangements have been made. The principal of
Foreign Currency Notes paid in the Specified Currency, together with accrued
and unpaid interest, due at Maturity will be paid in immediately available
funds by wire transfer to an account maintained with a bank outside the U.S.
(unless other arrangements have been made) designated at least sixteen days
before Maturity by the holders. However, such Foreign Currency Notes must be
presented to the Trustee or the Paying Agents designated in the attached
pricing supplement in time for the Trustee or the Paying Agents to make the
payments in those funds. Any payment of principal or interest required to be
made on an Interest Payment Date or at Maturity of a Foreign Currency Note that
is not a Business Day may be made instead on the following Business Day and no
interest shall accrue for the period from and after the 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 our control, we will be
entitled to satisfy our obligations to holders of Foreign Currency Notes by
making the payment in U.S. dollars on the basis of the Market Exchange Rate on
the date of the payment, or if the Market Exchange Rate is not available at
that time, on the basis of the most recently available Market Exchange Rate.
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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 of a
Note at its issue price, that is the first price to the public at which a
substantial amount of the Notes in an issue is sold, 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 United States Federal income tax consequences to them
in light of 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, 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 a partnership holds Notes, the tax treatment of
a partner will generally depend upon the status of the partner and upon the
activities of the partnership. Partners of partnerships holding Notes should
consult their tax advisors. 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.
Notes Purchased at a Premium
Under the Internal Revenue Code of 1986, as amended (the "Code"), a United
States Holder that purchases a Note for an amount in excess of its stated
redemption price at maturity may elect to treat such excess as "amortizable
bond premium", in which case the amount of 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. Under recently promulgated
regulations, if the amortizable bond premium allocable to a year exceeds the
amount of interest allocable to such year, such excess would be allowed as a
deduction for such year but only to the extent of the United States Holder's
prior interest inclusions on the Note. Any excess is generally carried forward
and allocable to the next year. A holder who elects to amortize bond premium
must reduce his tax basis in the Note as described below under "Purchase Sale
and Retirement of the Notes". 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
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thereafter acquired by the United States Holder, and may not be revoked without
the consent of the Internal Revenue Service ("IRS"). The new regulations
provide a restrictive automatic consent for a United States Holder to change
its method of accounting for eligible bond premium in certain circumstances, if
the change is made for the first taxable year for which the United States
Holder must account for the Note under the new regulations.
Notes Purchased at a Market Discount
A Note, other than a Note that matures one year or less from the date of
issuance ("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, unless such difference
is less than a specified de minimis amount.
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.
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.
Purchase, Sale, Exchange 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 any market discount included in the United States Holder's income
with respect to the Note, and reduced by 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, exchange 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, exchange or retirement for an amount in Foreign Currency
will be the U.S. dollar value of such amount on the date of sale, exchange or
retirement. Except to the extent described above under "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, exchange 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 whether the payment is in fact converted into U.S. dollars. A
cash basis United States Holder who receives such a payment will be required to
include the amount of such payment in income upon receipt. 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
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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.
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, exchange or retirement of a Note that is attributable to changes in
exchange rates will be treated as ordinary income or loss which will not be
treated as interest income or expense. 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.
NON-UNITED STATES HOLDERS
Subject to the discussion of backup withholding below, payments of principal
(and premium, if any) and interest 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
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withholding tax, provided, in the case of interest, 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.
A Non-United States Holder that does not qualify for exemption from
withholding under the preceding paragraph generally will be subject to United
States Federal withholding tax at the rate of 30% (or lower applicable treaty
rate) of payments of interest on the Notes.
If a Non-United States Holder is engaged in a trade or business in the United
States and interest 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 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% (or lower applicable treaty rate) of its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For purposes of the branch profits tax, interest on a Note
will be included in the earnings and profits of such Holder if such interest 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 (or successor form) 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 (a) such gain is not effectively connected with a United States trade or
business of the Non-United States Holder and (b) 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 finalized Treasury regulations (the "Final Regulations"), generally
effective for payments made after December 31, 1999, provide alternative
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.
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INFORMATION REPORTING AND BACK-UP 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 number, as the case may be), the aggregate amount of principal
and interest paid 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
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 an 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 (i) a United States person, (ii) a
controlled foreign corporation for United States tax purposes, (iii) 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 or (iv) for
payments made after December 31, 1999, a foreign partnership with certain
connections to the United States, information reporting (but not backup
withholding) 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 Final Regulations unify current certification procedures and forms
relating to information reporting and backup withholding for payments made
after December 31,1999.
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.
S-17
<PAGE>
PLAN OF DISTRIBUTION
Under the terms of a Distribution Agreement, a form of which is attached as
an exhibit to the Registration Statement (the "Distribution Agreement"), the
Notes are offered on a continuing basis by the Company through Credit Suisse
First Boston Corporation, Salomon Smith Barney Inc, and Chase Securities Inc.
(the "Agents"), each of which has agreed to use reasonable efforts to solicit
purchases of the Notes. Unless otherwise disclosed in the applicable pricing
supplement, the Company will pay a commission to the Agents. The Company will
have the sole right to accept offers to purchase Notes and may reject any
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 also may sell Notes at or above par to any Agent, acting as
principal, for a commission equivalent to that set forth on the cover page of
this prospectus supplement. The Notes may be resold at market prices prevailing
at the time of resale, at prices related to those prevailing market prices, at
a fixed offering price or at negotiated prices, as determined by that Agent.
The Company also may sell Notes at or above par to any Agent or to a group of
underwriters for whom an Agent acts as representative, for a commission to be
agreed at the time of sale for resale to one or more investors or purchasers at
a fixed offering price or at varying prices prevailing at the time of resale,
at prices related to those prevailing market prices at the time of the resale
or at negotiated prices. Notes purchased by an Agent or by a group of
underwriters may be resold to certain securities dealers for resale to
investors or to certain other dealers. Dealers may receive compensation in the
form of commissions from the Agents and/or from the purchasers for whom they
may act as agents. Unless the applicable pricing supplement specifies
otherwise, any compensation allowed by any Agent to any of these dealers shall
not be in excess of the commission received by that Agent from the Company.
After the initial public offering of Notes to be resold to investors and other
purchasers on a fixed public offering price basis, the public offering price
and commission may be changed.
The Company has reserved the right to sell Notes directly on its own behalf
and to accept (but not solicit) offers to purchase Notes through additional
agents on substantially the same terms and conditions (including commission
rates) as would apply to purchases of Notes pursuant to the Distribution
Agreement. In addition, the Company has reserved the right to appoint
additional agents for the purpose of soliciting offers to purchase Notes. Those
additional agents will be named in the applicable pricing supplement. No
commission will be payable on any Notes sold directly by the Company.
The Company will pay each Agent a commission of from .125% to .750% of the
principal amount of each Note, depending on its stated maturity, sold through
that Agent.
The following table summarizes the compensation to be paid to the Agents by
the Company.
<TABLE>
<CAPTION>
Total
--------------------------------
Per Note Minimum Maximum
------------ -------- ----------
<S> <C> <C> <C>
Commissions paid by the Company............ .125% -.750% $275,000 $1,650,000
</TABLE>
The Company estimates that it will incur expenses of $70,000 in connection
with this program.
The Agents and any dealers to whom the Agents may sell Notes may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933 (the "Act").
The Company has agreed to indemnify the Agent against certain liabilities,
including civil liabilities under the Securities Act of 1933, or contribute to
payments which the Agents may be required to make in this regard. The Company
has agreed to reimburse the Agents for certain expenses.
Unless the applicable pricing supplement indicates otherwise, payment of the
purchase price of Notes, other than Foreign Currency Notes, will be required to
be made in funds immediately available in New York City. With respect to
payment of the purchase price of Foreign Currency Notes, see "Description of
the Notes--Foreign Currency Notes" above.
S-18
<PAGE>
The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. No assurance can be given as
to the existence or liquidity of the secondary market for the Notes.
The Agents may engage in over-allotment, stabilizing transactions and
syndicate covering transactions and may impose penalty bids in accordance with
Regulation M under the Exchange Act. Over-allotment involves syndicate sales in
excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the Notes in the open market after
the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit the Agents to reclaim a selling concession from
a syndicate member when the Notes originally sold by that syndicate member are
purchased in a syndicate covering transaction to cover syndicate short
positions. These stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Notes to be higher than it would
otherwise be in the absence of the transactions. These transactions, if
commenced, may be discontinued at any time.
In the ordinary course of their respective businesses, the Agents and their
affiliates have engaged, and may in the future engage, in commercial banking
and/or investment banking transactions with the Company and its affiliates.
Citibank, N.A., the Trustee under the Indenture, is an affiliate of Salomon
Smith Barney Inc.
S-19
<PAGE>
LEGAL OPINIONS
Opinions regarding the validity of the Notes being offered will be issued for
us 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., our Senior Vice
President, General Counsel and Secretary), and for the Agents by Davis Polk &
Wardwell, New York, New York. In these opinions, certain assumptions will be
made regarding future action required to be taken by us and the Trustee in
connection with the issuance and sale of any particular Notes, the specific
terms of those Notes and other matters which may affect the validity of Notes
but which cannot be ascertained on the date of the relevant opinions.
S-20
<PAGE>
GLOSSARY
Set forth below are definitions of some of the terms used in this prospectus
supplement and not defined in the attached prospectus.
"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 New York City;
(b) with respect to Foreign Currency Notes (other than Foreign Currency
Notes denominated in euro only), not a day on which banking institutions
are authorized or required by law or regulation to be closed in the
principal financial center in the country of the Specified Currency;
(c) with respect to Foreign Currency Notes denominated in euro, any date
on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer (TARGET) System is open; and
(d) with respect to LIBOR Notes, a London Banking Day.
"Calculation Agent" means the agent appointed by the Company to calculate
interest rates for Floating Rate Notes. Unless the pricing supplement specifies
otherwise, the Calculation Agent will be Citibank, N.A.
"Calculation Date" means, with respect to any Interest Determination Date,
the date on which the Calculation Agent is to calculate an interest rate for a
Floating Rate Note. Unless the pricing supplement specifies otherwise, the
Calculation Date relating to an Interest Determination Date for a Floating Rate
Note will be the first to occur of (a) the tenth calendar day after that
Interest Determination Date, or, if that day is not a Business Day, the next
succeeding Business Day or (b) the Business Day preceding the applicable
Interest Payment Date or Maturity of that Note, as the case may be. However,
LIBOR will be calculated on the LIBOR Interest Determination Date.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable pricing supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in that pricing
supplement (or any other page as may replace that page on that service) for the
purpose of displaying the London interbank rates of major banks for the
applicable Index Currency, or (b) if "LIBOR Telerate" is specified in the
applicable pricing supplement as the method for calculating LIBOR, the display
on the Dow Jones Telerate Service (or any successor service) on the page
specified in that pricing supplement (or any other page as may replace that
page on that service) for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication, published by the Board
of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world wide web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
"Index Currency" means the currency or composite currency specified in the
applicable pricing supplement as to which LIBOR will be calculated. If no
currency or composite currency of this kind is specified in the applicable
pricing supplement, the Index Currency will be U.S. dollars.
"Index Maturity" means, for a Floating Rate Note, the period to maturity of
the instrument or obligation on which the interest rate quotation is based, as
set forth in the pricing supplement.
"Initial Interest Rate" means the rate at which a Floating Rate Note will
bear interest from and including its issue date to but excluding the first
Interest Reset Date, as indicated in the applicable pricing supplement.
S-21
<PAGE>
"Interest Determination Date" means the date as of which the interest rate
for a Floating Rate Note is to be calculated, to be effective as of the
following Interest Reset Date and calculated on the related Calculation Date.
However, LIBOR will be calculated on the LIBOR Interest Determination Date. The
Interest Determination Date relating 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 that Interest Reset Date. The Interest Determination Date
relating to an Interest Reset Date for a LIBOR Note (the "LIBOR Interest
Determination Date") will be the second London Banking Day preceding that
Interest Reset Date. The Interest Determination Date relating to an Interest
Reset Date for a Treasury Rate Note (the "Treasury Interest Determination
Date") will be the day of the week during which that Interest Reset Date falls
on which Treasury bills of the Index Maturity designated in the pricing
supplement 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 or may be held
on the preceding Friday. If, as the result of a legal holiday, an auction is so
held on the preceding Friday, that Friday will be the Treasury Interest
Determination Date pertaining to the Interest Reset Date occurring in the
following week.
"Interest Payment Date" means the date on which payment of interest on a Note
(other than payment at Maturity) is to be made. Unless the applicable pricing
supplement indicates otherwise, the Interest Payment Dates for the Fixed Rate
Notes will be February 15 and August 15 of each year and at Maturity. Unless
the applicable pricing supplement indicates otherwise and except as provided
below, the Interest Payment Dates for any Floating Rate Note will be:
(a) in the case of Floating Rate Notes that reset weekly, on the third
Wednesday of March, June, September and December of each year;
(b) in the case of Floating Rate Notes that 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 pricing
supplement);
(c) in the case of Floating Rate Notes that reset quarterly, on the third
Wednesday of March, June, September and December of each year, in the case
of Floating Rate Notes that reset semi-annually, on the third Wednesday of
the two months of each year specified in the pricing supplement;
(d) in the case of Floating Rate Notes that reset annually, on the third
Wednesday of the month specified in the pricing supplement; and
(e) in each case, at Maturity.
If an Interest Payment Date for any Fixed Rate Note falls on a day that is not
a Business Day for that Note, the interest payment for that Note will be made
on the following Business Day for that Note, and no interest on that payment
will accrue from and after that Interest Payment Date. If an Interest Payment
Date (other than an Interest Payment Date at Maturity) for any Floating Rate
Note would otherwise be a day that is not a Business Day for that Note, that
Interest Payment Date will be postponed to the next Business Day for that Note,
and interest will continue to accrue (except that, for a LIBOR Note, if that
Business Day is in the following calendar month, that Interest Payment Date
will be the preceding Business Day for that LIBOR Note).
"Interest Reset Date" means the date on which a Floating Rate Note will begin
to bear interest at the interest rate determined as of any Interest
Determination Date. Unless the pricing supplement specifies otherwise, the
Interest Reset Dates will be:
(a) in the case of Floating Rate Notes that reset daily, each Business
Day;
(b) in the case of Floating Rate Notes (other than Treasury Rate Notes)
that reset weekly, the Wednesday of each week;
S-22
<PAGE>
(c) in the case of Treasury Rate Notes that reset weekly, the Tuesday of
each week (except as provided below);
(d) in the case of Floating Rate Notes that reset monthly, the third
Wednesday of each month;
(e) in the case of Floating Rate Notes that reset quarterly, the third
Wednesday of March, June, September and December of each year;
(f) in the case of Floating Rate Notes that reset semiannually, the third
Wednesday of each of two months of each year specified in the pricing
supplement; and
(g) in the case of Floating Rate Notes that reset annually, the third
Wednesday of one month of each year specified in the pricing supplement.
If any Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Business Day for that Floating Rate Note, that Interest Reset
Date will be postponed to the next Business Day for that Floating Rate Note
(except that, for a LIBOR Note, if that Business Day is in the following
calendar month, that Interest Reset Date will be the preceding Business Day for
that LIBOR Note). If a Treasury bill auction (as described in the definition of
"Interest Determination Date") falls on any day that would otherwise be an
Interest Reset Date for a Treasury Rate Note, then that Interest Reset Date
will instead be the first Business Day following that auction date.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
"Market Exchange Rate" for any Specified Currency means the noon buying rate
in New York City for cable transfers for that Specified Currency as certified
for customs purposes by (or if not certified, as otherwise determined by) the
Federal Reserve Bank of New York.
"Maturity" means the date on which the principal of a Note becomes due,
whether at stated maturity, upon redemption or otherwise. If the Maturity of
any Note falls on a day that is not a Business Day, the payment of principal,
premium, if any, and interest for that Note will be made on the following
Business Day, and no interest on that payment will accrue from and after that
Maturity.
"Maximum Interest Rate" means, for any Floating Rate Note, a maximum
numerical interest rate limitation, or ceiling, on the rate at which interest
may accrue on that during any interest period.
"Minimum Interest Rate" means, for any Floating Rate Note, a minimum
numerical interest rate limitation, or floor, on the rate at which interest may
accrue on that during any interest period.
"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:
D x 360
Money Market Yield = --------------- x 100
360 - (D x M)
where "D" refers to the annual 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.
"Paying Agent" means the agent appointed by the Company to make payments of
principal, premium, if any, and interest on the Notes. Unless the pricing
supplement specifies otherwise, the Paying Agent will be Citibank, N.A.
"Principal Financial Center" means the capital city of the country issuing
the Index Currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire and Swiss
francs, the Principal Financial Center will be New York City, Sydney,
Frankfurt, Amsterdam, Milan and Zurich, respectively.
S-23
<PAGE>
"Regular Record Date" means the date on which a Note must be held in order
for the holder to receive an interest payment on the next Interest Payment
Date. Unless the pricing supplement specifies otherwise, the Regular Record
Date for any Interest Payment Date with respect to any Floating Rate Note will
be the fifteenth day (whether or not a Business Day) prior to that Interest
Payment Date. The Regular Record Dates for the Fixed Rate Notes will be the
February 1 and August 1 next preceding the February 15 and August 15 Interest
Payment Dates.
"Reuters Screen USPRIME1 Page" means the display on the Reuter Monitor Money
Rates Service (or any successor service) on the "USPRIME1" page (or any other
page as may replace the USPRIME1 page on such service) for the purpose of
displaying prime rates or base lending rates of major U.S. banks.
"Specified Currency" shall have the meaning set forth under the heading
"Special Provisions Relating to Foreign Currency Notes--General".
"Spread" means the number of basis points, if any, to be added to the
Commercial Paper Rate, the Prime Rate, LIBOR, the Treasury Rate, the Federal
Funds Rate, the CD Rate or any other interest rate index in effect at various
times for a Note, which amount will be set forth in the pricing supplement.
"Spread Multiplier" means the percentage by which the Commercial Paper Rate,
the Prime Rate, LIBOR, the Treasury Rate, the Federal Funds Rate, the CD Rate
or any other interest rate index in effect at various times for a Note is to be
multiplied, which percentage will be set forth in the pricing supplement.
S-24
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities, and it is not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 15, 1999
PROSPECTUS
Ashland Inc.
$600,000,000
Debt Securities
Preferred Stock
Depositary Shares
Common Stock
Warrants
------------
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
------------
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated , 1999
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all the information that is important to you. To understand the terms
of our securities, you should carefully read this document with the attached
prospectus supplement that together give the specific terms of the securities
we are offering. You should also read the documents we have referred you to in
"Where You Can Find More Information About The Company" on page 3 for
information on our company and our financial statements. Certain capitalized
terms used in this summary are defined elsewhere in this prospectus.
Ashland Inc.
Our businesses are grouped into five industry segments: Ashland Chemical,
APAC, Valvoline, Refining and Marketing, and Arch Coal.
Ashland Chemical distributes industrial chemicals, solvents, thermoplastics
and resins, and fiberglass materials, and manufactures and sells a wide variety
of specialty chemicals and certain petrochemicals. APAC performs contract
construction work, including highway paving and repair, excavation and grading,
and bridge construction, and produces asphaltic and ready-mix concrete, crushed
stone and other aggregate, concrete block and certain specialized construction
materials in the southern and midwestern United States.
Valvoline is a marketer of branded, packaged motor oil and automotive
chemicals, automotive appearance products, 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(R) name.
Effective January 1, 1998, we and USX-Marathon completed a transaction to
form Marathon Ashland Petroleum LLC ("MAP"), which combined major portions of
the supply, refining, marketing and transportation operations of the two
companies. Marathon has a 62% interest in MAP, and we hold a 38% interest. MAP
operates seven refineries with a total crude oil refining capacity of 935,000
barrels per day. Refined products are distributed through a network of
independent and company-owned outlets in the Midwest, the upper Great Plains
and the southeastern United States. We account for our investment in MAP using
the equity method.
Our coal operations are conducted by Arch Coal, Inc., which is 55% owned by
us and is publicly traded. Arch Coal produces, transports, processes and
markets bituminous coal produced in Central Appalachia and the western and
midwestern United States. We account for our investment in Arch Coal using the
equity method.
The Securities We May Offer
This prospectus is part of a registration statement (No. 333-.) (the
"Registration Statement") that we filed with the SEC utilizing a "shelf"
registration process. Under this shelf process, we may offer from time to time
up to $600,000,000 of any of the following securities, either separately or in
units: debt securities, preferred stock, depositary shares, common stock and
warrants. This prospectus provides you with a general description of the
securities we may offer. Each time we offer securities, we will provide you
with a prospectus supplement that will describe the specific amounts, prices
and terms of the securities being offered. The prospectus supplement may also
add, update or change information contained in this prospectus.
Debt Securities
We may offer unsecured general obligations of our company, which may be
senior (the "Senior Securities") or subordinated (the "Subordinated
Securities"). Unless the applicable prospectus supplement states otherwise,
Senior Securities will be issued under an indenture dated as of August 15,
1989, as amended and restated as of August 15, 1990 (the "Senior Indenture"),
between us and Citibank, N.A., as trustee. The Senior Securities and the
Subordinated Securities are together referred to in this prospectus as the
"Debt Securities". The Senior Securities will have the same rank as all of our
other unsecured, unsubordinated debt.
<PAGE>
The Subordinated Securities will be entitled to payment only after payment on
our Superior Indebtedness (as described below).
The Subordinated Securities will be issued under an indenture between us and
a commercial bank to be selected, as trustee. We have summarized certain
general features of the Debt Securities from the indentures. We encourage you
to read the indentures (which are exhibits to the Registration Statement) and
our recent periodic and current reports that we file with the SEC. Directions
on how you can get copies of these reports are provided on page 3.
General Indenture Provisions that Apply to Senior and Subordinated Securities
. Neither indenture limits the amount of debt that we may issue or provides
holders any protection should there be a highly leveraged transaction,
recapitalization or restructuring involving our company.
. The indentures provide that holders of two-thirds of the total principal
amount of outstanding Debt Securities of any series may vote to change
certain of our obligations or certain of your rights concerning the Debt
Securities of that series. However, to change the amount or timing of
principal, interest or other payments under the Debt Securities every
holder in the series must consent.
. If an Event of Default (as described below) occurs with respect to any
series of Debt Securities, the trustee or holder of 25% of the
outstanding principal amount of that series may declare the principal
amount of the series immediately payable. However, holders of a majority
of the principal amount may rescind this action except where a payment
default or a breach of certain covenants has occurred.
. If we satisfy certain conditions in either indenture, we may discharge
that indenture at any time by depositing with the trustee sufficient
funds or government obligations to pay when due the Debt Securities
outstanding under that indenture.
Events of Default. The indentures provide that the following are events of
default:
. Interest not paid for 30 days after due date.
. Principal or premium not paid when due.
. Sinking fund payment not paid for 30 days after due date.
. Covenant breach continuing for 60 days after notice.
. Occurrence of certain bankruptcy or insolvency events.
. Occurrence of any other event of default specified in the prospectus
supplement.
General Indenture Provisions that Apply Only to Senior Securities
. The indenture relating to the Senior Securities limits our ability and
the ability of any subsidiary of ours to assume or guarantee indebtedness
secured by mortgages, liens or other encumbrances upon our or our
subsidiary's property unless the Senior Securities will be equally and
ratably secured with such indebtedness.
. The indenture relating to the Senior Securities limits our ability and
the ability of any subsidiary of ours to sell or transfer property to a
lender or investor, which then, either directly or indirectly, leases the
property back to us or the subsidiary for a time period over three years.
. The indenture relating to the Senior Securities states that we may not
merge or consolidate with another company or sell all or substantially
all of our assets to another company unless certain conditions are met.
If these events occur, the other company will be required to assume our
responsibilities relating to the Debt Securities, and we will be released
from all liabilities and obligations.
General Indenture Provisions that Apply Only to Subordinated Securities
The Subordinated Securities will be subordinated to all "Superior
Indebtedness", which includes all indebtedness for money borrowed by us, except
indebtedness that is stated to be not superior to, or to have the same rank as,
the Subordinated Securities.
2
<PAGE>
Preferred Stock and Depositary Shares
We may issue our preferred stock, without par value, in one or more series
(the series being offered are referred to as "Preferred Stock"). We will
determine the dividend, voting, conversion and other rights of the series being
offered and the terms and conditions relating to its offering and sale at the
time of the offer and sale. We may also issue fractional shares of Preferred
Stock that will be represented by Depositary Shares and Depositary Receipts.
Common Stock
We may issue our common stock, par value $1.00 per share (the "Common
Stock"). Holders of Common Stock are entitled to receive dividends when
declared by the Board of Directors (subject to rights of preferred
stockholders). Each holder of Common Stock is entitled to one vote per share.
The holders of Common Stock have cumulative voting rights but no preemptive,
redemption or conversion rights.
Warrants
We may issue warrants for the purchase of Debt Securities, Preferred Stock or
Common Stock ("Securities Warrants"). We may issue warrants independently or
together with other securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends for the
company:
<TABLE>
<CAPTION>
Fiscal Year Ended
September 30,
------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges................... 2.28 2.39 1.92 1.06 2.40
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends........................... 2.28 2.23 1.70 * 2.06
</TABLE>
- --------
* Combined fixed charges and preferred stock dividends exceeded earnings (as
defined) by $4 million.
The above ratios are computed on a total enterprise basis including our
consolidated subsidiaries, plus our share of significant affiliates accounted
for on the equity method that are 50% or greater owned or whose indebtedness
has been directly or indirectly guaranteed by us. Earnings consist of income
from continuing operations before income taxes, 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.
Where You Can Find More Information About the Company
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
later information filed with the SEC will update and supersede this
information. We incorporate by reference the documents listed
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below and any future filings made with the SEC under Section 13(a), 13(c), 14,
or 14(d) of the Securities Exchange Act of 1934 until our offering is
completed:
(a) Annual Report on Form 10-K for the year ended September 30, 1998;
(b) The description of our 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;
(c) The description of our Rights to Purchase Series A Participating
Cumulative Preferred Stock, set forth in the Registration Statement on Form
8-A dated May 16, 1996; and
(d) The description of our 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.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address (or by visiting our website at
http://www.ashland.com):
Office of the Secretary
Ashland Inc.
50 E. RiverCenter Boulevard
P.O. Box 391
Covington, KY 41012-0391
606-815-3333
You should rely only on the information incorporated by reference or provided
in this prospectus or the prospectus supplement. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
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THE COMPANY
Our businesses are grouped into five industry segments: Ashland Chemical,
APAC, Valvoline, Refining and Marketing, and Arch Coal.
Ashland Chemical distributes industrial chemicals, solvents, thermoplastics
and resins, and fiberglass materials, and manufactures and sells a wide variety
of specialty chemicals and certain petrochemicals. APAC performs contract
construction work, including highway paving and repair, excavation and grading,
and bridge construction, and produces asphaltic and ready-mix concrete, crushed
stone and other aggregate, concrete block and certain specialized construction
materials in the southern and midwestern United States.
Valvoline is a marketer of branded, packaged motor oil and automotive
chemicals, automotive appearance products, 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(R) name.
Effective January 1, 1998, we and USX-Marathon completed a transaction to
form Marathon Ashland Petroleum LLC ("MAP"), which combined major portions of
the supply, refining, marketing and transportation operations of the two
companies. Marathon has a 62% interest in MAP, and we hold a 38% interest. MAP
operates seven refineries with a total crude oil refining capacity of 935,000
barrels per day. Refined products are distributed through a network of
independent and company-owned outlets in the Midwest, the upper Great Plains
and the southeastern United States. We account for our investment in MAP using
the equity method of accounting.
Our coal operations are conducted by Arch Coal, Inc., which is 55% owned by
us and is publicly traded. Arch Coal produces, transports, processes and
markets bituminous coal in Central Appalachia and the western and midwestern
United States. We account for our investment in Arch Coal using the equity
method of accounting.
We are a Kentucky corporation, organized on October 22, 1936, with our
principal executive offices located at 50 E. RiverCenter Boulevard, Covington,
Kentucky 41012 (Mailing Address: 50 E. RiverCenter Boulevard, P.O. Box 391,
Covington, Kentucky 41012-0391) (Telephone: (606) 815-3333).
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, we will use the
net proceeds we receive from the sale of the securities offered by this
prospectus and the accompanying prospectus supplement for general corporate
purposes. General corporate purposes may include additions to working capital,
capital expenditures, stock redemption, repayment of debt or the financing of
possible acquisitions.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth the general terms and provisions that
could apply to the Debt Securities. Each prospectus supplement will state the
particular terms that actually will apply to the Debt Securities included in
the supplement.
The Debt Securities will be either our senior debt securities (the "Senior
Securities") or our subordinated debt securities (the "Subordinated
Securities"). Under an indenture between us and Citibank, N.A., as Trustee (the
"Senior Indenture"), we have issued to date an aggregate of $1.45 billion of
Senior Securities. Subordinated Securities will be issued under an indenture
(the "Subordinated Indenture"), between us and a commercial bank to be
selected, as trustee. The Senior Indenture and the Subordinated Indenture are
together called the "Indentures".
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The following summary of certain provisions of the Indentures is not
complete. You should refer to the applicable provisions of the following
documents:
. the Senior Indenture, which is incorporated by reference to Exhibit 4(a)
to Registration Statement No. 33-39359, filed with the SEC on March 11,
1991, and
. the Subordinated Indenture, which is incorporated by reference to Exhibit
4.3 to Registration Statement No. 33-57011, filed with the SEC on
December 22, 1994.
Some of the capitalized terms used in the following discussion are defined in
the Indentures, and their definitions are incorporated by reference into this
prospectus.
General
Neither Indenture limits the aggregate principal amount of Debt Securities
that we may issue under that Indenture. The Debt Securities may be issued in
one or more series as we may authorize at various times. All Debt Securities
will be unsecured. The Senior Securities will have the same rank as all of our
other unsecured and unsubordinated debt. The Subordinated Securities will be
subordinated to Superior Indebtedness as described in the "Subordinated
Securities" section below. The Senior Securities and Subordinated Securities
may be combined into one series or offered separately. The prospectus
supplement relating to the particular series of Debt Securities being offered
will specify the amounts, prices and terms of those Debt Securities. These
terms may include:
. the title and the limit on the aggregate principal amount of the Debt
Securities;
. the date or dates on which the Debt Securities will mature;
. the annual rate or rates (which may be fixed or variable), if any, or the
method of determining such rate or rates, at which the Debt Securities
will bear interest;
. the date or dates from which such interest shall accrue and the date or
dates on which such interest will be payable;
. 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;
. whether such Debt Securities are to be Senior Securities or Subordinated
Securities;
. any redemption or sinking fund terms;
. any event of default or covenant with respect to the Debt Securities of a
particular series, if not set forth in this prospectus;
. whether the Debt Securities will be issued as Registered Securities (as
defined below) or as Bearer Securities (as defined below);
. 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
. any other terms of such series, which will not conflict with the terms of
applicable Indenture.
Unless the applicable prospectus supplement states otherwise, 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 appropriate trustee.
At our option, however, payment of interest may be made by check mailed to the
registered holders of the Debt Securities at their registered addresses.
We will issue the Debt Securities in fully registered form without coupons
("Registered Securities") unless the applicable prospectus supplement provides
for an issuance to be in bearer form with or without
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coupons ("Bearer Securities"). Unless the applicable prospectus states
otherwise, we will issue Debt Securities denominated in U.S. dollars in
denominations of $1,000 or multiples of $1,000 for Registered Securities and in
denominations of $5,000 or multiples of $5,000 for Bearer Securities. No
service charge will be made for any transfer or exchange of such Debt
Securities, but we may require payment beforehand of any related taxes or other
governmental charges. Debt Securities may also be issued pursuant to the
Indentures in transactions exempt from the registration requirements of the
Securities Act of 1933, and such Debt Securities will not be considered in
determining the aggregate amount of securities issued under the Registration
Statement.
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 the applicable prospectus supplement states otherwise, the covenants
contained in the Indentures and the Debt Securities will not provide special
protection to holders of Debt Securities if we enter into a highly leveraged
transaction, recapitalization or restructuring.
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 like
aggregate principal amount and tenor in different authorized denominations. In
addition, if Debt Securities of any series are issuable as both Registered
Securities and Bearer Securities, the holder may choose, upon written request,
and subject to the terms of the applicable Indenture, to exchange Bearer
Securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such series into Registered Securities of the
same series of any authorized denominations and of like aggregate principal
amount and tenor. Bearer Securities with appurtenant coupons surrendered in
exchange for Registered Securities between a Regular Record Date or a Special
Record Date and the relevant date for interest payment shall be surrendered
without the coupon relating to the interest payment date, and interest will not
be payable with respect to the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the holder of the coupon when due
in accordance with the terms of the applicable Indenture. Bearer Securities
will not be issued in exchange for Registered Securities.
You may present Debt Securities for exchange as provided above, and you may
present Registered Securities for registration of transfer (with a duly
executed form of transfer), at the office of the Security Registrar or at the
office of any transfer agent designated by us for such purpose with respect to
any series of Debt Securities and referred to in the applicable prospectus
supplement. This may be done without service charge and upon payment of any
taxes and other governmental charges as described in the applicable Indenture.
The Security Registrar or such transfer agent, as the case may be, will effect
the transfer or exchange upon being satisfied with the documents of title and
identity of the person making the request. We have appointed the applicable
trustee as Security Registrar for the applicable Indenture. If a prospectus
supplement refers to any transfer agents (in addition to the Security
Registrar) initially designated by us with respect to any series of Debt
Securities, we may at any time rescind the designation of any such transfer
agent or approve a change in the location through which such transfer agent
acts. However, if Debt Securities of a series are issuable solely as Registered
Securities, we 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, we 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. We may at any time designate additional transfer agents with respect to
any series of Debt Securities.
In the event of any redemption in part, we shall not be required to:
. 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
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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, or the date of such publication, if applicable;
. 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
. 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 restriction on the exchange, registration and transfer of
Global Securities, see "Global Securities" below.
Payment and Paying Agents
Unless the applicable prospectus supplement states otherwise, 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 U.S. as we may designate from time to time. Interest payment
on Bearer Securities and appurtenant coupons on any interest payment date will
be made only against surrender of the coupon relating to that interest payment
date. No payment with respect to any Bearer Security will be made at any of our
offices or agencies in the U.S. by check mailed to any U.S. address or by
transfer to an account maintained with a bank located in the U.S. However, if
(but only if) payment in U.S. dollars of the full amount of principal, premium,
if any, and interest on Bearer Securities denominated and payable in U.S.
dollars at all offices or agencies outside the U.S. is illegal or effectively
precluded by exchange controls or other similar restrictions, then such
payments will be made at the office of our paying agent in the Borough of
Manhattan, The City of New York.
Unless the applicable prospectus supplement indicates otherwise, 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 we may designate
from time to time. However, at our option, interest payments may be made by
check mailed to the address, as it appears in the Security Register, of the
person entitled to such payment. Unless otherwise indicated in the applicable
prospectus supplement, payment of any installment of interest on Registered
Securities will be made to the person in whose name such Registered Security is
registered at the close of business on the Regular Record Date for such
interest.
Unless the applicable prospectus supplement states otherwise, the Corporate
Trust Office of the trustee in the Borough of Manhattan, The City of New York,
will be designated (a) as our sole paying agent for payments with respect to
Debt Securities that are issuable solely as Registered Securities and (b) as
our 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. We will name
any paying agents outside the U.S. and any other paying agents in the U.S.
initially designated by us for the Debt Securities in the applicable prospectus
supplement. We 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. However, if Debt Securities of a series are
issuable solely as Registered Securities, we 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, we will be required to maintain
(a) 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 circumstance
described above, but not otherwise), and (b) a paying agent in a place of
payment located outside the U.S. where Debt Securities of such series and any
appurtenant coupons may be presented and surrendered for payment. However, if
the Debt Securities of such series are listed on the London Stock Exchange, the
Luxembourg Stock Exchange or any other stock exchange located outside the U.S.
and if the stock exchange requires it, we will maintain a paying agent in
London or Luxembourg or any other required city located outside the U.S., as
the case may be, for the Debt Securities of such series.
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All moneys we pay 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 becoming due and payable will be repaid to us, after
which the holder of such Debt Security or coupon will look only to us for such
payment.
Global Securities
The Debt Securities of a series may be issued in whole or in part in the form
of one or more global certificates (the "Global Securities") that we will
deposit with a depositary identified in the applicable prospectus supplement.
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 it represents, a Global Security
may not be transferred except as a whole (a) by the applicable depositary to a
nominee of the depositary, (b) by any nominee to the depositary itself or
another nominee, or (c) 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 applicable prospectus supplement. We
anticipate that the following provisions will generally apply to depositary
arrangements.
Upon the issuance of a Global Security in registered form, the depositary for
the 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 that Global Security to the accounts of persons that
have accounts with the depositary ("participants"). Such accounts shall be
designated by the dealers, underwriters or agents with respect to the
underlying Debt Securities or by us if such Debt Securities are offered and
sold directly by us. Ownership of beneficial interests in a Global Security
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable 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.
As long as the depositary for a Global Security, or its nominee, is the
registered owner of that Global Security, such depositary or nominee, as the
case may be, will be considered the sole owner or holder of the Debt Securities
represented by the Global Security for all purposes under the applicable
Indenture. Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to have any of the underlying Debt Securities
registered in their names, will not receive or be entitled to receive physical
delivery of any of the underlying Debt Securities in definitive form and will
not be considered the owners or holders under the Indenture relating to those
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 we, the trustee for the Debt
Securities, any paying agent, nor the registrar for the Debt Securities will be
responsible for any aspect of the records relating to or payments made by the
depositary or any participants on account of beneficial interests of the Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial interests.
We expect that the depositary for a series of Debt Securities or its nominee,
upon receipt of any payment of principal, premium, if any, or interest relating
to a permanent Global Security representing any of the Debt Securities,
immediately will credit participants' accounts with payments in amounts
proportionate to their
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respective beneficial interests in the principal amount of the Global Security
as shown on the records of the depositary or its nominee. We also expect that
payments by participants to owners of beneficial interests in the Global
Security held through those 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".
These payments will be the sole responsibility of those 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 us within 90 days, we will issue individual Debt Securities of
that series in exchange for the Global Security or Securities representing that
series. In addition, we may at any time in our sole discretion, subject to any
limitations described in the applicable prospectus supplement, determine not to
have any Debt Securities of a series represented by one or more Global
Securities. In such event, we will issue individual Debt Securities of such
series in exchange for the Global Security or Securities. Further, if we so
specify, an owner of a beneficial interest in a Global Security representing
Debt Securities of a series may, on terms acceptable to us, the trustee, and
the applicable depositary, receive individual Debt Securities of such series in
exchange for such beneficial interests, subject to any limitations described in
the applicable prospectus supplement. In any such instance, the owner of the
beneficial interest will be entitled to physical delivery of individual Debt
Securities equal in principal amount to the beneficial interest and to have the
Debt Securities registered in its name. These individual Debt Securities will
be issued in denominations, unless we specify otherwise, of $1,000 or integral
multiples of $1,000.
If an applicable prospectus supplement so states, 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. These temporary Global Securities will 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 Cedel
Bank, societe anonyme ("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 the 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 of these. 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 U.S. in connection with this
exchange.
Unless the applicable prospectus supplement states otherwise, we or our 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 on the applicable portion of the temporary Global Security
payable prior to the delivery of a definitive Debt Security. The certificate
must be based on statements provided to Euroclear or Cedel by its member
organizations. The certificate must be dated on the earlier of the date of the
first actual payment of interest on the Debt Security or the date of delivery
of the Debt Security in definitive form, and must state that on such date the
Debt Security is owned by:
. a person that is not a U.S. person and is not a financial institution
holding the obligation for purposes of resale during the Restricted
Period;
. a U.S. person that is either (a) the foreign branch of a U.S. financial
institution purchasing for its own account or for resale during the
Restricted Period or (b) a United States person who acquired its interest
through the foreign branch of a U.S. financial institution and who holds
the obligation through such financial institution on the date of
certification. In either case (a) or (b), the U.S. financial institution
must provide either 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 related regulations or has
provided a valid blanket certificate stating that the financial
institution will comply with such requirements) or
. 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 U.S. person or to a person within the United States or
its possessions.
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As used in this paragraph, the term "Restricted Period" means (a) the period
from the closing date until 40 days after or (b) any time if the obligation is
held as part of an unsold allotment or subscription.
Each of Euroclear and Cedel will in these circumstances credit the interest
received by it to the accounts of the beneficial owners of the temporary Global
Security (or to such other accounts as they may direct).
The beneficial owner of a Debt Security underlying a definitive Global
Security in bearer form may, upon at least 30 days' written notice to the
trustee given by it through either Euroclear or Cedel, exchange its interest in
that 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 U.S.
Senior Securities--Certain Restrictive Covenants
Limitations on Liens. Unless the applicable prospectus supplement states
otherwise, we will agree that neither we nor any Subsidiary of ours (as defined
in the Senior Indenture) will issue, assume or guarantee any Debt secured by a
mortgage, lien, pledge or other encumbrance ("Mortgages") upon real or personal
property of ours or of our Subsidiary that is located in the continental U.S.
without providing that the Senior Securities (and, if we choose, any other
existing or future indebtedness or obligation of equal rank) will be secured
equally and ratably or, if we so choose, prior to such Debt. However, this
provision shall not apply to the following:
. Mortgages existing on the date of the Senior Indenture;
. Mortgages affecting property of a corporation existing at the time it
becomes a Subsidiary of ours or at the time it is merged into or
consolidated with us or a Subsidiary of ours;
. Mortgages on property (a) existing at the time of the property's
acquisition, (b) to secure payment of all or part of the property's
purchase price, (c) to secure Debt incurred prior to, at the time of or
within 24 months after the property's acquisition for the purpose of
financing all or part of the property's purchase price or (d) assumed or
incurred in connection with the property's acquisition;
. Mortgages on property to secure all or part of the cost of repairing,
altering, constructing, improving, exploring, drilling or developing the
property, or to secure Debt incurred to provide funds for any such
purpose;
. Mortgages on (a) pipelines, gathering systems, pumping or compressor
stations, pipeline storage facilities or other related facilities, (b)
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, (c) office buildings,
laboratory and research facilities, retail service stations, retail or
wholesale sales facilities, terminals, bulk plants, warehouses or storage
or distribution facilities, (d) manufacturing facilities other than units
for the refining of crude oil, (e) the equipment of any of the foregoing
or (f) 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;
. 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;
. Mortgages which secure indebtedness owed by a Subsidiary of ours to us or
another Subsidiary of ours;
. Mortgages on property of any Subsidiary of ours principally engaged in a
financing or leasing business;
. Mortgages upon the oil, gas or other minerals produced or to be produced
(or on the related proceeds) from properties (other than those which were
acquired and which became productive on or before August 15, 1977) if,
each of those Mortgages has been or will be 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 is
later) of drilling or equipping such property; and
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. any extension, renewal or replacement (or successive extensions, renewals
or replacements), in whole or in part, of any Mortgage referred to in the
preceding items or of any Debt secured thereby, provided that the
original principal amount of Debt secured shall not exceed the principal
amount of Debt so secured at the time of such extension, renewal or
replacement. In addition, such extension, renewal or replacement Mortgage
will be limited to all or part of substantially the same property (plus
improvements) which secured the Mortgage.
Notwithstanding anything mentioned above, we and any one or more of our
Subsidiaries may issue, assume or guarantee Debt secured by Mortgages that
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 ours and our Subsidiaries that would otherwise be
subject to the foregoing restrictions, does not at any one time exceed 5% of
the stockholders' equity in us and our consolidated subsidiary companies as
shown on our audited consolidated balance sheet contained in our latest annual
report to stockholders.
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 from the sale or transfer 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 us or a Subsidiary of ours to perform any
contract or subcontract made with or at the request of the U.S., any State or
any department, agency or instrumentality of either.
"Debt" is defined to include any notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed.
Limitations on Sale and Lease-Back. Unless the applicable prospectus
supplement states otherwise, we will agree that neither we nor any Subsidiary
of ours 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,
to lease to us or a Subsidiary of ours for a period of more than three years
any real property located in the continental U.S. which has been or will be
sold or transferred by us or a Subsidiary of ours to the lender or investor or
to any person or organization to which funds have been or are to be advanced by
the lender or investor on the security of the leased property ("Sale and Lease-
Back Transactions"). This paragraph does not apply where either: (a) we or our
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) we (and in any such case we covenant and agree to do so),
within four months after the effective date of such Sale and Lease-Back
Transaction (whether made by us or our Subsidiary), apply to the retirement of
Debt of ours maturing by its terms more than one year after its original
creation ("Funded Debt"), an amount equal to the greater of (1) the net
proceeds of the sale of the real property leased pursuant to such arrangement
or (2) the fair value of the real property so leased at the time of entering
into such arrangement (as determined by the Board of Directors). This 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 Debt 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 us 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. We may not consolidate or merge
with any other person or convey or transfer all or substantially all of our
properties and assets to another person or permit another corporation to merge
into us, unless: (a) the successor is a person organized under the laws of the
United States or any state; (b) the successor person, if not us, assumes our
obligations on the Senior Securities and under the Senior Indenture; and (c)
certain other conditions are met.
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Subordinated Securities
Under the Subordinated Indenture, payment of the principal, interest and any
premium on the Subordinated Securities will generally be subordinated in right
of payment to the prior payment in full of all of our Superior Indebtedness.
"Superior Indebtedness" is defined as the principal of, premium, if any, and
accrued and unpaid interest on (whether outstanding on or created, incurred or
assumed after the date of execution of the Subordinated Indenture):
. our indebtedness for money borrowed (other than the Subordinated
Securities);
. guarantees by us of indebtedness for money borrowed of any other person;
. indebtedness evidenced by notes, debentures, bonds or other instruments
of indebtedness for the payment of which we are responsible or liable, by
guarantees or otherwise;
. our obligations under any agreement relating to any interest rate or
currency swap, interest rate cap, interest rate collar, interest rate
future, currency exchange or forward currency transaction or any similar
interest rate or currency hedging transaction, whether outstanding on the
date of the Subordinated Indenture or created, incurred or assumed
afterward; and
. our obligations 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 our balance sheet as a liability.
Superior Indebtedness shall also be deemed to include modifications,
renewals, extensions and refundings of any of the types of indebtedness,
liability, obligations or guarantee listed above, unless the relevant
instrument provides that such indebtedness, liability, obligation or guarantee,
or such modification, renewal, extension or refunding, is not superior in right
of payment to the Subordinated Securities. Superior Indebtedness shall not,
however, be deemed to include (a) any of our obligations to any Subsidiary of
ours and (b) any of our indebtedness, guarantee or obligations of the type set
forth above which is subordinate or junior in ranking in any respect to any of
our other indebtedness, guarantees or obligations.
No payment by us 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 occurs and is continuing and (unless such default or event of
default is our failure to pay principal or interest on any instrument
constituting Superior Indebtedness) written notice of this default or event of
default is given to the trustee by us or to us and the trustee by the holders
or their representatives of at least 10% in principal amount of any Superior
Indebtedness. We may resume payments on the Subordinated Securities (unless
otherwise prohibited by the related Indenture) if (a) such default is cured or
waived, or (b) 120 days pass after the notice is given, if such default is not
the subject of judicial proceedings, unless such default is our failure to pay
principal or interest on any Superior Indebtedness.
In the event that any Subordinated Security is declared due and payable
before its specified date, or upon any payment or distribution of assets by us
to creditors upon our dissolution, winding up, liquidation or reorganization,
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 any holder's 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 our assets applicable to Superior Indebtedness until the
Subordinated Securities are paid in full.
By reason of this subordination, in the event of insolvency, our creditors
who are holders of Superior Indebtedness, as well as certain of our general
creditors, may recover more, ratably, than the holders of the Subordinated
Securities.
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The Subordinated Indenture will not limit the amount of Superior Indebtedness
or Debt Securities which may be issued by us or any of our subsidiaries.
Modification of the Indentures
Under each Indenture our rights and obligations and the rights of the holders
may be modified with the consent of the holders of at least two-thirds in
principal amount of the then outstanding Debt Securities of each series
affected by the modification. None of the following modifications, however, is
effective against any holder without the consent of the holders of all of the
affected outstanding Debt Securities:
. changing the maturity, installment or interest rate of any of the Debt
Securities;
. reducing the principal amount, any premium or the rate of interest of any
of the Debt Securities;
. changing the currency, currencies or currency unit or units in which any
principal, premium or interest of any of the Debt Securities is payable;
. changing any of our obligations to maintain an office or agency in the
places and for the purposes required by the Indentures;
. impairing any right to take legal action for an overdue payment;
. reducing the percentage required for modifications or waivers of
compliance with the Indentures; or
. with certain exceptions, modifying the provisions for the waiver of
certain covenants and defaults and any of the foregoing provisions.
Any actions we or the trustee may take toward adding to our covenants, adding
Events of Default or establishing the structure or terms of the Debt Securities
as permitted by the Indentures will not require the approval of any holder of
Debt Securities. In addition, we or the trustee may cure ambiguities or
inconsistencies in the Indentures or make other provisions without the approval
of any holder as long as no holder's interests are materially and adversely
affected.
Waiver of Certain Covenants
The Indentures provide that we will not be required to comply with certain
restrictive covenants (including those described above under "Senior
Securities--Certain Restrictive Covenants") if the holders of at least two-
thirds in principal amount of each series of outstanding Debt Securities
affected waive compliance with the restrictive covenants.
Events of Default, Notice and Waiver
"Event of Default" when used in an Indenture, will mean any of the following
in relation to a series of Debt Securities:
. failure to pay interest on any Debt Security for 30 days after the
interest becomes due;
. failure to pay the principal or any premium on any Debt Security when
due;
. failure to deposit any sinking fund payment for 30 days after such
payment becomes due;
. failure to perform or breach of any other covenant or warranty in the
Indenture that continues for 60 days after our being given notice from
the trustee or the holders of at least 25% in principal amount of the
outstanding Debt Securities of the series;
. certain events of bankruptcy, insolvency or reorganization of ours; or
. any other Event of Default provided for Debt Securities of that series.
If any Event of Default relating to outstanding Debt Securities of any series
occurs and is continuing, either the trustee or the holders of at least than
25% in principal amount of the outstanding Debt Securities of that series may
declare the principal of all of the outstanding Debt Securities of such series
to be due and immediately payable.
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The Indentures provide that the holders of at least a majority in principal
amount of the outstanding Debt Securities of any series may direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee, or of exercising any trust or power conferred on the trustee, with
respect to the Debt Securities of such series. The trustee may act in any way
that is consistent with such directions and may decline to act if any such
direction is contrary to law or to the Indentures or would involve such trustee
in personal liability.
The Indentures provide that the holders of at least a majority in principal
amount of the outstanding Debt Securities of any series may on behalf of the
holders of all of the outstanding Debt Securities of the series waive any past
default (and its consequences) under the Indentures relating to such series,
except a default (a) in the payment of the principal of (or premium, if any) or
interest on any of the Debt Securities of such series or (b) with respect to 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 Debt 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 to act with the required standard of
care, to be indemnified by the holders of the Debt Securities of the relevant
series before proceeding to exercise any right or power under the Indentures at
the request of those holders.
The Indentures require the trustee to, within 90 days after the occurrence of
a default known to it with respect to any series of outstanding Debt
Securities, give the holders of that series notice of the default if uncured
and unwaived. However, the trustee may withhold this notice if it in good faith
determines that the withholding of this notice is in the interest of those
holders, except that the trustee may not withhold this notice in the case of a
default in payment of principal, premium, interest or sinking fund installment
with respect to any Debt Securities of the series ("payment"). The above notice
shall not be given until at least 30 days after the occurrence of a default in
the performance of or a breach of a covenant or warranty in the applicable
Indenture other than a covenant to make payment. The term "default" for the
purpose of this provision 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 that series.
Each Indenture requires us to file annually with the trustee a certificate,
executed by one of our officers, indicating whether the officer has knowledge
of any default under the Indenture.
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 us or the holders of at least 10% in principal amount of the outstanding
Debt Securities of such series, we or such holders may call a meeting upon
notice given in accordance with the provisions described in "Notices" below.
Persons entitled to vote a majority in principal amount of the outstanding Debt
Securities of a series shall constitute a quorum at a meeting of the holders of
Debt Securities of such series. However, 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 at least two-thirds in principal amount of the outstanding Debt
Securities of a series, the persons entitled to vote two-thirds in principal
amount of the outstanding Debt Securities of such series shall constitute a
quorum. In the absence of a quorum, a meeting called by us or the trustee shall
be adjourned for a period of at least 10 days, and in the absence of a quorum
at any such adjourned meeting, the meeting shall be further adjourned for a
period of at least 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 holders of a specified percentage in principal
amount of outstanding Debt 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 the specified percentage in
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principal amount of the outstanding Debt 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 Debt 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 the specified
percentage of outstanding Debt Securities of any series affected (acting as one
class), only the principal amount of outstanding Debt Securities of any series
represented at a meeting or adjourned meeting duly reconvened at which a quorum
is present as described above and voting in favor of such action shall be
counted for purposes of calculating the aggregate principal amount of
outstanding Debt Securities of all series affected 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 any other cities
specified in the Bearer Securities. For holders of Bearer Securities, notices
will also be mailed to those 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 information. Notices to holders of
Registered Securities will be sent by mail to the addresses 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 related coupons will pass by delivery.
We, the appropriate trustee and any agent of us or the 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 (whether or not such security
or coupon is overdue and notwithstanding any notice to the contrary) for the
purpose of making payment and for all other purposes.
Replacement of Securities and Coupons
We will replace any mutilated Debt Security and any Debt Security with a
mutilated coupon at the expense of the holder upon surrender of the mutilated
Debt Security or Debt Security with a mutilated coupon to the appropriate
trustee. We will replace Debt Securities or coupons that are destroyed, stolen
or lost at the expense of the holder upon delivery to the appropriate trustee
of evidence of the destruction, loss or theft of the Debt Securities or coupons
satisfactory to us and to the trustee. In the case of any coupon which is
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 relates. In the case of a destroyed,
lost or stolen Debt Security or coupon, an indemnity satisfactory to the
appropriate trustee and us may be required at the expense of the holder of such
Debt Security or coupon before a replacement Debt Security will be issued.
Defeasance
The Indentures contain a provision that, if made applicable to any series of
Debt Securities, permits us to elect (a) to defease and be discharged from all
of our obligations (subject to limited exceptions) with respect to any series
of Debt Securities then outstanding ("legal defeasance") or (b) to be released
from our obligations under certain restrictive covenants (including those
described above under "Senior Securities--Certain Restrictive Covenants")
("covenant defeasance"). To make either of the above elections, we must
. deposit in trust with the trustee (a) in the case of Debt Securities and
coupons denominated in U.S. dollars, U.S. Government Obligations (as
defined in the Indentures) and (b) 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 principal
and interest in accordance with their terms will provide sufficient
money, U.S. Government Obligations and/or Foreign Government Obligations
(as the case may be), without reinvestment, to repay in full those Debt
Securities; and
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. deliver to the trustee an opinion of counsel that holders of the Debt
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 (in the case of legal defeasance only, such
opinion of counsel to be based on a ruling of the Internal Revenue
Service or other change in applicable Federal income tax law.)
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 defined below)
of the Company 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 is 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 us to purchase all or any part of
the holder's Debt Securities on the date (the "Repurchase Date") that is 100
days after the later of (1) public notice of such Change in Control and (2) 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 later of public notice of the
Change in Control and the decrease in the rating of such Debt Securities, we
are 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 date by which the repurchase right must be exercised (the "repurchase
date"), the applicable price for such Debt Securities and the procedure which
the holder must follow to exercise this right. We 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 us (or an agent designated by us 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. We 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 when
(a) 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 our outstanding voting stock,
otherwise than through a transaction consummated with the prior approval of our
Board of Directors or (b) during any period of two consecutive years,
individuals who at the beginning of such period constitute our Board of
Directors (together with any new director whose election by our Board of
Directors or whose nomination for election by our 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 will be required to consider the interests of our stockholders,
employees and other creditors which may not necessarily 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
acquiror 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 these
holders. We cannot presently predict the source of such funds, but expect that
the source would be determined in the context of the overall consideration of
such a transaction.
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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
under which unsecured debt obligations of ours are outstanding. The trustee has
other customary banking relationships with us and our affiliates.
DESCRIPTION OF PREFERRED STOCK
General. Our Second Restated Articles of Incorporation, as amended (the
"Restated Articles") authorize our Board of Directors, 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 of these series. We may amend from time to time our Restated
Articles to increase the number of authorized shares of Preferred Stock. Any
such amendment would require the approval of the holders of two-thirds 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, we have no
preferred stock outstanding. We have 500,000 shares designated as Series A
Participating Cumulative Preferred Stock reserved for issuance upon exercise of
rights under the Rights Agreement described below under "Preferred Stock
Purchase Rights".
The particular terms of any series of Preferred Stock being offered by us
under this shelf registration will be described in the prospectus supplement
relating to that series of Preferred Stock. Those terms may include:
. the title and liquidation preference per share of the Preferred Stock and
the number of shares offered;
. the purchase price of the Preferred Stock;
. the dividend rate (or method of calculation), the dates on which
dividends will be paid and the date from which dividends will begin to
accumulate;
. any redemption or sinking fund provisions of the Preferred Stock;
. any conversion provisions of the Preferred Stock;
. the voting rights, if any, of the Preferred Stock; and
. any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions of the
Preferred Stock.
If the terms of any series of Preferred Stock being offered differ from the
terms set forth in this prospectus, those terms will also be disclosed in the
prospectus supplement relating to that series of Preferred Stock. The summary
in this prospectus is not complete. You should refer to the Articles of
Amendment to the Restated Articles establishing a particular series of
Preferred Stock which will be filed with the Secretary of State of the
Commonwealth of Kentucky and the SEC in connection with the offering of the
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
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dates as set forth in the prospectus supplement. With respect to each 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 our voluntary or involuntary liquidation,
dissolution or winding up and before any distribution is made to the holders of
Common Stock, the amount set forth in the applicable prospectus supplement, but
in such case the holders of Preferred Stock shall not be entitled to any other
or further payment. If upon any such liquidation, dissolution or winding up our
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, our entire remaining net assets 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 series are respectively entitled.
Redemption. All shares of any series of Preferred Stock shall be redeemable
to the extent set forth in the prospectus supplement relating to the 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 applicable prospectus supplement.
Voting Rights. Except as indicated in the prospectus supplement, the holders
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 will
vote together as one class.
Preferred Stock Purchase Rights. On May 16, 1996, we 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 our Common Stock
(the "Rights"). We issued the dividend to shareholders of record on the date of
the adoption of the Rights Agreement, and holders of shares of Common Stock
issued since 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 our shareholders against coercive takeover
tactics. The purpose of the Rights is to encourage potential acquirors to
negotiate with our 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 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 its
holder to purchase from us one 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) any time
that we learn that a person or group (including any affiliate or associate of
the person or group) has acquired, or has obtained the right to acquire,
beneficial ownership of 15% or more of our outstanding Common Stock (the person
or group being called an "Acquiring Person"), unless provisions preventing
accidental triggering of the Rights apply and (b) the close of business on the
date, if any, designated by our Board of Directors following the commencement
of, or first public disclosure of an intent to commence, a tender or exchange
offer for 15% or more of our outstanding Common Stock (the earlier of such
dates being called the "Distribution Date").
In the event that, following the Distribution Date, we are acquired in a
merger or other business combination by a publicly traded Acquiring Person or
its associate or affiliate or 50% or more of our assets or assets representing
50% or more of our revenues or cash flow are sold, leased, exchanged or
transferred in
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another manner (in one or more transactions) to a publicly traded Acquiring
Person or its associate or affiliate, 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
we are acquired in a merger or other business combination by a non-publicly
traded Acquiring Person or its associate or affiliate or 50% or more of our
assets or assets representing 50% or more of our revenues or cash flow are
sold, leased, exchanged or otherwise transferred (in one or more transactions)
to a non-publicly traded Acquiring Person or its associate or affiliate, each
Right will entitle its holder (subject to the next paragraph) to purchase, for
the Purchase Price, at the holder's option, (a) that number of shares of the
surviving corporation (including us, if we are the surviving corporation) in
the transaction with such entity 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.
Any Rights that are at any time beneficially owned by an Acquiring Person (or
any affiliate or associate) will be null and void and nontransferable, and any
holder of such Right (including any purported transferee or subsequent holder)
will be unable to exercise or transfer the Right.
The Rights will expire at the close of business on May 16, 2006, unless
redeemed before that time. At any time prior to the earlier of (a) the time 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 (this amount is subject to adjustment as provided in the
Rights Agreement).
The following summary is not complete and is not intended to give full effect
to provisions of statutory or common law. You should refer to the applicable
provisions of the Rights Agreement and the Form of Right Certificate, which are
incorporated by reference to Exhibits 4(a) and 4(c), respectively, to our Form
8-A, filed with the SEC on May 16, 1996, into Exhibit 4.5 to the Registration
Statement.
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 us
and not approved by our 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 us. 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 our 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 us and such 10% shareholder unless (a)
the transaction is approved by a majority of our continuing directors (as
defined) or (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 our independent directors (as defined) approves such combination
before the date such shareholder becomes a 10% shareholder.
The Restated Articles also provide that (a) the Board of Directors is
classified into three classes, (b) 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 our then outstanding voting stock, (c) the
Board of Directors may adopt By-laws concerning the conduct of, and matters
considered at, meetings of shareholders, including special
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<PAGE>
meetings, (d) 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 our then outstanding voting stock and (e) 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
our then outstanding voting stock.
DESCRIPTION OF DEPOSITARY SHARES
General. We may, at our option, elect to offer fractional shares of Preferred
Stock, rather than full shares of Preferred Stock. If we exercise this option,
we will issue to the public receipts for Depositary Shares, and each of these
Depositary Shares will represent a fraction (to be set forth in the applicable
prospectus supplement) of a share of a particular series of Preferred Stock.
The shares of any series of Preferred Stock underlying the Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
us and a bank or trust company selected by us (the "Depositary"). The
Depositary will have its principal office in the United States and a combined
capital and surplus of at least $50,000,000. 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 underlying
that Depositary Share, to all the rights and preferences of the Preferred Stock
underlying that Depositary Share. Those rights include 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 underlying the Depositary Shares, 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. The following
summary of the Deposit Agreement, the Depositary Shares and the Depositary
Receipts is not complete. You should refer to the forms of the Deposit
Agreement and Depositary Receipts that will be filed with the SEC in connection
with the offering of the specific Depositary Shares.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon our written order, issue temporary Depositary Receipts
substantially identical to the definitive Depositary Receipts but not in
definitive form. These temporary Depositary Receipts entitle their holders to
all the rights of definitive Depositary Receipts which are to be prepared
without unreasonable delay. Temporary Depositary Receipts will then be
exchangeable for definitive Depositary Receipts at our expense.
Dividends and Other Distributions. The Depositary will distribute all cash
dividends or other cash distributions received with respect to the Preferred
Stock to the record holders of Depositary Shares relating to the Preferred
Stock in proportion to the number of Depositary Shares owned by those holders.
If there is a distribution other than in cash, the Depositary will distribute
property received by it to the record holders of Depositary Shares that are
entitled to receive the distribution, unless the Depositary determines that it
is not feasible to make the distribution. If this occurs, the Depositary may,
with our approval, sell the property and distribute the net proceeds from the
sale to the applicable 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 that 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
that series of the Preferred Stock. Whenever we redeem shares of Preferred
Stock that are 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.
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<PAGE>
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 the notice to the record holders of the
Depositary Shares underlying the 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 then
try, as far as practicable, to vote the number of shares of Preferred Stock
underlying those Depositary Shares in accordance with such instructions, and we
will agree to take all actions which may be deemed necessary by the Depositary
to enable the Depositary to do so. The Depositary will not vote the shares of
Preferred Stock to the extent it does not receive specific instructions from
the holders of Depositary Shares underlying the Preferred Stock.
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 us 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
us or by the Depositary only if (a) all outstanding Depositary Shares have been
redeemed or (b) there has been a final distribution of the underlying Preferred
Stock in connection with our liquidation, dissolution or winding up and the
Preferred Stock has been distributed to the holders of Depositary Receipts.
Charges of Depositary. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. We will also 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 those 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 us that we deliver to the Depositary and
that we are required to furnish to the holders of the Preferred Stock.
Neither we nor the Depositary will be liable if either of us is prevented or
delayed by law or any circumstance beyond our control in performing our
respective obligations under the Deposit Agreement. Our obligations and those
of the Depositary will be limited to performance in good faith of our
respective duties under the Deposit Agreement. Neither we nor they will be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is
furnished. We and the Depositary 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 notice to us of its election to do so. We may remove the
Depositary at any time. Any resignation or removal will take effect upon the
appointment of a successor Depositary and its acceptance of such appointment.
The 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.
DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
300,000,000 shares of Common Stock. As of December 31, 1998, we had 74,645,734
shares of Common Stock issued and had reserved 12,029,530 additional shares of
Common Stock for issuance under our various stock and compensation incentive
plans.
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The following summary is not complete and is not intended to give full effect
to provisions of statutory or common law. You should refer to the applicable
provisions of the following documents:
. the Restated Articles, which are incorporated by reference to Exhibit 3
to our Form 10-Q for the quarter ended December 31, 1997, and
. the By-laws, as amended (the "By-laws"), which are incorporated by
reference to Exhibit 3 to Registrant's Form 10-K/A (amendment No. 1),
filed with the SEC on May 1, 1998, for a complete statement of the terms
and rights of the Common Stock.
Dividends. The holders of Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors, out of funds legally
available for their payment subject to the rights of holders of the Preferred
Stock subject to the rights of holders of Preferred Stock.
Voting Rights. The holders of Common Stock are entitled to one vote per share
on all matters submitted to a vote of shareholders. The holders of Common Stock
also possess cumulative voting rights. Under cumulative voting, a shareholder
may multiply the number of shares owned by the number of directors to be
elected and either 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.
Rights Upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of Common Stock will be
entitled to share equally in any of our assets available for distribution after
the payment in full of all debts and distributions and after the holders of all
series of outstanding Preferred Stock have received their liquidation
preferences in full.
Miscellaneous. The outstanding shares of Common Stock are fully paid and
nonassessable. The holders of Common Stock are not entitled to preemptive or
redemption rights. Shares of Common Stock are not convertible into shares of
any other class of capital stock. Harris Trust and Savings Bank, Chicago,
Illinois, is the transfer agent and registrar for the Common Stock.
DESCRIPTION OF SECURITIES WARRANTS
We 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
and may be attached to or separate from any offered securities. Each series of
Securities Warrants will be issued under a separate warrant agreement (a
"Securities Warrant Agreement") to be entered into between us and a bank or
trust company, as warrant agent (the "Securities Warrant Agent"). The
Securities Warrant Agent will act solely as our agent in connection with the
Securities Warrants and will not assume any obligation or relationship of
agency or trust for or with any registered holders of Securities Warrants or
beneficial owners of Securities Warrants. This summary of some provisions of
the Securities Warrants is not complete. You should refer to the Securities
Warrant Agreement, including the forms of Securities Warrant Certificate
representing the Securities Warrants, relating to the specific Securities
Warrants being offered for the complete terms of the Securities Warrant
Agreement and the Securities Warrants. That Securities Warrant Agreement,
together with the terms of Securities Warrant Certificate and Securities
Warrants, will be filed with the SEC in connection with the offering of the
specific Securities Warrants.
The particular terms of any issue of Securities Warrants will be described in
the prospectus supplement relating to the issue. Those terms may include:
. 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;
. 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;
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<PAGE>
. 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;
. 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");
. United States Federal income tax consequences applicable to such
Securities Warrants; and
. 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 its holder to purchase the principal
amount of Debt Securities or the number of shares of Preferred Stock or Common
Stock at the exercise price set forth in, or calculable as set forth in, the
applicable prospectus supplement. The exercise price may be subject to
adjustment upon the occurrence of certain events as set forth in the prospectus
supplement. After the close of business on the Expiration Date (or such later
date to which the Expiration Date may be extended by us), 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
applicable prospectus supplement.
Prior to the exercise of any Securities Warrants to purchase Debt Securities,
Preferred Stock or Common Stock, holders of the 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:
. in the case of Securities Warrants for the purchase of Debt Securities,
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
. in the case of Securities Warrants for the purchase of Preferred Stock or
Common Stock, the right 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
We may sell the Debt Securities, Preferred Stock, Depositary Shares, Common
Stock or Securities Warrants (together referred to as the "Offered Securities")
(a) through underwriters or dealers; (b) directly to one or a limited number of
institutional purchasers; or (c) through agents. This prospectus or the
applicable prospectus supplement will set forth the terms of the offering of
any Offered Securities, including the name or names of any underwriters,
dealers or agents, the price of the Offered Securities and the net proceeds to
us from such sale, any underwriting commissions or other items constituting
underwriters' compensation.
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 applicable prospectus supplement, the obligations of the underwriters or
agents to purchase the Offered Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all the Offered
Securities if any are purchased. Any initial public offering price and any
underwriting commissions or other items constituting underwriters' compensation
may be changed from time to time.
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If a dealer is utilized in the sale of any Offered Securities, we 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.
We may sell Offered Securities directly 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 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 an applicable prospectus supplement so indicates, we will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Offered Securities from us at the public offering
price set forth in the prospectus supplement under delayed delivery contracts
providing for payment and delivery on a specified date in the future. These
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 the contracts.
Under agreements entered into with us, agents and underwriters who
participate in the distribution of the Offered Securities may be entitled to
indemnification by us against certain civil liabilities, including liabilities
under the Securities Act of 1933, or to contribution with respect to payments
which the agents or underwriters may be required to make. Agents and
underwriters may be customers of, engage in transactions with or perform
services for us in the ordinary course of business.
LEGAL MATTERS
The validity of the issuance of the Offered Securities will be passed upon
for us 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., our Senior
Vice President, General Counsel and Secretary. Cravath, Swaine & Moore has in
the past represented and continues to represent us in other matters on a
regular basis. Samuel C. Butler is a director of ours and a partner in the law
firm of Cravath, Swaine & Moore and owns beneficially 65,325 shares of our
common stock. Thomas L. Feazell owns beneficially 143,304 shares of our common
stock.
EXPERTS
The consolidated financial statements and schedule of Ashland Inc.
incorporated by reference or included in Ashland Inc.'s Annual Report (Form 10-
K) for the year ended September 30, 1998, 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 have been 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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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
Filing Fee for Registration Statement........................... $ 64,304
Legal Fees and Expenses......................................... 50,000
Accounting Fees and Expenses.................................... 30,000
Trustee's Fees and Expenses..................................... 25,000
Printing and Engraving Fees..................................... 20,000
Miscellaneous................................................... 15,000
--------
Total....................................................... $204,304
========
</TABLE>
All of the above amounts, other than the Commission filing fee, are estimates
only.
Item 15. Indemnification of Directors and Officers.
Sections 271B.8-500 through 580 of the Kentucky Business Corporation Act
contain detailed provisions for indemnification of directors and officers of
Kentucky corporations against judgments, penalties, fines, settlements and
reasonable expenses in connection with litigation. Under Kentucky law, the
provisions of a company's articles and by-laws may govern the indemnification
of officers and directors in lieu of the indemnification provided for by
statute. The Registrant has elected to indemnify its officers and directors
pursuant to its Restated Articles, its By-laws and by contract rather than to
have such indemnification governed by the statutory provisions.
Article X of the Restated Articles permits, but does not require, the
Registrant to indemnify its directors, officers and employees to the fullest
extent permitted by law. The Registrant's By-laws require indemnification of
officers and employees of the Registrant and its subsidiaries under certain
circumstances. The Registrant has entered into indemnification contracts with
each of its directors that require indemnification to the fullest extent
permitted by law, subject to certain exceptions and limitations.
The Registrant has purchased insurance which insures (subject to certain
terms and conditions, exclusions and deductibles) the Registrant against
certain costs which it might be required to pay by way of indemnification to
its directors or officers under its Restated Articles or By-laws,
indemnification agreements or otherwise and protects individual directors and
officers from certain losses for which they might not be indemnified by the
Registrant. In addition, the Registrant has purchased insurance which provides
liability coverage (subject to certain terms and conditions, exclusions and
deductibles) for amounts which the Registrant, or the fiduciaries under its
employee benefit plans, which may include its directors, officers and
employees, might be required to pay as a result of a breach of fiduciary duty.
II-1
<PAGE>
Item 16. Exhibits.
The following Exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
<C> <S> <C>
**1.1 --Form of Underwriting Agreement.
*1.2 --Form of Distribution Agreement.
3.1 --Second Restated Articles of Incorporation of the
Company, as amended effective January 30, 1998
(incorporated by reference to Exhibit 3 to Registrant's
Form 10-Q for the quarter ended December 31, 1997).
3.2 --By-laws of the Company, as amended effective March 19,
1998 (incorporated by reference to Exhibit 3 to
Registrant's Form 10-K/A (Amendment No. 1), filed with the
Commission on May 1, 1998).
4.1 --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 (incorporated by reference to
Exhibit 4(a) to Registration Statement No. 33-39359, filed
with the Commission on March 11, 1991).
4.2 --Form of Senior Security (incorporated by reference to
Exhibit 4(a) to Registration Statement No. 33-39359, filed
with the Commission on March 11, 1991).
4.3 --Form of Indenture for Subordinated Securities
(incorporated by reference to Exhibit 4.3 to Registration
Statement No. 33-57011, filed with the Commission on
December 22, 1994).
4.4 --Form of Subordinated Security (incorporated by reference
to Exhibit 4.4 to Registration Statement No. 33-57011,
filed with the Commission on December 22, 1994).
4.5 --Rights Agreement dated as of May 16, 1996, between the
Company and Harris Trust and Savings Bank, together with
Form of Right Certificate, as amended (incorporated by
reference to Exhibits 4(a) and 4(c), respectively, to
Registrant's Form 8-A, filed with the Commission on May
16, 1996).
**4.6 --Form of Warrant Agreement for Debt Securities.
**4.7 --Form of Warrant Certificate for Debt Securities.
**4.8 --Form of Warrant Agreement for Preferred Stock.
**4.9 --Form of Warrant Certificate for Preferred Stock.
**4.10 --Form of Warrant Agreement for Common Stock.
**4.11 --Form of Warrant Certificate for Common Stock.
**4.12 --Form of Deposit Agreement for Depositary Shares.
**4.13 --Form of Depositary Receipt.
4.14 --Form of Certificate of Common Stock, par value $1.00 per
share, of the Company (incorporated by reference to
Exhibit 4(e) to Registration Statement No. 33-60040, filed
with the Commission on March 26, 1993).
4.15 --Form of Debt Securities (Certificated Medium-Term Note,
Series H, Fixed Rate) (incorporated by reference to
Exhibit 4.15 to Post-Effective Amendment No. 2 to
Registration Statement No. 33-57011, filed with the
Commission on December 18, 1996).
4.16 --Form of Debt Securities (Certificated Medium-Term Note,
Series H, Floating Rate) (incorporated by reference to
Exhibit 4.16 to Post-Effective Amendment No. 2 to
Registration Statement No. 33-57011, filed with the
Commission on December 18, 1996).
4.17 --Form of Debt Securities (Book-Entry Medium-Term Note,
Series H, Fixed Rate) (incorporated by reference to
Exhibit 4.17 to Post-Effective Amendment No. 2 to
Registration Statement No. 33-57011, filed with the
Commission on December 18, 1996).
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<C> <S>
4.18 --Form of Debt Securities (Book-Entry Medium-Term Note,
Series H, Floating Rate) (incorporated by reference to
Exhibit 4.18 to Post-Effective Amendment No. 2 to
Registration Statement No. 33-57011, filed with the
Commission on December 18, 1996).
* 5 --Opinion of Thomas L. Feazell, Esq.
*12 --Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
*23.1 --Consent of Ernst & Young LLP.
*23.2 --Consent of Thomas L. Feazell, Esq. (included as part of
Exhibit 5).
*24 --Power of Attorney, including resolutions of the Board of
Directors.
*25 --Form T-1 Statement of Eligibility and Qualification of
Trustee under the Trust Indenture Act of 1939 for
Citibank, N.A.
</TABLE>
- --------
*Filed herewith
**To be filed
Item 17. Undertakings.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(B) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
(C) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy, as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(D) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(E) The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all the requirements
for filing on Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Russell, Commonwealth of Kentucky, on January 15, 1999.
ASHLAND INC.,
/s/ Thomas L. Feazell
By___________________________________
Thomas L. Feazell
Senior Vice President, General
Counsel and Secretary
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities
indicated on the fifteenth day of January, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chairman of the Board and Chief Executive
___________________________________________ Officer (Principal Executive Officer)
Paul W. Chellgren
* Senior Vice President and Chief Financial
___________________________________________ Officer (Principal Financial Officer)
J. Marvin Quin
* Administrative Vice President and
___________________________________________ Controller (Principal Accounting Officer)
Kenneth L. Aulen
* Director
___________________________________________
Samuel C. Butler
* Director
___________________________________________
Frank C. Carlucci
* Director
___________________________________________
Ernest H. Drew
* Director
___________________________________________
James B. Farley
* Director
___________________________________________
Ralph E. Gomory
* Director
___________________________________________
Bernadine P. Healy
* Director
___________________________________________
Mannie L. Jackson
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Director
___________________________________________
Patrick F. Noonan
* Director
___________________________________________
Jane C. Pfeiffer
* Director
___________________________________________
Michael D. Rose
* Director
___________________________________________
William L. Rouse, Jr
</TABLE>
*By__________________________________
Thomas L. Feazell
Attorney-in-fact
- --------
*Original powers of attorney authorizing, Paul W. Chellgren, Thomas L.
Feazell and David L. Hausrath and each of them to sign the Registration
Statement and amendments thereto on behalf of the above-mentioned directors
and officers of the Registrant have been filed with the Commission as
Exhibit 24 to the Registration Statement.
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S> <C>
**1.1 Form of Underwriting Agreement.
*1.2 Form of Distribution Agreement.
3.1 Second Restated Articles of Incorporation of the Company, as
amended effective January 30, 1998 (incorporated by reference
to Exhibit 3 to Registrant's Form 10-Q for the quarter ended
December 31, 1997).
3.2 By-laws of the Company, as amended effective March 19, 1998
(incorporated by reference to Exhibit 3 to Registrant's Form
10-K/A (Amendment No. 1), filed with the Commission on May 1,
1998).
4.1 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 (incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-39359, filed with the Commission
on March 11, 1991).
4.2 Form of Senior Security (incorporated by reference to Exhibit
4(a) to Registration Statement No. 33-39359, filed with the
Commission on March 11, 1991).
4.3 Form of Indenture for Subordinated Securities (incorporated by
reference to Exhibit 4.3 to Registration Statement No. 33-
57011, filed with the Commission on December 22, 1994).
4.4 Form of Subordinated Security (incorporated by reference to
Exhibit 4.4 to Registration Statement No. 33-57011, filed with
the Commission on December 22, 1994).
4.5 Rights Agreement dated as of May 16, 1996, between the Company
and Harris Trust and Savings Bank, together with Form of Right
Certificate, as amended (incorporated by reference to Exhibits
4(a) and 4(c), respectively, to Registrant's Form 8-A, filed
with the Commission on May 16, 1996).
**4.6 Form of Warrant Agreement for Debt Securities.
**4.7 Form of Warrant Certificate for Debt Securities.
**4.8 Form of Warrant Agreement for Preferred Stock.
**4.9 Form of Warrant Certificate for Preferred Stock.
**4.10 Form of Warrant Agreement for Common Stock.
**4.11 Form of Warrant Certificate for Common Stock.
**4.12 Form of Deposit Agreement for Depositary Shares.
**4.13 Form of Depositary Receipt.
4.14 Form of Certificate of Common Stock, par value $1.00 per
share, of the Company (incorporated by reference to Exhibit
4(e) to Registration Statement No. 33-60040, filed with the
Commission on March 26, 1993).
4.15 Form of Debt Securities (Certificated Medium-Term Note, Series
H, Fixed Rate) (incorporated by reference to Exhibit 4.15 to
Post-Effective Amendment No. 2 to Registration Statement No.
33-57011, filed with the Commission on December 18, 1996).
4.16 Form of Debt Securities (Certificated Medium-Term Note, Series
H, Floating Rate) (incorporated by reference to Exhibit 4.16
to Post-Effective Amendment No. 2 to Registration Statement
No. 33-57011, filed with the Commission on December 18, 1996).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
4.17 Form of Debt Securities (Book-Entry Medium-Term Note, Series
H, Fixed Rate) (incorporated by reference to Exhibit 4.17 to
Post-Effective Amendment No. 2 to Registration Statement No.
33-57011, filed with the Commission on December 18, 1996).
4.18 Form of Debt Securities (Book-Entry Medium-Term Note, Series
H, Floating Rate) (incorporated by reference to Exhibit 4.18
to Post-Effective Amendment No. 2 to Registration Statement
No. 33-57011, filed with the Commission on December 18, 1996).
* 5 Opinion of Thomas L. Feazell, Esq.
*12 Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
*23.1 Consent of Ernst & Young LLP.
*23.2 Consent of Thomas L. Feazell, Esq. (included as part of
Exhibit 5).
*24 Power of Attorney, including resolutions of the Board of
Directors.
*25 Form T-1 Statement of Eligibility and Qualification of Trustee
under the Trust Indenture Act of 1939 for Citibank, N.A.
</TABLE>
- --------
*Filed herewith
**To be filed
<PAGE>
EXHIBIT 1.2
U.S. $220,000,000
MULTIPLE CURRENCY
MEDIUM-TERM NOTES, SERIES H
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
ASHLAND INC.
DISTRIBUTION AGREEMENT
January __, 1999
New York, New York
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Salomon Smith Barney Inc.
Seven World Trade Center
New York, N.Y. 10048
Chase Securities Inc.
270 Park Avenue
New York, N.Y. 10017
Ladies and Gentlemen:
Ashland Inc., a Kentucky corporation (the "Company"), confirms its
agreement with you with respect to the issue and sale by the Company of up to
$220,000,000 aggregate principal amount of its Medium-Term Notes, Series H, Due
Nine Months or More from Date of Issue (the "Notes"). The Notes will have the
interest rates, maturities, redemption provisions and other terms as set forth
in a pricing supplement ("Pricing Supplement") to the Prospectus referred to
below. The Notes will be issued under an Indenture dated as of August 15, 1989,
as amended and restated as of August 15, 1990 (the "Indenture"), between the
Company and Citibank, N.A., as trustee (the "Trustee"). The Notes will be
issued, and the terms thereof established, in accordance with the Indenture and,
in the case of Notes sold pursuant to Section 1(a), the Medium-Term Notes
Administrative Procedures attached hereto as Annex A (the "Procedures"). For the
purposes of this Agreement, the term "Agents" shall refer to any or all of you
(and any other person appointed by the Company in accordance with Section 1(a))
acting solely in the capacity as agent for the Company pursuant to Section 1(a)
and not as principal, the term "Purchasers" shall refer to any or all of you
acting solely as principal pursuant to Section 1(g) and not as agent, the term
"you" shall
<PAGE>
refer to you acting in both such capacities or in either such capacity and the
term "Closing Date" shall mean the date of delivery of any Notes sold hereunder,
whether to purchasers solicited by you as agents or to you as principal. The
term "Terms Agreement" is defined in Section 1(g). Other terms are defined in
Section 3.
1. Appointment of Agent; Solicitation by the Agent of Offers to Purchase;
Sales of Notes to a Purchaser. (a) Subject to the terms and conditions set forth
herein, the Company hereby appoints the Agents to act as its agents for the
purpose of soliciting offers to purchase all or part of the Notes from the
Company upon the terms set forth in the Prospectus, as amended or supplemented
from time to time, and in the Procedures. The Company shall have the right to
appoint additional persons to act as its agents for such purposes upon three
days prior notice to the Agents then acting hereunder so long as any such
additional persons become parties to this Agreement upon the same terms and
conditions as shall then be applicable to such Agents. So long as this Agreement
shall remain in effect with respect to any Agents, the Company shall not,
without the consent of such Agents, solicit offers to purchase Notes otherwise
than through one of such Agents, except as contemplated by Section 1(g) hereof
and except that nothing contained herein shall be construed to prevent the
Company from selling Notes at any time (x) in a firm commitment underwriting
pursuant to an underwriting agreement which does not provide for a continuous
offering of such Notes or (y) directly to investors other than the Purchasers,
and no commission shall be payable to the Agents with respect to any such sales.
The Company also reserves the right to sell Notes through agents other than
pursuant to this 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 are contained herein, including
commissions.
(b) On the basis of the representations and warranties set forth herein,
but subject to the terms and conditions set forth herein, each Agent agrees to
use its reasonable efforts, as agent of the Company, to solicit offers to
purchase Notes from the Company upon the terms set forth in the Prospectus, as
amended or supplemented from time to time, and in the Procedures. Subject to the
provisions of Section 1(c) and to the Procedures, offers for the purchase of
Notes may be solicited at such times and in such amounts as each Agent may from
time to time deem advisable.
(c) The Company reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase Notes from the Company at any time for any
period of time or permanently. Upon receipt of at least one business day's prior
notice from the Company, the Agents forthwith will suspend their solicitation of
2
<PAGE>
offers to purchase Notes from the Company until such time as the Company has
advised the Agents that such solicitation may be resumed.
(d) Each Agent will communicate to the Company, orally or in writing, each
offer to purchase Notes from the Company that is received by such Agent as agent
of the Company and that is not rejected by such Agent as provided below. The
Company will have the sole right to accept offers to purchase Notes from the
Company and may reject any such offer, in whole or in part, for any reason. Each
Agent may, without notice to the Company, in its discretion reasonably
exercised, reject any offer to purchase Notes from the Company that is received
by such Agent, in whole or in part, and any such rejection shall not be deemed a
breach of such Agent's agreements contained herein.
(e) The Company agrees to pay each Agent a commission, on the Closing Date
with respect to each sale of Notes by the Company as a result of a solicitation
made by such Agent, in an amount equal to that percentage specified in Schedule
I hereto of the aggregate principal amount of each Note sold by the Company.
Such commission shall be payable as specified in the Procedures. The commission
rates may be amended from time to time by written agreement of the Company and
the Agents. The Terms Agreement may specify any concessions allowed or reallowed
or paid to dealers.
(f) Each of you agrees, with respect to any Note denominated in a currency
other than U.S. dollars, as agent, directly or indirectly, not to solicit offers
to purchase, and as principal under any Terms Agreement or otherwise, directly
or indirectly, not to offer, sell or deliver, such Note in, or to residents of,
the country issuing such currency (or, if such Note is denominated in a
composite currency, in any country issuing a currency comprising a portion of
such composite currency), except as permitted by applicable law.
(g) Subject to the terms and conditions stated herein, whenever the Company
and you determine that the Company shall sell Notes directly to any or all of
you acting as principal (the "Purchaser"), each such sale of Notes shall be made
in accordance with the terms of this Agreement and any supplemental agreement
relating thereto between the Company and the Purchaser. Each such supplemental
agreement (which shall be substantially in the form of Annex B) is herein
referred to as a "Terms Agreement". The Purchaser's commitment to purchase Notes
pursuant to any Terms Agreement shall be deemed to have been made on the basis
of the representations and warranties of the Company herein contained and shall
be subject to the terms and conditions herein set forth. Each Terms Agreement
shall describe the Notes to be purchased by the Purchaser pursuant thereto,
specify the maturity and principal amount of such Notes, the price to be paid to
the Company for such Notes, the rate at which interest will be
3
<PAGE>
paid on the Notes, the Closing Date for such Notes, the place of delivery of the
Notes and payment therefor, the method of payment and any modification of the
requirements for the delivery of the opinions of counsel, the certificates from
the Company or its officers, and the letter from the Company's independent
public accountants, pursuant to Section 7(c). Such Terms Agreement shall also
specify the period of time referred to in Section 5(l). The Terms Agreement may
specify the terms upon which any Agent may resell any Notes to other dealers.
Delivery of the certificates if the Notes are certificated, or entry into
the books of the Depository Trust Company if the Notes are book-entry Notes, for
Notes sold to the Purchaser pursuant to any Terms Agreement shall be made as
agreed to between the Company and the Purchaser as set forth in the respective
Terms Agreement, not later than the Closing Date set forth in such Terms
Agreement, against payment of funds to the Company in the amount due to the
Company for such Notes by the method and in the form set forth in the respective
Terms Agreement.
2. Offering Procedures. The Procedures may be amended only by written
agreement of the Company and the Agents after notice to the Trustee, and, to the
extent any such amendment materially affects the Trustee, with the approval of
the Trustee. The Company and the Agents agree to perform the respective duties
and obligations specifically provided to be performed by them in the Procedures.
The Company will furnish to the Trustee a copy of the Procedures as from time to
time in effect.
3. Registration Statement and Prospectus. The Company has filed with the
Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations adopted by the Commission thereunder (the "Rules"), a
registration statement on Form S-3 (No. 333-_______) (the "Registration
Statement") relating to $600,000,000 aggregate principal amount of securities,
including debt securities (the "Securities") of the Company registered under the
Securities Act. The Company has filed or will file with the Commission pursuant
to the applicable paragraph of Rule 424(b) under the Securities Act, a
supplement to the form of prospectus included in the Registration Statement
relating to the Notes and the plan of distribution thereof (the "Prospectus
Supplement"). In connection with the sale of the Notes, the Company proposes to
file with the Commission pursuant to the applicable paragraph of Rule 424(b)
under the Securities Act further supplements to the Prospectus Supplement
specifying the interest rates, maturity dates, redemption provisions and other
similar terms of the Notes sold pursuant hereto or the offering thereof. The
Indenture has been qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). The term "Effective Date" shall mean each date that
the Registration
4
<PAGE>
Statement and any post-effective amendment thereto became effective. "Basic
Prospectus" shall mean the form of basic prospectus dated January __, 1999
relating to the Securities contained in the Registration Statement. The term
"Prospectus" means the Basic Prospectus as supplemented by the Prospectus
Supplement. Any reference herein to the Registration Statement, the Basic
Prospectus, the Prospectus Supplement or the Prospectus includes the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 (the
"Incorporated Documents") which were or will be filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on or before the
Effective Date of the Registration Statement or the issue date of the Basic
Prospectus, the Prospectus Supplement or the Prospectus, as the case may be, and
any reference herein to "amend", "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, the Prospectus Supplement or the
Prospectus includes the Incorporated Documents filed under the Exchange Act
after the Effective Date of the Registration Statement or the issue date of the
Basic Prospectus, the Prospectus Supplement or the Prospectus, as the case may
be.
The Company confirms that you are authorized to distribute the Prospectus
and any amendments or supplements thereto.
4. Representations and Warranties. The Company represents and warrants to
you as follows:
(a) The Company meets the requirements for the use of Form S-3 under the
Securities Act. The Registration Statement meets the requirements set forth in
Rule 415(a)(1)(x) of the Rules and complies in all other material respects with
Rule 415 of the Rules.
(b) As of the date hereof, when any amendment to the Registration
Statement becomes effective (including the filing with the Commission of any
document incorporated by reference in the Registration Statement), when any
amendment or supplement to the Prospectus is filed with the Commission pursuant
to Rule 424 of the Rules, as of the date of any Terms Agreement and on any
Closing Date, (i) the Registration Statement, as amended as of any such time,
the Prospectus, as amended or supplemented as of any such time, and the
Incorporated Documents will comply in all material respects with the applicable
requirements of the Securities Act and the Rules, and the Exchange Act and the
Trust Indenture Act and the respective published rules and regulations adopted
by the Commission thereunder, (ii) the Registration Statement, as amended as of
any such time, did not or will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and (iii) the
Prospectus, as supplemented as of any such time, will not contain any untrue
statement of a
5
<PAGE>
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; except that this representation and warranty does not
apply to (x) statements or omissions made in reliance on and in conformity with
information relating to you furnished in writing to the Company by you expressly
for use in the Registration Statement, the Prospectus or any amendment or
supplement thereto or (y) that part of the Registration Statement consisting of
the Statement of Eligibility and Qualification on Form T-1 of the Trustee under
the Trust Indenture Act, except statements or omissions in such Statement made
in reliance upon information furnished in writing to the Trustee by or on behalf
of the Company for use therein.
5. Agreements. (a) Prior to the termination of the offering of the Notes
under this Agreement, the Company will not file any amendment or supplement to
the Registration Statement or the Prospectus (except for a supplement relating
to an offering of Securities other than the Notes and filings with the
Commission pursuant to the Exchange Act) unless a copy thereof has been
submitted to you a reasonable period of time before its filing and you have not
reasonably objected thereto within a reasonable period of time after receiving
such copy. Subject to the foregoing sentence, the Company will cause each
amendment or supplement to the Prospectus to be filed with the Commission as
required pursuant to the applicable paragraph of Rule 424(b) of the Rules or, in
the case of any document to be incorporated therein by reference, to be filed
with the Commission as required pursuant to the Exchange Act, within the time
period prescribed.
(b) The Company will advise you promptly (i) when each amendment or
supplement to the Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) of the Rules or, in the case of any document incorporated therein
by reference, when such document shall have been filed with the Commission
pursuant to the Exchange Act, (ii) when, prior to the termination of the
offering of the Notes, any amendment to the Registration Statement shall have
been filed or become effective, (iii) of the initiation or threatening of any
proceedings for, or receipt by the Company of any notice with respect to, the
suspension of the qualification of the Notes for sale in any jurisdiction or the
issuance of any order by the Commission suspending the effectiveness of the
Registration Statement, and (iv) of the receipt by the Company or any
representative or attorney of the Company of any other communication from the
Commission relating to the Registration Statement, the Prospectus or any
amendment or supplement thereto or to the transactions contemplated by this
Agreement. The Company will use reasonable efforts to prevent the issuance of an
order suspending the effectiveness of the Registration Statement and, if any
such order is issued, to obtain its lifting as soon as possible.
6
<PAGE>
(c) The Company will deliver to you, without charge, three signed copies of
the Registration Statement and each post-effective amendment thereto (including
all exhibits filed with any such document) and as many conformed copies of the
Registration Statement and each such amendment (excluding exhibits) and the
Indenture as you may reasonably request.
(d) During such period as (i) a prospectus is required by law to be
delivered by you and (ii) no suspension of solicitation of offers to purchase
Notes pursuant to Section 1(c) shall be in effect (any such time referred to in
clause (ii) and any time when any Agent shall own any Notes with the intention
of reselling them or the Company has accepted an offer to purchase Notes but the
related settlement has not occurred being referred to herein as a "Marketing
Time"), the Company will deliver, without charge, to you, at such office or
offices as you may designate, as many copies of the Prospectus or any amendment
or supplement thereto as you may reasonably request, and, if any event occurs
during such period as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
during such period it is necessary to amend the Registration Statement or to
amend or supplement the Prospectus to comply with the Securities Act or the
Rules or the Exchange Act or the published rules and regulations adopted by the
Commission thereunder, the Company promptly will (y) notify you to suspend
solicitation of offers to purchase Notes from the Company and (z) prepare and
file with the Commission, subject to Section 5(a), and deliver, without charge,
to you, an amendment or supplement which will correct such statement or omission
or effect such compliance, and supply any supplemented Prospectus to you in such
quantities as you may reasonably request.
(e) The Company will make generally available to its security holders as
soon as practicable, but in any event not later than 15 months after (i) the
Effective Date of the Registration Statement, (ii) the Effective Date of each
post-effective amendment to the Registration Statement, and (iii) the date of
each filing by the Company with the Commission of an Annual Report on Form 10-K
that is incorporated by reference in the Registration Statement, an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 of the Rules.
(f) The Company will take such actions as you may reasonably designate in
order to qualify the Notes for offer and sale under the securities or "blue sky"
laws of such jurisdictions as you designate, will maintain such qualification in
effect for so long as may be required for the distribution of the Notes and will
7
<PAGE>
arrange for the determination of the legality of the Notes for purchase by
institutional investors.
(g) During the term of this Agreement, the Company will supply to you
copies of such financial statements and other periodic and special reports as
the Company may from time to time distribute generally to the holders of any
class of its capital stock and of each annual or other report it is required to
file with the Commission. The Company shall furnish to you such information,
documents, certificates of officers of the Company and opinions of counsel for
the Company relating to the business, operations and affairs of the Company, the
Registration Statement, the Prospectus, and any amendments thereof or
supplements thereto, the Indenture, the Notes, this Agreement, the Procedures
and the performance by the Company and you of its and your respective
obligations hereunder and thereunder as you may from time to time and at any
time prior to the termination of this Agreement reasonably request.
(h) The Company will, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, (i) pay, or reimburse
if paid by you, all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including costs and expenses
relating to (A) the preparation, printing and filing of the Registration
Statement and exhibits thereto, the Prospectus, all amendments and supplements
to the Registration Statement and the Prospectus, and the printing or other
reproduction of the Indenture and this Agreement, (B) the authorization and
issuance of the Notes, the preparation and delivery of certificates for the
Notes, and the fees charged in connection with the maintenance of a book-entry
system for the Notes, (C) the registration or qualification of the Notes for
offer and sale under the securities or "blue sky" laws of the jurisdictions
referred to in paragraph (f) of this Section 5 and the determination of the
legality of the Notes for investment, including the reasonable fees and
disbursements of counsel for you in that connection, and the preparation and
printing of preliminary and supplemental "blue sky" memoranda and legal
investment memoranda, (D) the furnishing (including costs of shipping and
mailing) to you of copies of the Prospectus, and all amendments or supplements
to the Prospectus, and of all other documents, reports and other information
required by this Section to be so furnished, (E) all transfer taxes, if any,
with respect to the sale and delivery of the Notes by the Company, (F) the fees
and expenses of the Trustee, and (G) the fees charged by rating agencies in
connection with any rating of the Notes, (ii) reimburse you on a quarterly basis
for all reasonable out-of-pocket expenses (including advertising expenses)
incurred by you with the advance approval of the Company, and (iii) reimburse
the reasonable fees and disbursements of counsel for you incurred in connection
with this Agreement.
8
<PAGE>
(i) During any Marketing Time, each time that either of the Registration
Statement or the Prospectus is amended or supplemented (other than by an
amendment or supplement (x) relating to any offering of Securities other than
the Notes, (y) providing solely for the specification of or a change in the
maturity dates, the interest rates, the issuance prices or other similar terms
of any Notes sold pursuant hereto or (z) resulting from the filing by the
Company of a Current Report on Form 8-K (or any similar successor form), unless
in the case of clause (z) above, in your reasonable judgment, such Current
Report is of such a nature that a certificate should be furnished), including by
the filing of any document incorporated therein by reference, the Company will
deliver or cause to be delivered forthwith to you a certificate of the Company,
signed by the Chairman of the Board, the President, or any Senior or
Administrative Vice President or any Vice President and the principal financial
or accounting officer of the Company, dated the date of the effectiveness of
such amendment or the date of filing of such supplement, in form reasonably
satisfactory to you, to the effect that the statements contained in the
certificate that was last furnished to you pursuant to either Section 6(c) or
this paragraph (i) are true and correct at the time of the effectiveness of such
amendment or the filing of such supplement as though made at and as of such time
(except that (i) the last day of the fiscal quarter for which financial
statements of the Company were last filed with the Commission shall be
substituted for the corresponding date in such certificate and (ii) such
statements shall be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented to the time of the effectiveness of such
amendment or the filing of such supplement) or, in lieu of such certificate, a
certificate of the same tenor as the certificate referred to in Section 6(c) but
modified to relate to the last day of the fiscal quarter for which financial
statements of the Company were last filed with the Commission and to the
Registration Statement and the Prospectus as amended or supplemented to the time
of the effectiveness of such amendment or the filing of such supplement.
(j) During any Marketing Time, each time that either of the Registration
Statement or the Prospectus is amended or supplemented (other than by an
amendment or supplement (x) relating to any offering of Securities other than
the Notes, (y) providing solely for the specifications of or a change in the
maturity dates, the interest rates, the issuance prices or other similar terms
of any Notes sold pursuant hereto, or (z) resulting from the filing by the
Company of a Quarterly Report on Form 10-Q or a Current Report on Form 8-K (or
any similar successor forms), unless, in the case of clause (z) above, in your
reasonable judgment, such Quarterly or Current Report is of such a nature that
an opinion of counsel should be furnished), including by the filing of any
document incorporated therein by reference, the Company will furnish or cause to
be furnished forthwith to you a written opinion of counsel for the Company
reasonably satisfactory to you, dated the date of the effectiveness of such
9
<PAGE>
amendment or date of filing of such supplement, in form reasonably satisfactory
to you, of the same tenor as the opinion referred to in Section 6(d) but
modified to relate to the Registration Statement and the Prospectus as amended
or supplemented to the time of the effectiveness of such amendment or the filing
of such supplement or, in lieu of such opinion, counsel last furnishing such an
opinion to you may furnish you with a letter to the effect that you may rely on
such counsel's last opinion to the same extent as though it were dated the date
of such letter authorizing reliance (except that statements in such counsel's
last opinion will be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented to the time of the effectiveness of such
amendment or the filing of such supplement).
(k) During any Marketing Time, each time that either of the Registration
Statement or the Prospectus is amended or supplemented to set forth amended or
supplemental financial information (other than by an amendment or supplement
resulting from the filing by the Company of a Quarterly Report on Form 10-Q or a
Current Report on Form 8-K (or any similar successor forms), unless, in your
reasonable judgment, such Quarterly Report or Current Report is of such a nature
that a letter from the Company's independent public accountants should be
furnished), the Company will cause its independent public accountants forthwith
to furnish a letter, dated the date of the effectiveness of such amendment or
the date of filing of such supplement, in form satisfactory to you, of the same
tenor as the letter referred to in Section 6(f) with such changes as may be
necessary to reflect the amended and supplemental financial information included
or incorporated by reference in the Registration Statement and the Prospectus,
as amended or supplemented to the date of such letter, provided that if either
of the Registration Statement or the Prospectus is amended or supplemented
solely to include or incorporate by reference financial information as of and
for a fiscal quarter and you shall have reasonably requested that such a letter
be furnished, the Company's independent public accountants may limit the scope
of such letter, which shall be satisfactory in form to you, to the unaudited
financial statements, the related "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and any other information of an
accounting, financial or statistical nature included in such amendment or
supplement.
(l) During the period, if any, specified in any Terms Agreement, the
Company shall not, without the prior consent of the Purchaser, issue or announce
the proposed issuance of any of its debt securities, including Notes, with terms
substantially similar to the Notes being purchased pursuant to such Terms
Agreement.
(m) Each acceptance by the Company of an offer for the purchase of Notes
shall be deemed to be an affirmation that its representations and warranties
10
<PAGE>
contained in this Agreement are true and correct at the time of such acceptance
and a covenant that such representations and warranties will be true and correct
at the time of delivery to the purchaser of the Notes relating to such
acceptance as though made at and as of each such time, it being understood that
such representations and warranties shall relate to the Registration Statement
and the Prospectus as amended or supplemented at each such time. Each such
acceptance by the Company of an offer for the purchase of Notes shall be deemed
to constitute an additional representation, warranty and agreement by the
Company that, as of the settlement date for the sale of such Notes, after giving
effect to the issuance of such Notes, of any other Notes to be issued on or
prior to such settlement date and of any other Securities, which have been
issued and sold by the Company will not exceed the amount of Securities
registered pursuant to the Registration Statement.
6. Conditions of the Agents' Obligations. The obligations of the Agents
to solicit offers to purchase Notes from the Company are subject to the accuracy
of the representations and warranties of the Company in this Agreement on the
date of this Agreement, when any amendment to the Registration Statement becomes
effective (including the filing with the Commission of any document incorporated
by reference in the Registration Statement), when any amendment or supplement to
the Prospectus is filed with the Commission pursuant to the applicable paragraph
of Rule 424(b) of the Rules and on each Closing Date, to performance by the
Company of its obligations under this Agreement and to each of the following
additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus, and any such supplement, shall have
been filed in the manner and within the time period required by Rule 424(b); and
no order suspending the effectiveness of the Registration Statement, as amended
from time to time, may be in effect and no proceedings for such purpose may be
pending before or threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) must be complied with to the
reasonable satisfaction of the Agents.
(b) Since the date of the most recent financial statements included or
incorporated by reference in the Prospectus, (i) there must not have been any
material adverse change or decrease (of the type indicated in paragraphs (ii)(B)
or (ii)(C) of Annex D to this Agreement) specified in the most recent letter of
the type referred to in Section 5(k) or in paragraph (f) of this Section 6, (ii)
there must not have been any material adverse change in the general affairs,
prospects, management, business, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, whether or not
arising from
11
<PAGE>
transactions in the ordinary course of business, except as set forth in or
contemplated by the Prospectus, as amended or supplemented at the time of
acceptance by the Company of any offer to purchase the Notes, (iii) the Company
and its subsidiaries taken as a whole must not have sustained any material loss
or interference with their business or properties from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree not described in the Prospectus, as then amended or supplemented
at the time of acceptance by the Company of any offer to purchase the Notes, and
(iv) there must not have been any downgrading in the rating of any of the
Company's long-term debt securities by Standard & Poor's ("S&P") or Moody's
Investors Service ("Moody's") or any public announcement that either S & P or
Moody's has under surveillance or review its rating of the Company's long-term
debt securities (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading of such
rating), if, in the judgment of the Agents, any such development referred to in
clause (i), (ii), (iii) or (iv) makes it impracticable or inadvisable to proceed
with the soliciting of offers to purchase Notes from the Company as contemplated
by the Prospectus, as then amended or supplemented.
(c) The Company shall have furnished to the Agents on the date of this
Agreement a certificate of the Company, signed by the Chairman of the Board, the
President, or any Senior or Administrative Vice President or any Vice President
and the principal financial or accounting officer of the Company, dated such
date, certifying that the signers have carefully examined the Registration
Statement, the Prospectus, the Indenture and this Agreement, and, to the best of
their knowledge, after reasonable investigation, (i) the representations and
warranties of the Company in this Agreement are accurate on and as of the date
of such certificate and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied as a
condition to the obligation of the Agents to solicit offers to purchase the
Notes, (ii) there has not been any material adverse change in the general
affairs, prospects, management, business, properties, financial condition or
results of operations of the Company and its subsidiaries taken as a whole,
whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus, as amended or
supplemented as of the date of such certificate, and (iii) no actions to suspend
the effectiveness of the Registration Statement, as amended as of the date of
such certificate, or to prohibit the sale of the Notes have been taken or
threatened by the Commission.
(d) The Agents shall have received on the date of this Agreement from
Thomas L. Feazell, Esq., Senior Vice President, General Counsel and Secretary of
the Company, and Cravath, Swaine & Moore, special counsel to the Company,
12
<PAGE>
opinions or letters dated such date substantially in the forms set forth in
Annex C-1, Annex C-2-A and Annex C-2-B to this Agreement.
(e) The Agents shall have received on the date of this Agreement from
Davis Polk & Wardwell, their counsel, an opinion dated such date with respect to
the Company, the Notes, the Indenture, the Registration Statement, the
Prospectus, this Agreement and the form and sufficiency of all proceedings taken
in connection with the sale and delivery of the Notes. Such opinion and
proceedings shall be satisfactory in all respects to the Agents. The Company
must have furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to render such opinion.
(f) The Agents shall have received, at the date of this Agreement, a
signed letter from Ernst & Young LLP substantially in the form of Annex D to
this Agreement.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement will comply with this Agreement only if they are in
form and scope reasonably satisfactory to the Agents and their counsel.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Agents and their counsel,
this Agreement and all obligations of the Agents hereunder may be canceled at
any time by the Agents. Notice of such cancellation shall be given to the
Company in writing or by telephone or telegraph confirmed in writing. The
documents required to be delivered by this Section 6 shall be delivered at the
offices of Davis Polk & Wardwell, counsel for the Agents, at 450 Lexington
Avenue, New York, New York, on the date of this Agreement.
7. Conditions to the Obligations of the Purchaser. The obligations of the
Purchaser to purchase any Notes from the Company are subject to the accuracy, on
the Closing Date for such Notes, of the representations and warranties of the
Company in this Agreement, to performance by the Company of its obligations
under this Agreement and to each of the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(b) Since the date of the most recent financial statements included or
incorporated by reference in the Prospectus, (i) there must not have been any
13
<PAGE>
material adverse change or decrease (of the type indicated in paragraphs (ii)(B)
or (C) of Annex D to this Agreement) specified in the most recent letter of the
type referred to in Section 5(k) or in paragraph (c) of this Section 7, (ii)
there must not have been any material adverse change in the general affairs,
prospects, management, business, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated by the Prospectus, as amended or supplemented at the
date of execution of the Terms Agreement relating to such Notes, (iii) the
Company and its subsidiaries taken as a whole must not have sustained any
material loss or interference with their business or properties from fire,
explosion, earthquake, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree not described in the Prospectus, as amended
or supplemented at the date of execution of the Terms Agreement relating to such
Notes, and (iv) there must not have been any downgrading in the rating of any of
the Company's long-term debt securities by S&P or Moody's or any public
announcement that either S & P or Moody's has under surveillance or review its
rating of the Company's long-term debt securities (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading of such rating), if, in the judgment of the Purchaser, any
such development referred to in clause (i), (ii), (iii) or (iv) makes it
impracticable or inadvisable to consummate the sale and delivery of the Notes to
the Purchaser as contemplated by the Prospectus, as then amended or
supplemented.
(c) If specified by any related Terms Agreement and except to the extent
modified by such Terms Agreement, the Purchaser shall have received (i) a
certificate of the Company, dated as of such Closing Date, to the effect set
forth in Section 6(c), (ii) the opinions or letters of Thomas L. Feazell, Esq.,
Senior Vice President, General Counsel and Secretary of the Company, and
Cravath, Swaine & Moore, special counsel to the Company, each dated as of such
Closing Date, to the effect set forth in Section 6(d), (iii) the opinion of
Davis Polk & Wardwell, counsel for the Purchaser, dated as of such Closing Date,
to the effect set forth in Section 6(e), and (iv) a letter of Ernst & Young LLP,
independent accountants for the Company, dated as of such Closing Date, to the
effect set forth in Section 6(f).
(d) Prior to the Closing Date, the Company shall have furnished to the
Purchaser such further information, certificates and documents as the Purchaser
may reasonably request.
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as provided in this Agreement and any Terms Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement or such Terms Agreement shall not be reasonably satisfactory in form
14
<PAGE>
and substance to the Purchaser and its counsel, such Terms Agreement and all
obligations of the Purchaser thereunder and with respect to the Notes subject
thereto may be canceled at, or at any time prior to, the respective Closing Date
by the Purchaser. Notice of such cancellation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing
8. Right of Person Who Agreed to Purchase to Refuse to Purchase. The
Company agrees that any person who has agreed to purchase and pay for any Note
pursuant to a solicitation by the Agents, shall have the right to refuse to
purchase such Note if, at the Closing Date therefor, any condition set forth in
Section 6(a) and (b) shall not be satisfied.
9. Indemnification. (a) The Company will indemnify and hold harmless you
and each person, if any, who controls you within the meaning of Section 15 of
the Securities Act against any and all losses, claims, damages and liabilities,
joint or several (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Securities Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided that the Company will not be liable to the extent that such loss,
claim, damage or liability arises from the sale of Notes by the Company as a
result of a solicitation by you and is based upon an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon and
in conformity with information relating to you furnished in writing to the
Company by you expressly for use in the document or (ii) in a preliminary
prospectus if the Prospectus, as amended or supplemented as of the time of the
confirmation of the sale to such person, corrected the untrue statement or
omission or alleged untrue statement or omission which is the basis of the loss,
claim, damage or liability for which indemnification is sought and a copy of the
Prospectus, as so amended (but excluding any documents incorporated therein by
reference), was not sent or given to such person at or before the confirmation
of the sale to such person in any case where such delivery is required by the
Securities Act, unless such failure to deliver the Prospectus, as so amended,
was a result of noncompliance by the Company with Section 5(d). This indemnity
agreement will be in addition to any liability that the Company might otherwise
have.
15
<PAGE>
(b) Each of you, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each director of the Company and
each officer of the Company who signs the Registration Statement to the same
extent as the foregoing indemnity from the Company to each of you, but only
insofar as losses, claims, damages or liabilities arise from the sale of Notes
by the Company to any person as a result of a solicitation by each of you and
are based upon any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with information relating to each of you furnished in writing to the
Company by each of you expressly for use in the document. This indemnity
agreement will be in addition to any liability that you might otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section 9 will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 9, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission to so notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party
otherwise than under this Section 9. If any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel who shall be reasonably
satisfactory to the indemnified party, and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with
the defense. The indemnified party will have the right to employ its own counsel
in any such action, but the fees and expenses of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded that there may be legal defenses
available to it or other indemnified parties which are different from or in
addition to those available to the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (3) the indemnifying party has not in
fact employed counsel reasonably satisfactory to such indemnified party to
assume the defense of such action within a reasonable time after receiving
notice
16
<PAGE>
of the commencement of the action, in each of which cases the reasonable fees
and expenses of such counsel will be at the expense of the indemnifying party or
parties and all such fees and expenses will be reimbursed promptly as they are
incurred. An indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent or, in connection with any
proceeding or related proceedings in the same jurisdiction, for the fees and
expenses of more than one separate counsel for all indemnified parties.
10. Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section 9 is
applicable in accordance with its terms but for any reason is held by a tribunal
to be unavailable from the Company or you, the Company and you will contribute
to the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action or any claims asserted, but
after deducting any contribution received by the Company from persons other than
you, such as persons who control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who may also be liable for contribution) to which
the Company and you may be subject in such proportion so that you are
responsible for that portion represented by the percentage that the aggregate
commissions received by you pursuant to Section 1 bears to the aggregate
principal amount of Notes sold by the Company and the Company is responsible for
the balance; provided that (i) you will not be responsible for any amount in
excess of the aggregate commissions received by you pursuant to Section 1 and
(ii) no person found guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 10, any person who controls a party to this Agreement within the
meaning of the Securities Act will have the same rights to contribution as that
party, and each officer of the Company who signed the Registration Statement and
each director of the Company will have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 10. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for
contribution may be made under this Section 10, notify such party or parties
from whom contribution may be sought, but the omission so to notify will not
relieve the party or parties from whom contribution may be sought from any other
obligation it or they may have otherwise than under this Section 10. No party
will be liable for contribution with respect to any action or claim settled
without its written consent.
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11. Termination. (a) Upon three days written notice, this Agreement may be
terminated for any reason at any time by the Company as to any or all of you, or
may be terminated for any reason at any time by any or all of you as to those of
you giving such notice. In the event of any such termination, no party giving
such notice shall have any liability to the other party or parties hereto,
except as provided in Sections 1(e), 5(h), 9, 10 and 12.
(b) Each Terms Agreement shall be subject to termination in the absolute
discretion of the Purchaser, by notice given to the Company prior to delivery of
any payment for Notes to be purchased thereunder, if prior to such time (1)
trading in any securities of the Company is suspended by the Commission, by an
exchange that lists such securities of the Company, or by the National
Association of Securities Dealers Automated Quotation National Market System,
(2) additional material governmental restrictions, not in force on the date of
this Agreement, have been imposed upon trading in securities generally or
minimum or maximum prices have been generally established on the New York Stock
Exchange or on the American Stock Exchange, or trading in securities generally
has been suspended on any such Exchange or a general banking moratorium has been
established by Federal or New York authorities, or (3) any outbreak or material
escalation of hostilities or other calamity or crisis occurs the effect of which
is such as to make it impracticable to market such Notes.
12. Miscellaneous. The reimbursement, indemnification and contribution
agreements in Sections 1(e), 5(h), 9, 10 and 11 and the representations and
other agreements of the Company and you in this Agreement will remain in full
force and effect until the sixth anniversary of the date of termination of this
Agreement as to any party regardless of any termination of this Agreement or any
investigation made by or on behalf of you, the Company or any controlling person
and will survive delivery of and payment for the Notes.
This Agreement is for the benefit of you and the Company and their
respective successors and, to the extent expressed in this Agreement, for the
benefit of persons controlling you or the Company, and directors and officers of
the Company, and their respective successors, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue of
this Agreement.
All notices and communications under this Agreement will be in writing,
effective only on receipt and mailed or delivered, by messenger, facsimile
transmission or otherwise, addressed to the parties as follows: if to the Agents
or the Purchaser, to Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, attention of Helena M. Wilner, Salomon Smith
Barney Inc., Seven World Trade Center, New York, New York 10048,
18
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Attention of Martha D. Bailey, and Chase Securities Inc., 270 Park Avenue, 8th
floor, New York, N.Y. 10017, attention: Medium-Term Note Department, and if to
the Company, to Ashland Inc., 1000 Ashland Drive, Russell, Kentucky 41169,
attention of the Treasurer, except that legal notices will be sent to the
attention of the General Counsel.
This Agreement may be signed in multiple counterparts that taken as a whole
constitute one agreement.
This Agreement will be governed by and construed in accordance with the
laws of the State of New York.
Please confirm that the foregoing correctly sets forth the agreement
between us.
Very truly yours,
ASHLAND INC.
By:
Title:
Confirmed:
CREDIT SUISSE FIRST BOSTON CORPORATION
By ____________________________
Title:
SALOMON SMITH BARNEY INC.
By ____________________________
Title:
CHASE SECURITIES INC.
19
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By ____________________________
Title:
20
<PAGE>
ANNEX A
MEDIUM-TERM NOTE ADMINISTRATIVE PROCEDURES
JANUARY __, 1999
The Medium-Term Notes, Series H, due Nine Months or More from their issue
date (the "Notes") are to be offered on a continuing basis by Ashland Inc. (the
"Company"). Credit Suisse First Boston Corporation, Salomon Smith Barney Inc.
and Chase Securities Inc., as agents (individually, an "Agent" and collectively,
the "Agents"), have each agreed to use reasonable efforts to solicit offers to
purchase the Notes. None of the Agents will be obligated to purchase Notes for
their own accounts. The Notes are being sold pursuant to a Distribution
Agreement, dated January __, 1999 (the "Distribution Agreement"), among the
Company and the Agents, and will be issued pursuant to an Indenture, dated as of
August 15, 1989, as amended and restated as of August 15, 1990 (the
"Indenture"), between the Company and Citibank, N.A., as trustee (the
"Trustee"). The Notes will rank equally with all other unsecured and
unsubordinated indebtedness of the Company and will have been registered with
the Securities and Exchange Commission (the "Commission"). The Notes may be
denominated in U.S. dollars, or in such foreign currencies or currency units as
may be designated by the Company. The Notes are to be offered in an aggregate
principal amount of up to U.S.$220,000,000 (or the equivalent thereof if any of
the Notes is denominated in foreign currency or currency units).
Administrative and record-keeping responsibilities will be handled for the
Company by its Treasury and Finance Department. The Company will advise the
Agents in writing of those persons handling administrative responsibilities with
whom the Agents are to communicate regarding offers to purchase Notes and the
details of their delivery. Administrative procedures and certain terms of the
offering are explained below. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned thereto in the Distribution
Agreement, the Prospectus or the Indenture.
CERTAIN TERMS OF THE OFFERING
Notes will be issued only in fully registered form and will be represented
by either a global certificate (a "Global Certificate") delivered to Citibank,
N.A., as custodian for The Depository Trust Company (the "Depositary"), with
ownership of beneficial interests in such Global Certificates recorded in the
book-entry system maintained by the Depositary (a "Book-Entry Note") or a
certificate (a "Definitive Certificate") delivered to a person designated by an
Agent.
A-1
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Citibank, N.A., in addition to acting as Trustee, will act as Exchange Rate
Agent, Paying Agent, Calculation Agent and Security Registrar for the Company,
in each case, under the Indenture (in any of the foregoing capacities, as
applicable, "Citibank").
Part I contains provisions common to Book-Entry and Certificated Notes.
Part II contains provisions specific to Certificated Notes and Part III contains
provisions specific to Book-Entry Notes. To the extent the procedures set forth
below conflict with the provisions of the Notes, the Indenture or the
Distribution Agreement, the terms and provisions of the Notes, the Indenture and
the Distribution Agreement shall prevail. Unless otherwise defined herein, terms
defined in the Indenture or the Notes shall be used herein as therein defined.
PART I: GENERAL
PRICE TO PUBLIC
Each Note will be issued at or above par.
DENOMINATIONS
The minimum denomination of the Notes will be $1,000 and in denominations
of integral multiples of $1,000 in excess thereof.
ISSUE DATE
Each Note will be dated the date of its authentication. Each Note will also
bear an original issue date (the "Issue Date") which, with respect to any Note
(or portion thereof), shall mean the date of its original issuance and shall be
specified therein. The Issue Date shall remain the same for all Notes
subsequently issued upon transfer, exchange or substitution of a Note,
regardless of their dates of authentication.
MATURITIES
Each Note will mature on a Business Day, selected by the purchaser and
agreed to by the Company, which will be at least nine months after the Issue
Date. Each Floating Rate Note (as defined below) will mature on an Interest
Payment Date (as defined below) for such Note.
INTEREST PAYMENT
A-2
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Each interest bearing Note will bear interest from and including its Issue
Date, or in the case of Notes issued upon transfer or exchange, from the most
recent Interest Payment Date to which interest has been paid or provided for, to
but excluding the relevant Interest Payment Date or the maturity date of such
Note. Interest payments, if any, will be 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, in the case of Floating Rate Notes on
which the interest rate is reset daily or weekly, the interest payments (other
than 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. Each Note will bear
interest (i) in the case of Notes bearing interest at a Fixed Rate (the "Fixed
Rate Notes"), at the annual rate stated on the face thereof, payable semi-
annually in arrears on February 15 and August 15 unless otherwise specified in
the related pricing supplement to the Prospectus Supplement (the "Pricing
Supplement") (each an "Interest Payment Date" with respect to such Fixed Rate
Note) and at maturity and (ii) in the case of Notes bearing interest at a rate
or rates determined by reference to an interest rate formula (the "Floating Rate
Notes"), at a rate determined pursuant to the formula stated on the face
thereof, payable in arrears on such dates as are specified therein and in the
Pricing Supplement (each such date an "Interest Payment Date" with respect to
such Floating Rate Note). In addition, a Floating Rate Note may bear interest at
the lowest or highest or average of two or more interest rate formulae. Interest
(including payments for partial periods) will be calculated and paid (a) in the
case of Fixed Rate Notes, on the basis of a 360-day year of twelve 30-day
months, (b) in the case of Floating Rate Notes whose interest formula is based
on the Treasury Rate or the Prime Rate, on the basis of the actual number of
days in the year divided by 365 or 366, as the case may be, and (c) in the case
of Floating Rate Notes whose interest formula is based on the Commercial Paper
Rate, the LIBOR Rate, the Federal Funds Rate, or on the CD Rate, on the basis of
the actual number of days in the year divided by 360. Interest will be payable
(a) in the case of Fixed Rate Notes, to the person in whose name the Note is
registered at the close of business on the February 1 or August 1 (the Regular
Record Dates with respect to Fixed Rate Notes) next preceding the Interest
Payment Date, unless otherwise specified in the Pricing Supplement, and (b) in
the case of Floating Rate Notes, to the person in whose name the Note is
registered at the close of business on the dates established on the Issue Date
and set forth in each such Note and in the applicable Pricing Supplement (the
Regular Record Dates with respect to Floating Rate Notes); provided, however,
that interest payable on a maturity date
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will be payable to the person to whom principal shall be payable. Unless
otherwise set forth in the applicable Prospectus Supplement, the first payment
of interest on any Note originally issued between a Regular Record Date and an
Interest Payment Date will be made on the Interest Payment Date following the
next succeeding Regular Record Date. With respect to Fixed Rate Notes, each
payment of interest shall include interest accrued to but excluding the date of
such payment. For special provisions relating to Floating Rate Notes, see the
section entitled "Description of the Notes" in the Prospectus Supplement
relating to the Notes, dated January __, 1999, attached hereto and hereinafter
referred to as the "Prospectus Supplement". Except in the case of Book-Entry
Notes, all interest payments (excluding interest payments made at maturity) will
be made by check mailed to the person entitled thereto as provided above. All
interest payments on any Book-Entry Note will be made to the Depositary, or its
nominee, as Noteholder thereof, in accordance with arrangements then in effect
between the Trustee and the Depositary.
TRUSTEE AND CITIBANK NOT TO RISK FUNDS
Nothing herein shall be deemed to require the Trustee or Citibank to risk
or expend its own funds in connection with any payment to the Company, or the
Agents, or the Depositary, or any Noteholder, it being understood by all parties
that payments made by the Trustee or Citibank to either the Company, or the
Agents, or the Depositary, or any Noteholder shall be made only to the extent
that funds are provided to the Trustee for such purpose.
ADVERTISING COSTS
The Company will determine with the Agents the amount of advertising that
may be appropriate in offering the Notes. Advertising expenses approved in
advance by the Company will be paid by the Company.
BUSINESS DAY
"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 euro or United States dollars, not a day on which
banking institutions are authorized or required by law or regulation to close in
the principal financial center of the country of the Specified Currency, (c) if
the Note is denominated in euro, any day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open, and (d)
with respect to LIBOR Notes, a London Banking Day. "London Banking Day" means
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any day on which dealings in deposits in United States dollars are transacted in
the London interbank market.
PROCEDURES FOR ESTABLISHING THE TERMS OF THE NOTES
The Company and the Agents will discuss from time to time the Issue Date,
maturity date, interest rates, and other provisions of the Notes that may be
sold as a result of the solicitation of offers by the Agents. If the Company
decides to post rates and a decision has been reached to change interest rates,
the Company will promptly notify each Agent. Each Agent will forthwith suspend
solicitation of purchases. At that time, the Agents will recommend and the
Company will establish rates to be so "posted". Following establishment of
posted rates and prior to the filing or mailing described in the following
sentence, the Agents may only record indications of interest in purchasing Notes
at the posted rates. If the Company accepts an offer at the posted rates, it
will prepare a Pricing Supplement reflecting the terms of such offer and will
arrange to have such Pricing Supplement electronically filed with the Commission
in accordance with the applicable paragraph of Rule 424(b) under the Act and
Rule 101(a) of Regulation S-T, and will supply at least 10 copies of the Pricing
Supplement to the Agent who presented such offer (the "Presenting Agent"). No
settlements may occur prior to such mailing or filing and the Agents will not,
prior to such mailing or filing, mail confirmations to customers who have
offered to purchase Notes at the posted rates. The Company will not offer Notes
denominated in a foreign currency unless it has received confirmation from the
Trustee that the Trustee will be able to perform its duties in respect of such
Notes, and that the Trustee has had sufficient time to make the necessary
arrangements.
Outdated Pricing Supplements and copies of the Prospectus to which they are
attached (other than those retained for files) will be destroyed.
SUSPENSION OF SOLICITATION; AMENDMENT OR SUPPLEMENT
As provided in the Distribution Agreement, the Company may suspend
solicitation of purchases at any time and, upon receipt of at least one Business
Day's prior notice from the Company, the Agents will each forthwith suspend
solicitation until such time as the Company has advised them that solicitation
of purchases may be resumed.
If the Agents receive the notice from the Company contemplated by Section
5(b) of the Distribution Agreement, they will promptly suspend solicitation and
will only resume solicitation as provided in the Distribution Agreement. If the
Company decides to amend or supplement the Registration Statement or the
Prospectus relating to the Notes, it will promptly advise each Agent and will
furnish each Agent with the proposed amendment or supplement
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in accordance with the terms of the Distribution Agreement. The Company will
promptly file or mail to the Commission for filing such amendment or supplement,
provide the Agents with copies of any such amendment or supplement, confirm to
the Agents that such amendment or supplement has been filed with the Commission
and advise the Agents that solicitation may be resumed.
Any such suspension shall not affect the Company's obligations under the
Distribution Agreement; and in the event that at the time the Company suspends
solicitation of purchases there shall be any offers already accepted by the
Company outstanding for settlement, the Company will have the sole
responsibility for fulfilling such obligations. The Company will in addition
promptly advise the Agents and the Trustee if such offers are not to be settled
and if copies of the Prospectus as in effect at the time of the suspension may
not be delivered in connection with the settlement of such offers.
ACCEPTANCE OF OFFERS
Each Agent will promptly advise the Company, orally or in writing, of each
reasonable offer to purchase Notes received by it, other than those rejected by
such Agent. Each Agent may, in its discretion reasonably exercised, without
notice to the Company, reject any offer received by it, in whole or in part. The
Company will have the sole right to accept offers to purchase Notes and may
reject any such offer, in whole or in part. If the Company rejects an offer, the
Company will promptly notify the Agent involved.
DELIVERY OF PROSPECTUS
A copy of the Prospectus as most recently amended or supplemented on the
date of delivery thereof (except as provided below) must be delivered to a
purchaser prior to or together with the earlier of the delivery of (i) the
written confirmation provided for above, and (ii) any Note purchased by such
purchaser. The Company shall ensure that the Presenting Agent receives copies of
the Prospectus and each amendment or supplement thereto (including appropriate
pricing supplements) in such quantities and within such time limits as will
enable the Presenting Agent to deliver such confirmation or Note to a purchaser
as contemplated by these procedures and in compliance with the preceding
sentence. If, since the date of acceptance of a purchaser's offer, the
Prospectus shall have been supplemented solely to reflect any sale of Notes on
terms different from those agreed to between the Company and such purchaser or a
change in posted rates not applicable to such purchaser, such purchaser shall
not receive the Prospectus as supplemented by such new supplement, but shall
receive the Prospectus as supplemented to reflect the terms of the Notes being
purchased by
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such purchaser and otherwise as most recently amended or supplemented on the
date of delivery of the Prospectus.
DETERMINATION OF SETTLEMENT DATE
All offers accepted by the Company will be settled no later than the third
Business Day next succeeding the date of acceptance unless otherwise agreed by
any purchaser and the Company. The settlement date shall be specified upon
receipt of an offer.
PART II: CERTIFICATED NOTES
SETTLEMENT DATE
The Company will instruct, by telecopy or other acceptable means, the
Trustee to authenticate and deliver the Notes no later than 2:15 P.M., New York
City time, on the settlement date. Such instructions will be given by the
Company no later than 3:00 P.M., New York City time, on the Business Day prior
to the settlement date unless the settlement date is the date of acceptance by
the Company of the offer to purchase the Notes, in which case such instructions
will be given by the Company by 10:00 A.M., New York City time.
DETAILS FOR SETTLEMENT
For each offer accepted by the Company, the Presenting Agent shall
communicate to the Company's Treasury and Finance Department by telephone,
facsimile transmission or other acceptable means the following information (the
"Purchase Information"):
1. Exact name in which the Note or Notes are to be registered ("registered
owner").
2. Exact address of registered owner and, if different, the address for
payment of principal and interest.
3. Taxpayer identification number of registered owner.
4. Principal amount of each Note in authorized denominations to be
delivered to registered owner.
5. Currency or currency unit of such principal amount.
6. The issue price, interest rate, if fixed or, if floating, the initial
interest rate, the interest rate basis, the spread or spread multiplier, the
maximum or minimum interest rates, if any, the index maturity, the Interest
Reset Dates and the
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Interest Payment Dates (as such terms are defined in the Prospectus Supplement)
of each Note, and all other items necessary to complete each Note.
7. Maturity date.
8. Issue date.
9. Settlement date.
10. Presenting Agent's commission (to be paid by the Company upon
settlement).
11. Terms of redemption and Redemption Date, if any.
12. Net proceeds to the Company.
The Issue Date of, and the settlement date for, Notes will be the same.
Before accepting any offer to purchase Notes to be settled in less than three
Business Days, the Company shall verify that the Trustee will have adequate time
to prepare and authenticate the Notes.
After receiving the details for each offer from the Presenting Agent, the
Company will, after recording the details and any necessary calculations,
communicate the Purchase Information by facsimile transmission or other
acceptable means, to the Trustee. The Company will identify in writing to the
Trustee officers of the Company who are authorized to provide such details for
each such offer to the Trustee.
SETTLEMENT; NOTE DELIVERIES AND CASH PAYMENT
Upon the receipt of appropriate documentation and instructions from the
Company, the Trustee will cause the Notes to be prepared and authenticated.
The Trustee will deliver the Notes, in accordance with instructions from
the Company, to the Presenting Agent, as the Company's agent, for the benefit of
the purchaser. The Presenting Agent shall make payment in immediately available
funds directly to the account of the Company in an amount equal to the face
amount of the Notes.
The Presenting Agent, as the Company's agent, will deliver the Notes (with
the written confirmation provided for above) to the purchaser thereof against
payment by such purchaser in immediately available funds. Delivery of any
confirmation or Note will be made in compliance with "Delivery of Prospectus"
above.
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FAILS
In the event that a purchaser shall fail to accept delivery of and make
payment for a Note on the settlement date, the Presenting Agent will notify the
Trustee and the Company, by telephone or other acceptable means. If the Note has
been delivered to the Presenting Agent, as the Company's agent, the Presenting
Agent shall return such Note to the Trustee. If funds have been advanced for the
purchase of such Note, the Trustee will, immediately upon receipt of such Note,
confirm receipt to the Company and the Company shall refund the payment
previously made by the Presenting Agent in immediately available funds. Such
payments will be made on the settlement date, if possible, and in any event not
later than the Business Day following the settlement date. If such fail shall
have occurred for any reason other than the failure of the Presenting Agent to
provide the Purchase Information to the Company or to provide a confirmation to
the purchaser, the Company will reimburse the Presenting Agent on an equitable
basis for its loss of the use of funds during the period when they were credited
to the account of the Company.
Immediately upon receipt of the Note in respect of which the fail occurred,
the Trustee will cause the Security Registrar to make appropriate entries to
reflect the fact that the Note was never issued and will destroy the Note.
PAYMENT OF INTEREST
On the fifth Business Day immediately preceding each Interest Payment Date,
the Trustee will furnish the Company with the total amount of the interest
payments to be paid on the Certificated Notes on such Interest Payment Date. The
Trustee will provide monthly to the Company's Treasury and Finance Department a
list of the principal and interest to be paid on Certificated Notes maturing in
the next succeeding month, to the extent then known. The Trustee will assume
responsibility for withholding taxes on interest paid as required by law.
MATURITY
Upon presentation of each Certificated Note at maturity the Trustee (or any
duly appointed Paying Agent) will pay the principal amount thereof, together
with accrued interest due at maturity out of immediately available funds
provided by the Company. Such payment shall be made in immediately available
funds to the holder of the Note, provided that the Note is presented to the
Trustee (or any such Paying Agent) in time for the Trustee (or such Paying
Agent) to make payments in such funds in accordance with its normal procedures.
The Company will provide the Trustee (and any such Paying Agent) with funds
available for immediate use for such purpose. Notes presented at maturity will
be canceled by the Trustee as provided in the Indenture.
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AUTHENTICITY OF SIGNATURES
The Company will cause the Trustee to furnish the Agents from time to time
with the specimen signatures of each of the Trustee's officers, employees or
agents who have been authorized by the Trustee to authenticate Notes, but the
Agents will have no obligation or liability to the Company or the Trustee in
respect of the authenticity of the signature of any officer, employee or agent
of the Company or the Trustee on any Note.
PART III: BOOK-ENTRY NOTES
An owner of a Book-Entry Note will not be entitled to receive a certificate
representing such Note. In connection with the qualification of the Book-Entry
Notes for eligibility in the book-entry system maintained by the Depositary,
Citibank will perform the custodial, document control and administrative
functions described below, in accordance with its respective obligations under a
Letter of Representations (the "Letter of Representations") from the Company and
Citibank to the Depositary and a Medium-Term Note Certificate Agreement (the
"Certificate Agreement") between Citibank and the Depositary, and its
obligations as a participant in the Depositary, including the Depositary's Same-
Day Funds Settlement system ("SDFS").
ISSUANCE
On any date of settlement (as defined under "settlement" below) for one or
more Book-Entry Notes, the Company will issue a Global Certificate or
Certificates in fully registered form without coupons representing in each case
not in excess of $200,000,000 principal amount of all of such Book-Entry Notes
that have the same interest rate, Stated Maturity and terms. Each Global
Certificate will be dated and issued as of the date of its authentication by
Citibank as Trustee. No Global Certificate will represent any Certificated Note.
IDENTIFICATION NUMBERS
The Company will arrange, on or prior to the commencement of a program for
the offering of Book-Entry Notes, with the CUSIP Service Bureau of Standard &
Poor's (the "CUSIP Service Bureau") for the reservation of a series of CUSIP
numbers (including tranche numbers), consisting of approximately 900 CUSIP
numbers relating to Global Certificates representing the Book-Entry Notes. The
Company will obtain from the CUSIP Service Bureau a written list of such series
of reserved CUSIP numbers and will deliver such list to Citibank and the
Depositary. Citibank will assign CUSIP numbers to Global Certificates as
described below under Settlement Procedure "B". The Depositary will notify the
CUSIP Service Bureau periodically of the CUSIP numbers that the Company has
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assigned to Global Certificates. Citibank will notify the Company at any time
when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global
Certificates, and if it deems it necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Certificates representing Book-Entry
Notes. Upon obtaining such additional CUSIP numbers, the Company shall deliver a
list thereof to Citibank and the Depositary.
REGISTRATION
Each Global Certificate will be registered in the name of Cede & Co., as
nominee for the Depositary, on the Securities Register maintained under the
Indenture governing such Global Certificate. The beneficial owner of a Book-
Entry Note (or one or more indirect participants in the Depositary designated by
such owner) will designate one or more participants in the Depositary (with
respect to such Note, the "Participants") to act as agent or agents for such
owner in connection with the book-entry system maintained by the Depositary, and
the Depositary will record in book-entry form, in accordance with instructions
provided by such Participants, a credit balance with respect to such Note in the
account of such Participants. The ownership interest of such beneficial owner in
such Note will be recorded through the records of such Participants or through
the separate records of such Participants and one or more indirect participants
in the Depositary. So long as Cede & Co. is the registered owner of a Global
Certificate, the Depositary will be considered the sole owner and holder of the
Book-Entry Notes represented by such Global Certificate for all purposes under
the Indenture.
TRANSFERS
Transfers of a Book-Entry Note will be accomplished by book entries made by
the Depositary and, in turn, by Participants (and in certain cases, one or more
indirect participants in the Depositary) acting on behalf of beneficial
transferors and transferees of such Note.
CONSOLIDATION AND EXCHANGE
Citibank may deliver to the Depositary and the CUSIP Service Bureau at any
time a written notice of consolidation specifying (i) the CUSIP numbers of two
or more Outstanding Global Certificates that represent Book-Entry Notes having
the same interest rate, Stated Maturity and tenor and for which interest has
been paid to the same date, (ii) a date, occurring at least thirty days after
such written notice is delivered and at least thirty days before the next
Interest Payment Date for such Book-Entry Notes, on which such Global
Certificates shall be exchanged for a single replacement Global Certificate and
(iii) a new CUSIP number, obtained from the Company, to be assigned to such
replacement Global
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Certificate. Upon receipt of such a notice, the Depositary will send to its
participants (including Citibank) a written reorganization notice to the effect
that such exchange will occur on such date. Prior to the specified exchange
date, Citibank will deliver to the CUSIP Service Bureau a written notice setting
forth such exchange date and the new CUSIP number and stating that, as of such
exchange date, the CUSIP numbers of the Global Certificates to be exchanged will
no longer be valid. On the specified exchange date, Citibank will exchange such
Global Certificates for a single Global Certificate bearing the new CUSIP number
and new Issue Date, which shall be the most recent Interest Payment Date to
which interest has been paid or duly provided for on the predecessor Global
Certificates, and the CUSIP numbers of the exchanged Global Certificates will,
in accordance with CUSIP Service Bureau procedures, be canceled and not
immediately reassigned. Notwithstanding the foregoing, if the Global
Certificates to be exchanged exceed $200,000,000 in aggregate principal amount,
one Global Certificate will be authenticated and issued to represent each
$200,000,000 of principal amount of the exchanged Global Certificates and an
additional Global Certificate will be authenticated and issued to represent any
remaining principal amount of such Global Certificates (see "Denominations"
below).
DENOMINATIONS
Book-Entry Notes will be issued in principal amounts of $1,000 or any
amount in excess thereof that is an integral multiple of $1,000. Global
Certificates will be denominated in principal amounts not in excess of
$200,000,000. If one or more Book-Entry Notes having an aggregate principal
amount in excess of $200,000,000 would, but for the preceding sentence, be
represented by a single Global Certificate, then one Global Certificate will be
issued to represent $200,000,000 principal amount of such Book-Entry Note or
Notes and an additional Global Certificate will be issued to represent any
remaining principal amount of such Book-Entry Note or Notes. In such a case,
each of the Global Certificates representing such Book-Entry Note or Notes shall
be assigned the same CUSIP number.
INTEREST
Standard & Poor's will use the information received in the pending deposit
message described under Settlement Procedure "C" below in order to include the
amount of any interest payable and certain other information regarding the
related Global Security in the appropriate weekly bond report published by
Standard & Poor's.
PAYMENTS OF PRINCIPAL AND INTEREST
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Payments of Interest Only. Promptly after each Regular Record Date,
Citibank will deliver to the Company and the Depositary a written notice
specifying by CUSIP number the amount of interest to be paid on each Global
Certificate on the following Interest Payment Date (other than an Interest
Payment Date coinciding with Maturity) and the total of such amounts. The
Depositary will confirm the amount payable on each Global Certificate on such
Interest Payment Date by reference to the daily bond reports published by
Standard & Poor's. The Company will pay to Citibank, as Paying Agent, the total
amount of interest due on such Interest Payment Date (other than at Maturity),
and Citibank will pay such amount to the Depositary at the times and in the
manner set forth below under "Manner of Payment".
Payments at Maturity. On or about the first Business Day of each month,
Citibank will deliver to the Company, the Depositary and the Trustee a written
list of principal and interest to be paid on each Global Certificate maturing in
the following month. The Company, Citibank and the Depositary will confirm the
amounts of such principal and interest payments with respect to each such Global
Certificate on or about the fifth Business Day preceding the Maturity of such
Global Certificate. The Company will pay to Citibank as the Paying Agent, the
principal amount of such Global Certificate, together with interest due at such
Maturity and Citibank will pay such amount to the Depositary at the times and in
the manner set forth below under "Manner of Payment".
Promptly after payment to the Depositary of the principal and interest due
at the Maturity of such Global Certificate, Citibank will cancel such Global
Certificate and deliver it to the Company. Citibank will from time to time, on
request by the Trustee, deliver to the Trustee a written statement indicating
the total principal amount of outstanding Global Certificates for which it
serves as Trustee as of the immediately preceding Business Day.
Manner of Payment. The total amount of any principal and/or interest due on
Global Certificates on any Interest Payment Date or at Maturity shall be paid by
the Company to Citibank in funds available for use by Citibank as of 9:30 A.M.
(New York City time) on such date. The Company will make such payment on such
Global Certificates by instructing Citibank to withdraw funds from an account
maintained by the Company at Citibank, N.A. The Company will confirm such
instruction in writing to Citibank. Citibank will forward to the Company an
appropriate debit advice. Prior to 10:00 A.M. (New York City time) on such date
or as soon as possible thereafter, Citibank will make such payments to the
Depositary in same day funds in accordance with the payment provisions contained
in the Letter of Representations. The Depositary will allocate such payments to
its Participants in accordance with its existing operating procedures. NONE OF
THE COMPANY, THE TRUSTEE NOR CITIBANK SHALL HAVE
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ANY RESPONSIBILITY OR LIABILITY FOR THE PAYMENT BY THE DEPOSITARY TO SUCH
PARTICIPANTS OF THE PRINCIPAL OF AND INTEREST ON THE BOOK-ENTRY NOTES.
Withholding Taxes. The amount of any taxes required under applicable law to
be withheld from any interest payment on a Book-Entry Note will be determined
and withheld by the Participant, indirect participant in the Depositary or other
Person responsible for forwarding payments and materials directly to the
beneficial owner of such Note.
SETTLEMENT
The receipt by the Company of immediately available funds in payment for a
Book-Entry Note and the authentication and issuance of the Global Certificate
representing such Note shall constitute "settlement" with respect to such Book-
Entry Note. All orders accepted by the Company will be settled on the next
Business Day pursuant to the timetable for settlement set forth below unless the
Company and the purchaser agree to settlement on a later date.
SETTLEMENT PROCEDURES
Settlement Procedures with regard to each Global Certificate sold by the
Company through an Agent, as agent, shall be as follows:
A. Such Agent will advise the Company by telephone of the Purchase
Information with respect to each Book-Entry Note which will be represented by
the Global Certificate which is to be issued.
B. The Company will advise Citibank writing or electronic transmission of
the information set forth in Settlement Procedure "A" above and the name of such
Agent. Each such communication by the Company shall constitute a representation
and warranty by the Company to Citibank, the Trustee and each Agent that (i)
such Global Certificate is then, and at the time of issuance and sale thereof
will be, duly authorized for issuance and sale by the Company, (ii) such Global
Certificate will conform with the terms of the Indenture pursuant to which such
Global Certificate is issued and (iii) upon authentication and delivery of such
Global Certificate, the aggregate principle amount of all Notes issued will not
exceed $200,000,000 (except for Book-Entry Notes represented by Global
Certificates authenticated and delivered in exchange for or in lieu of Global
Certificates pursuant to Section 304, 305, 306 or 906 of the Indenture and
except for Certificated Notes authenticated and delivered upon registration of,
transfer of, in exchange for, or in lieu of Certificated Notes pursuant to any
such Section).
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C. Citibank will assign a CUSIP number to such Global Certificate and
advise the Company by telephone of such CUSIP number. Citibank will enter a
pending deposit message through the Depositary's Participant Terminal System,
providing the following settlement information to the Depositary (which will
provide such information to Standard & Poor's), such Agent, and, upon request,
the Trustee under the Indenture pursuant to which each Book-Entry Note which is
represented by the Global Certificate which is to be issued:
1. The information set forth in Settlement Procedure "A".
2. Initial Interest Payment Date for such Book-Entry Note, number of days
by which such date succeeds the related Regular Record Date (which, in the case
of Floating Rate Notes which reset daily or weekly, shall be the date 5 calendar
days immediately preceding the applicable Interest Payment Date, and in the case
of all other Notes shall be the Regular Record Date as defined in the Note) and
amount of interest payable on such Interest Payment Date.
3. CUSIP number of the Global Certificate representing such Book-Entry
Note.
4. Whether such Global Certificate will represent any other Book-Entry
Note (to the extent known at such time).
D. The Trustee will complete the first page of the preprinted note, the
form of which was previously approved by the Company, the Agents and the
Trustee.
E. The Trustee will authenticate the Global Certificate.
F. The Depositary will credit each Book-Entry Note represented by the
Global Certificate to be issued to Citibank's participant account at the
Depositary.
G. Citibank will enter an SDFS deliver order through the Depositary's
Participant Terminal System, with respect to each Book-Entry Note represented by
the Global Certificate to be issued, instructing the Depositary to (i) debit
such Book-Entry Note to Citibank's participant account and credit such Book-
Entry Note to such Agent's participant account and (ii) debit such Agent's
settlement account and credit Citibank's settlement account for an amount equal
to the price of such Book-Entry Note less such Agent's commission. The entry of
such a deliver order shall constitute a representation and warranty by Citibank
to the Depositary that (i) the Global Certificate representing such Book-Entry
Note has been issued and authenticated and (ii) Citibank is holding such Global
Certificate pursuant to the Certificate Agreement.
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H. The Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System, with respect to each Book-Entry Note represented by
the Global Certificate to be issued, instructing the Depositary (i) to debit
such Book-Entry Note to such Agent's participant account and credit such Book-
Entry Note to the participant account of the Participant with respect to such
Book-Entry Note and (ii) to debit the settlement account of such Participant and
credit the settlement account of such Agent for an amount equal to the price of
such Book-Entry Note.
I. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "G" and "H" will be settled in accordance with SDFS Paying
Agent Operating Procedures (as defined in the Letter of Representations) in
effect on the settlement date.
J. Citibank will credit to an account of the Company maintained at
Citibank, N.A., funds available for immediate use in the amount transferred to
Citibank in accordance with Settlement Procedure "G".
K. Citibank, N.A., as custodian for the Depositary, will hold the Global
Certificate pursuant to the Certificate Agreement. Periodically, Citibank will
send to the Company a statement setting forth the principal amount of Book-Entry
Notes and Global Certificates outstanding as of that date under the Indenture
and setting forth a brief description of any sales of which the Company has
advised Citibank but which have not yet been settled.
L. Such Agent will deliver to the purchaser a copy of the most recent
Prospectus applicable to the Notes with or prior to any written offer of Notes
and the confirmation and payment by the purchaser of the Note.
Such Agent will confirm the purchase of each Book-Entry Note to the
purchaser either by transmitting to the Participant with respect to such Book-
Entry Note a confirmation order or orders through the Depositary's institutional
delivery system or by mailing a written confirmation to such purchaser.
SETTLEMENT PROCEDURES TIMETABLE
For orders of Book-Entry Notes solicited by an Agent, as agent, and
accepted by the Company for settlement on the first Business Day after the sale
date, Settlement Procedures "A" through "L" set forth above shall be completed
as soon as possible but not later than the respective times (New York City time)
set forth below:
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<TABLE>
<CAPTION>
SETTLEMENT TIME
PROCEDURE
<S> <C>
A-B 11:00 A.M. on the sale date
C 2:00 P.M. on the sale date
D 3:00 P.M. on day before settlement date
E 9:00 A.M. on settlement date
F 10:00 A.M. on settlement date
G-H 2:00 P.M. on settlement date
I 4:45 P.M. on settlement date
J-L 5:00 P.M. on settlement date
</TABLE>
If a sale is to be settled more than one Business Day after the sale date,
Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable
but no later than 11:00 A.M. and 2:00 P.M., as the case may be, on the first
Business Day after the sale date. In connection with a sale which is to be
settled more than one Business Day after the sale date, if the initial interest
rate for a Floating Rate Note is not known at the time that Settlement Procedure
"A" is completed, Settlement Procedures "B" and "C" shall be completed as soon
as such rates have been determined, but no later than 11:00 a.m. and 2:00 p.m.,
respectively, on the second Business Day before the Settlement Date. Settlement
Procedure "I" is subject to extension in accordance with any extension of
Fedwire closing deadlines and in the other events specified in the SDFS
operating procedures in effect on the settlement date.
If settlement of a Note is rescheduled or canceled, Citibank will deliver
to the Depositary, through the Depositary's Participant Terminal System, a
cancellation message to such effect by no later than 2:00 p.m. on the Business
Day immediately preceding the scheduled settlement date.
FAILURE TO SETTLE
Prior to Citibank's entry of an SDFS deliver order with respect to a Book-
Entry Note pursuant to Settlement Procedure "G", Citibank, upon written request
of the Company, shall deliver through the Depositary's Participant Terminal
System, as soon as practicable, but not later than 2:00 p.m. on any Business
Day, a withdrawal message instructing the Depositary to debit such Book-Entry
Note to Citibank's participant account. The Depositary will process the
withdrawal message, provided that Citibank's participant account contains a
principal amount of the Global Certificate representing such Book-Entry Note
that
A-17
<PAGE>
is at least equal to the principal amount to be debited. If a withdrawal
message is processed with respect to all the Book-Entry Notes represented by a
Global Certificate, Citibank will mark such Global Certificate "Canceled", make
appropriate entries in Citibank's records and send such canceled Global
Certificate to the Company. The CUSIP number assigned to such Global Certificate
shall, in accordance with CUSIP Service Bureau procedures, be canceled and not
immediately reassigned. If a withdrawal message is processed with respect to one
or more, but not all, of the Book-Entry Notes represented by a Global
Certificate, Citibank will exchange such Global Certificate for two Global
Certificates, one of which shall represent such Book-Entry Note or Notes and
shall be canceled immediately after issuance and the other of which shall
represent the other Book-Entry Notes previously represented by the surrendered
Global Certificate and shall bear the CUSIP number of the surrendered Global
Certificate.
If the purchase price for any Book-Entry Note is not timely paid to the
Participant with respect to such Note by the beneficial purchaser thereof (or a
Person, including an indirect participant in the Depositary, acting on behalf of
such purchaser), such Participant and, in turn, the Agent for such Note may
enter a deliver order through the Depositary's Participant Terminal System
debiting such Note to such Agent's participant account and crediting such Note
free to the participant account of Citibank and shall notify Citibank and the
Company thereof. Thereafter, Citibank (i) will immediately notify the Company
thereof, once Citibank has confirmed that such Note has been credited to its
participant account, and the Company shall immediately transfer by Fedwire (in
immediately available funds) to such Agent an amount equal to the price of such
Note which was previously transferred to the account of the Company maintained
at Citibank, N.A. in accordance with Settlement Procedure and (ii) Citibank will
deliver the withdrawal message and take the related actions described in the
preceding paragraph. The Agent will not be entitled to any commission with
respect to any Note which the purchaser does not accept and make payment for.
Such debits and credits will be made on the Settlement Date, if possible, and in
any event not later than 5:00 p.m. on the following Business Day. If such
failure shall have occurred for any reason other than failure by the applicable
Agent to perform its obligations hereunder or under the Distribution Agreement,
the Company will reimburse such Agent on an equitable basis for its loss of the
use of funds during the period when the funds were credited to the account of
the Company.
Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Note, the Depositary may take any actions in accordance with its SDFS
operating procedures then in effect. In the event of a failure to settle with
respect to one or more, but not all, of the Book-Entry Notes to have been
represented by a Global Certificate, Citibank will provide, in accordance with
A-18
<PAGE>
Settlement Procedures "D" and "E", for the authentication and issuance of a
Global Certificate representing the other Book-Entry Notes to have been
represented by such Global Certificate and will make appropriate entries in its
records.
A-19
<PAGE>
ANNEX B
ASHLAND INC.
Terms Agreement
_________, 199_
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Salomon Smith Barney Inc.
Seven World Trade Center
New York, N.Y. 10048
Chase Securities Inc.
270 Park Avenue
New York, N.Y. 10017
Ladies and Gentlemen:
Ashland Inc. (the "Company") proposes, subject to the terms and conditions
stated herein and in the Distribution Agreement, dated January __, 1999 (the
"Distribution Agreement"), between the Company on the one hand and Credit Suisse
First Boston Corporation, Salomon Smith Barney Inc. and Chase Securities Inc.
(the "Purchasers") on the other, to issue and sell to Credit Suisse First Boston
Corporation, Salomon Smith Barney Inc. and Chase Securities Inc. the securities
specified in the Schedule hereto (the "Purchased Securities"). Each of the
provisions of the Distribution Agreement not specifically related to the
solicitation by the Agents, as the agents of the Company, of offers to purchase
Securities is incorporated herein by reference in its entirety, and shall be
deemed to be part of this Terms Agreement to the same extent as if such
provisions had been set forth in full herein. Nothing contained herein or in the
Distribution Agreement shall make any party hereto an agent of the Company or
make such party subject to the provisions therein relating to the solicitation
of offers to purchase securities from the Company, solely by virtue of its
execution of this Terms Agreement. Each of the representations and warranties
set forth therein shall be deemed to have been made at and as of the date of
this Terms Agreement, except that each representation and warranty in Section 4
of the Distribution
B-1
<PAGE>
Agreement which makes reference to the Prospectus shall be deemed to be a
representation and warranty as of the date of this Terms Agreement in relation
to the Prospectus as amended and supplemented to relate to the Purchased
Securities.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Purchasers and the Purchasers agree to purchase from the
Company the Purchased Securities, at the time and place, in the principal amount
and at the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us the counterparts hereof, and upon acceptance hereof by you this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
ASHLAND INC.
By
Title:
Accepted:
[CREDIT SUISSE FIRST BOSTON CORPORATION
By _____________________________
Title:]
[SALOMON SMITH BARNEY INC.
By _____________________________
Title:]
[CHASE SECURITIES INC.
B-2
<PAGE>
By _____________________________
Title:]
B-3
<PAGE>
B-4
<PAGE>
SCHEDULE TO ANNEX B
Title of Purchased Securities:
[__%] Medium-Term Notes
Aggregate Principal Amount:
$_____________
[Price to Public:]
Purchase Price by [Name of Purchaser]:
% of the principal amount of the Purchased Securities, plus accrued
interest from to
Method of and Specified Funds for Payment of Purchase Price:
[By certified or official bank check or checks, payable to the order of the
Company, in [immediately available] funds]
[By wire transfer to a bank account specified by the Company in
[immediately available] funds]]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %]
Interest Payment Dates:
[months and dates]
Other Provisions:
B-5
<PAGE>
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall be
delivered as a condition to the Closing:
[(1) The officers' certificate referred to in Section 6(c).]
[(2) The opinions referred to in Section 6(d).]
[(3) The opinion referred to in Section 6(e).]
[(4) The accountants' letter referred to in Section 6(f).]
B-6
<PAGE>
ANNEX C-1
FORM OF OPINION OF THOMAS L. FEAZELL, ESQ.
[DATE]
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Salomon Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Chase Securities Inc.
270 Park Avenue
New York, N.Y. 10017
Ladies and Gentlemen:
Re: Distribution Agreement by and between
Credit Suisse First Boston Corporation, Salomon Smith Barney Inc.,
Chase Securities Inc., and Ashland Inc.
I am Senior Vice President, General Counsel and Secretary of Ashland Inc.,
a Kentucky corporation ("Ashland"), and as such I have acted as counsel for
Ashland in connection with the execution and delivery of a Distribution
Agreement dated January __, 1999 (the "Distribution Agreement") between you and
Ashland, providing for the issue and sale by Ashland of up to $220,000,000
aggregate principal amount of its Medium-Term Notes, Series H, Due Nine Months
or More from Date of Issue (the "Notes"), to be issued pursuant to the Indenture
dated as of August 15, 1989, as amended and restated as of August 15, 1990, (the
"Indenture"), between Ashland and Citibank, N.A., as Trustee.
In that connection, I have examined originals, or copies certified or
otherwise identified to my satisfaction, of such documents, corporate records
and other instruments as I have deemed necessary or appropriate for the purpose
of this opinion, including (a) the Second Restated Articles of Incorporation of
Ashland, as amended; (b) the By-laws of Ashland, as amended; (c) the
Registration Statement on Form S-3 (File No. 333-______), (the "Registration
Statement"), relating to $600,000,000 aggregate principal amount of securities
of Ashland registered under the Securities Act of 1933, as amended (the "Act");
(d)
C-1-1
<PAGE>
the prospectus dated January __, 1999 included in the Registration Statement
and the prospectus supplement dated January __, 1999 (such prospectus together
with such prospectus supplement (including all material incorporated by
reference therein) as supplemented or amended to the date hereof being
hereinafter collectively called the "Final Prospectus"); (e) the Distribution
Agreement; (f) the Indenture; (g) the form of the Notes; and (h) resolutions
adopted by the Board of Directors of the Company on November 5, 1998.
Based upon the foregoing, I am of the opinion that:
(a) Ashland has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Kentucky with
full corporate power and authority to own its properties and conduct its
business as described in the Final Prospectus [, and is duly qualified to do
business as a foreign corporation under the laws of each jurisdiction which
requires such qualification wherein it owns or leases material properties or
conducts material business except for any jurisdiction wherein failure to be so
qualified would not have a material adverse effect on the business, financial
condition or results of operations of Ashland and its subsidiaries, taken as a
whole.]/(1)/
(b) Ashland's authorized equity capitalization is as set forth or
incorporated by reference in the Final Prospectus.
(c) The Indenture has been duly authorized, executed and delivered by
Ashland, and constitutes a legal, valid and binding instrument enforceable
against Ashland in accordance with its terms (subject to applicable bankruptcy,
reorganization, fraudulent transfers, insolvency, moratorium or other laws
relating to and affecting creditors' rights generally from time to time in
effect). The enforceability of Ashland's obligations is also subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(d) The Notes have been duly authorized and, when the terms of any Notes
have been established in accordance with the Indenture and have been executed,
authenticated, issued and delivered against payment therefor in accordance with
the provisions of the Indenture, will constitute legal, valid and binding
obligations of Ashland enforceable against Ashland in accordance with
___________
/(1)/ Language in brackets to be included only in opinion dated the date of
the Distribution Agreement.
C-1-2
<PAGE>
their terms (subject to applicable bankruptcy, reorganization, fraudulent
transfer, insolvency, moratorium or other laws relating to and affecting
creditors' rights generally from time to time in effect) and will be entitled to
the benefits of the Indenture. The enforceability of Ashland's obligations is
also subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(e) To the best knowledge of the undersigned (i) there is no pending or
threatened action, suit or proceeding before any court or governmental agency,
authority or body or any arbitrator involving Ashland or any of its
subsidiaries, the probable outcome of which would have a material adverse effect
on the financial condition of Ashland and its subsidiaries taken as a whole and
which is not adequately disclosed in the Final Prospectus; (ii) there is no
franchise, contract or other document of a character required to be described in
the Registration Statement, as amended, or the Final Prospectus or to be filed
as an exhibit to the Registration Statement, as amended, which is not described
or filed as required; and (iii) the statements included or incorporated in the
Registration Statement, as amended, and the Final Prospectus describing any
legal proceedings or contracts or agreements relating to Ashland fairly
summarize such matters in accordance with the rules under the Act.
(f) The Registration Statement, as amended, has become effective under the
Act; to the best knowledge of the undersigned, no stop order suspending the
effectiveness of the Registration Statement, as amended, has been issued, no
proceedings for that purpose have been instituted or threatened, and the
undersigned has no reason to believe that any part of the Registration
Statement, as amended, (other than the Form T-1 and the financial statements
including the notes thereto and related schedules and other financial and
statistical data included therein or incorporated therein by reference, as to
which the undersigned expresses no opinion), when such part became effective or
was incorporated by reference into such Registration Statement, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading or that
the Final Prospectus (other than the financial statements, including the notes
thereto and related schedules and other financial and statistical data included
therein or incorporated therein by reference, as to which the undersigned
expresses no belief), includes any untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(g) The Distribution Agreement has been duly authorized, executed and
delivered by Ashland.
C-1-3
<PAGE>
(h) To the best knowledge of the undersigned, no consent, approval,
authorization or order of any court or governmental agency or body is required,
insofar as the same may be applicable to Ashland, for the consummation of the
transactions contemplated in the Distribution Agreement, except such as have
been obtained under the Act and the Trust Indenture Act and such as may be
required under the blue sky laws of any jurisdiction in connection with the sale
of the Notes.
(i) Neither the issue and sale of the Notes, nor the consummation of any
other of the transactions contemplated in the Distribution Agreement nor the
fulfillment of the terms thereof will conflict with, result in a material breach
of, or constitute a material default under the Second Restated Articles of
Incorporation or By-laws of Ashland, each as amended, or the terms of any
indenture or other agreement or instrument known to the undersigned and to which
Ashland or any of its subsidiaries is a party or bound, or any order or
regulation known to the undersigned to be applicable to Ashland or any of its
subsidiaries of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over Ashland or any of its subsidiaries.
(j) No holders of securities of Ashland have rights to the registration of
such securities under the Registration Statement.
As to certain of the matters referred to in Paragraph (c), Paragraph (d),
Paragraph (e), Paragraph (f) and Paragraph (h) in the foregoing opinion, I have
relied upon the opinion or letter of Cravath, Swaine & Moore dated the date
hereof, a copy of which opinion or letter is attached hereto and the undersigned
believes that you and the undersigned are justified in relying on such opinion
or letter.
I am not a member of the bar of any states other than the Commonwealth of
Kentucky and the State of West Virginia and, accordingly, do not purport to be
an expert on matters of law outside of such jurisdictions. I have, however,
reviewed such of the laws of other jurisdictions as I have deemed necessary and
relevant regarding the matters referred to above which are governed by such law
and have no reason to believe that the opinions stated herein are not correct.
Very truly yours,
Thomas L. Feazell
Attachment
C-1-4
<PAGE>
ANNEX C-2-A
FORM OF OPINION OF
CRAVATH, SWAINE & MOORE
[DATE]
Ashland Inc.
Medium-Term Notes
Ladies and Gentlemen:
We have acted as counsel for Ashland Inc., a Kentucky corporation (the
"Company"), in connection with the execution and delivery of a Distribution
Agreement dated January __, 1999 (the "Distribution Agreement"), between you and
the Company, providing for the issue and sale by the Company of up to
$220,000,000 aggregate principal amount of its Medium-Term Notes, Series H, Due
Nine Months or More from Date of Issue (the "Notes"), to be issued pursuant to
the Indenture dated as of August 15, 1989, as amended and restated as of August
15, 1990 (the "Indenture"), between the Company and Citibank, N.A., as Trustee.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary or appropriate for the purpose
of this opinion, including (a) the Second Restated Articles of Incorporation of
the Company, as amended; (b) the By-laws of the Company, as amended; (c) the
Registration Statement on Form S-3 (No. 333-______) (the "Registration
Statement"), filed with the Securities and Exchange Commission (the
"Commission"), relating to $600,000,000 aggregate principal amount of securities
of the Company registered under the Securities Act of 1933, as amended (the
"Act"); (d) the Prospectus dated January __, 1999, as supplemented by the
Prospectus Supplement dated January __, 1999 (such Prospectus, including all
material incorporated by reference therein, and Prospectus Supplement being
hereinafter collectively called the "Final Prospectus"); (e) the Distribution
Agreement; (f) the Indenture; (g) the form of the Notes; and (h) certain
resolutions adopted by the Board of Directors of the Company on January __,
1999.
Based on the foregoing, we are of opinion as follows:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Kentucky,
with full corporate power and authority to own its properties and conduct its
business as described in the Final Prospectus.
C-2-A-1
<PAGE>
(b) The Company's authorized equity capitalization is as set forth or
incorporated by reference in the Final Prospectus and the Notes conform to the
description thereof contained in the Final Prospectus.
(c) The Indenture has been duly authorized, executed and delivered by the
Company, has been duly qualified under the Trust Indenture Act of 1939, as
amended, and constitutes a legal, valid and binding instrument enforceable
against the Company in accordance with its terms (subject to applicable
bankruptcy, reorganization, fraudulent transfer, insolvency, moratorium and
other laws affecting creditors' rights generally from time to time in effect).
The enforceability of the Company's obligations is also subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(d) The Notes have been duly authorized and, when the terms of any Notes
have been established in accordance with the Indenture and when such Notes have
been executed, authenticated, issued and delivered against payment therefor in
accordance with the provisions of the Indenture, will constitute legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms (subject to applicable bankruptcy, reorganization,
fraudulent transfer, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect) and will be entitled to the
benefits of the Indenture. The enforceability of the Company's obligations is
also subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(e) The Distribution Agreement has been duly authorized, executed and
delivered by the Company.
(f) Neither the issue and sale of the Notes nor the consummation of any
other of the transactions contemplated in the Distribution Agreement nor the
fulfillment of the terms thereof will conflict with, result in a material breach
of, or constitute a material default under, the Second Restated Articles of
Incorporation or By-laws of the Company. (g) To the best of our knowledge, no
consent, approval, authorization or order of any court or governmental agency or
body is required, insofar as the same may be applicable to the Company, for the
consummation of the transactions contemplated in the Distribution Agreement
except such as have been obtained under the Act and the Trust Indenture Act and
such as may be required under the blue sky laws of any jurisdiction in
connection with the sale of the Notes.
We are admitted to the Bar of the State of New York and express no opinion
as to the laws of any jurisdiction other than the State of New York and United
States of America. To the extent that our opinions herein are based upon
C-2-A-2
<PAGE>
matters governed by the law of the Commonwealth of Kentucky, we have relied,
with your approval, on the opinion dated today of Thomas L. Feazell, Esq.,
Senior Vice President, General Counsel and Secretary of the Company.
Thomas L. Feazell, Esq. and Citibank, N.A., as Trustee, are each entitled
to rely on this letter as fully as if this letter had been addressed to them
directly.
Very truly yours,
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Salomon Smith Barney Inc.
Seven World Trade Center
New York, NY 10048
Chase Securities Inc.
270 Park Avenue
7th Floor
New York, NY 10017
C-2-A-3
<PAGE>
ANNEX C-2-B
[date]
Ashland Inc.
Medium-Term Notes
Ladies and Gentlemen:
We have acted as counsel for Ashland Inc., a Kentucky corporation (the
"Company"), in connection with the execution and delivery of a Distribution
Agreement dated January __, 1999, between you and the Company, providing for the
issue and sale by the Company of up to $220,000,000 aggregate principal amount
of its Medium-Term Notes, Series H, Due Nine Months or More from Date of Issue,
to be issued pursuant to the 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.
In that capacity, we participated in conferences with certain officers of,
and with the accountants for, the Company concerning the preparation of (a) the
Registration Statement on Form S-3 (Registration No. 333-______) (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "Commission"), for registration of $600,000,000 aggregate principal amount
of securities of the Company under the Securities Act of 1933 (the "Securities
Act"); and (b) the Prospectus dated January __, 1999, as supplemented by the
Prospectus Supplement dated January __, 1999 (such Prospectus, including all
material incorporated by reference therein, and Prospectus Supplement being
hereinafter collectively called the "Final Prospectus"). Certain of the
documents incorporated by reference in the Registration Statement and Final
Prospectus were prepared and filed by the Company without our participation.
Although we have made certain inquiries and investigations in connection
with the preparation of the Registration Statement and the Final Prospectus, the
limitations inherent in the role of outside counsel are such that we cannot and
do not assume responsibility for the accuracy or completeness of the statements
made in the Registration Statement and Final Prospectus, except insofar as such
statements relate to us. Subject to the foregoing, we hereby advise you that our
work in connection with this matter did not disclose any information that gave
us reason to believe that: (i) the Registration Statement, the Final Prospectus
and each amendment or supplement thereto (except the financial statements and
other accounting or financial data included therein, as to which we do not
express any view) were not, as of their respective effective or issue dates,
appropriately
C-2-B-1
<PAGE>
responsive in all material respects to the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder, or (ii)
the Registration Statement, at the time the Registration Statement became
effective contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Final Prospectus or any amendment or
supplement thereto, at the date hereof, include or included an untrue statement
of a material fact or omit or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (in each case except for the financial
statements and other accounting or financial data included therein, as to which
we do not express any view).
We are furnishing this letter to you, as Agents, solely for your benefit.
This letter is not to be used, circulated, quoted or otherwise referred to for
any other purposes.
Thomas L. Feazell, Esq. and Citibank, N.A., as Trustee, are each entitled
to rely on this letter as fully as if this letter had been addressed to them
directly.
Very truly yours,
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Salomon Smith Barney Inc.
Seven World Trade Center
New York, NY 10048
Chase Securities Inc.
270 Park Avenue
7th Floor
New York, NY 10017
C-2-B-2
<PAGE>
ANNEX D
Accountants' Comfort Letter
Upon execution of the Distribution Agreement and, to the extent provided in
Section 7 of the Distribution Agreement, at each Closing Date, (1) Ernst & Young
LLP shall furnish to the Agents or Purchaser, as the case may be, a letter or
letters (which may refer to letters previously delivered to the Agents or
Purchaser, as the case may be), dated as of the date of the Distribution
Agreement or such Closing Date, as the case may be, in form and substance
satisfactory to the Agents or the Purchaser, as the case may be, confirming that
they are independent accountants within the meaning of the Securities Act and
the applicable published rules and regulations thereunder and stating in effect
that:
(i) in their opinion the consolidated financial statements audited by them
and incorporated by reference in the Registration Statements and the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Exchange Act and the related
published rules and regulations;
(ii) on the basis of a reading of the latest available interim consolidated
financial statements of the Company, carrying out certain specified procedures
(but not an audit in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect to the
comments set forth in such letter, inquiries of officials of the Company
responsible for financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated financial statements, if any, included or
incorporated in the Registration Statements and the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements and with the published rules and regulations of the Commission
with respect to financial statements included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act, or are not in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the audited financial statements included or incorporated in the
Registration Statement and the Prospectus, except for the accounting
changes discussed in the notes thereto;
(B) with respect to the period subsequent to the date of the most recent
financial statements included or incorporated in the Registration
Statements or Prospectus, (i) at the date of the latest available
consolidated balance sheet read by such accountants or (ii) at a subsequent
specified date not more than five days prior to the date of the letter,
there was any decrease in the working
D-1
<PAGE>
capital (but only with respect to the date referred to in the foregoing clause
(i)), any change in capital stock of the Company (except pursuant to existing
stock option, bonus or other similar plans or conversion of debentures or
preferred stock) or increase in long-term debt and debt due within one year,
or decrease in the common stockholders' equity of the Company and its
consolidated subsidiaries (except such changes, increases or decreases which
the Prospectus (directly or by incorporation) discloses have occurred or may
occur) as compared with the amounts shown on the most recent consolidated
balance sheet included or incorporated in the Registration Statements and the
Prospectus;
(C) for the period from the closing date of the most recent consolidated
balance sheet included or incorporated in the Registration Statements and
the Prospectus to the closing date of the latest available consolidated
income statement read by such accountants there were any decreases, as
compared with the corresponding period in the previous year, in
consolidated sales and operating revenues or consolidated net income except
for changes or decreases which the Prospectus (directly or by
incorporation) discloses have occurred or may occur, or which are described
in such letter; or
(D) unaudited pro forma consolidated condensed financial statements, if
any, included or incorporated by reference in the Prospectus do not comply
as to form in all material respects with the applicable accounting
requirements of the Securities Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements;
(iii) they have performed certain other specified procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Company and its
subsidiaries) set forth in the Registration Statements and the Prospectus and in
Exhibit 12 to the Registration Statements, including the information included or
incorporated in Items 1, 6 and 7 of the Company's Annual Report on Form 10-K,
incorporated in the Registration Statements and the Prospectus, and the
information included in the "Management's Discussion and Analysis" included or
incorporated in the Company's quarterly reports on Form 10-Q, incorporated in
the Registration Statements and the Prospectus, agrees with the accounting
records of the Company and its subsidiaries excluding any questions of legal
interpretation; and
(iv) they have made a review of any unaudited financial statements included
in the Registration Statement in accordance with standards established by the
American Institute of Certified Public Accountants, as indicated in their report
or reports, if any, attached to such letter.
D-2
<PAGE>
SCHEDULE I
----------
Agent's Commissions
-------------------
<TABLE>
<CAPTION>
MATURITY OF NOTE COMMISSION
---------------- (PERCENT OF
PRINCIPAL AMOUNT
OF NOTE)
Maturity
--------
<S> <C>
9 months to less than 12 months .125%
12 months to less than 18 months .150
18 months to less than 24 months .200
24 months to less than 30 months .250
30 months to less than 3 years .300
3 years to less than 4 years .350
4 years to less than 5 years .450
5 years to less than 7 years .500
7 years to less than 10 years .550
10 years to less than 20 years .600
20 years or more .750
</TABLE>
<PAGE>
EXHIBIT 5
January 15, 1999
Ashland Inc.
50 E. RiverCenter Boulevard
Covington, KY 41012
Dear Sirs:
As Senior Vice President, General Counsel and Secretary of Ashland Inc., a
Kentucky corporation (the "Company"), I have examined and am familiar with the
Second Restated Articles of Incorporation of the Company, as amended, and the
By-laws of the Company, as amended. I am also familiar with the corporate
proceedings taken by the Board of Directors to authorize the Registration
Statement on Form S-3 (the "Registration Statement") being filed by the Company
on the date hereof with the Securities and Exchange Commission under the
Securities Act of 1933 (the "Securities Act") with respect to $600,000,000
aggregate initial offering price of unsecured debt securities, which may be
either senior or subordinated debt securities (the "Debt Securities"), shares of
cumulative preferred stock, without par value (the "Preferred Stock"),
depositary shares (the "Depositary Shares"), shares of common stock, par value
$1.00 per share (the "Common Stock") and warrants to purchase Debt Securities,
Preferred Stock or Common Stock (the "Warrants"), for issuance from time to time
pursuant to Rule 415 under the Securities Act.
In connection with the foregoing, I have examined originals, or copies
certified or otherwise identified to my satisfaction, of such documents,
corporate records and other instruments as I have deemed necessary or
appropriate for the purpose of this opinion.
Based upon the foregoing, I am of the opinion that:
1. When the Debt Securities have been duly authorized by appropriate
corporate authorization and executed, authenticated and delivered against
payment therefor, such Debt Securities will be validly issued and will
constitute binding obligations of the Company in accordance with their terms,
subject to applicable bankruptcy, reorganization, moratorium or similar laws
affecting creditors' rights generally from time to time in effect.
<PAGE>
2. When the Preferred Stock, the Common Stock and the Depositary Shares
have been duly authorized by appropriate corporate authorization and when
issued, such Preferred Stock, Common Stock, and Depositary Shares will be
validly issued, fully paid and nonassessable.
3. When the Warrants have been duly authorized by appropriate corporate
authorization and executed, countersigned and delivered against payment
therefor, such Warrants will be validly issued and will constitute binding
obligations of the Company in accordance with their terms, subject to applicable
bankruptcy, reorganization, moratorium or similar laws affecting creditors'
rights generally from time to time in effect.
I know that I am referred to under the heading "Legal Matters" in the
Registration Statement, and I consent to such use of my name in the Registration
Statement and to the use of this opinion for filing as an exhibit to the
Registration Statement.
Very truly yours,
Thomas L. Feazell
<PAGE>
EXHIBIT 12
ASHLAND INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(In millions)
<TABLE>
<CAPTION>
Years Ended September 30
---------------------------
1994 1995 1996 1997 1998
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
EARNINGS
- --------
Income from continuing operations.................. $ 163 $ 14 $ 136 $ 192 $ 203
Income taxes....................................... 82 (1) 72 127 114
Interest expense................................... 119 153 154 148 133
Interest portion of rental expense................. 34 35 44 48 40
Amortization of deferred debt expense.............. 1 1 1 1 1
Undistributed earnings of unconsolidated affiliates (14) (8) (21) (19) (77)
Amounts related to significant affiliates*
Earnings.......................................... 27 49 57 47 59
Dividends......................................... - (9) (5) (12) (10)
----- ----- ----- ----- -----
$ 412 $ 234 $ 438 $ 532 $ 463
===== ===== ===== ===== =====
FIXED CHARGES
- -------------
Interest expense................................... $ 119 $ 153 $ 154 $ 148 $ 133
Interest portion of rental expense................. 34 35 44 48 40
Amortization of deferred debt expense.............. 1 1 1 1 1
Capitalized interest............................... - - - 1 -
Fixed charges of significant affiliates*........... 18 32 29 25 29
----- ----- ----- ----- -----
$ 172 $ 221 $ 228 $ 223 $ 203
===== ===== ===== ===== =====
COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
- -------------------------
Preferred dividend requirements.................... $ 19 $ 19 $ 19 $ 9 $ -
Ratio of pretax to net income**.................... 1.51 .90 1.53 1.66 -
----- ----- ----- ----- -----
Preferred dividends on a pretax basis.............. 28 17 29 16 -
Fixed charges...................................... 172 221 228 223 203
----- ----- ----- ----- -----
$ 200 $ 238 $ 257 $ 239 $ 203
===== ===== ===== ===== =====
RATIO OF EARNINGS TO FIXED CHARGES................. 2.40 1.06 1.92 2.39 2.28
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS......................... 2.06 *** 1.70 2.23 2.28
</TABLE>
* Significant affiliates are companies accounted for on the equity method
that are 50% or greater owned or whose indebtedness has been directly
guaranteed by Ashland or its consolidated subsidiaries.
** Computed as income from continuing operations before income taxes divided
by income from continuing operations, which adjusts dividends on preferred
stock to a pretax basis.
*** Combined fixed charges and preferred stock dividends exceeded earnings (as
defined) by $4 million.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus dated January 15, 1999
of Ashland Inc. and to the incorporation by reference therein of our report
dated November 4, 1998, with respect to the consolidated financial statements
and schedule of Ashland Inc. and subsidiaries, included in its Annual Report on
Form 10-K for the year ended September 30, 1998, filed with the Securities and
Exchange Commission.
Louisville, Kentucky
January 13, 1999
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned Directors and
Officers of ASHLAND INC., a Kentucky corporation, which is about to file a
Registration Statement on Form S-3 for the registration of up to $600,000,000 of
common stock, preferred stock, depositary shares, debt securities, warrants to
purchase equity securities or warrants to purchase debt securities or any
combination thereof with the Securities and Exchange Commission under the
provisions of the Securities Exchange Act of 1933, as amended, hereby
constitutes and appoints PAUL W. CHELLGREN, THOMAS L. FEAZELL and DAVID L.
HAUSRATH, and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power to act without the others, to sign such Registration
Statement and any and all amendments thereof, to affix the corporate seal of
Ashland thereto and to attest said seal, and to file such Registration Statement
and each such amendment and the exhibits thereto and any and all other documents
in connection therewith with the Securities and Exchange Commission, and to do
and perform any and all acts and things requisite and necessary to be done in
connection with the foregoing as fully as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may lawfully do or cause to be done by virtue hereof.
Dated: November 5, 1998
/s/ Paul W. Chellgren /s/ Ralph E. Gomory
- --------------------------------------- --------------------------------------
Paul W. Chellgren, Chairman of the Ralph E. Gomory, Director
Board and Chief Executive Officer
/s/ J. Marvin Quin /s/ Bernadine P. Healy
- --------------------------------------- --------------------------------------
J. Marvin Quin, Senior Vice President Bernadine P. Healy, Director
and Chief Financial Officer
/s/ Kenneth L. Aulen /s/ Mannie L. Jackson
- --------------------------------------- --------------------------------------
Kenneth L. Aulen, Administrative Mannie L. Jackson, Director
Vice President, Controller and
Principal Accounting Officer
/s/ Samuel C. Butler /s/ Patrick F. Noonan
- --------------------------------------- --------------------------------------
Samuel C. Butler, Director Patrick F. Noonan, Director
/s/ Frank C. Carlucci /s/ Jane C. Pfeiffer
- --------------------------------------- --------------------------------------
Frank C. Carlucci, Director Jane C. Pfeiffer, Director
<PAGE>
/s/ Ernest H. Drew /s/ Michael D. Rose
- --------------------------------------- --------------------------------------
Ernest H. Drew, Director Michael D. Rose, Director
/s/ James B. Farley /s/ William L. Rouse, Jr.
- --------------------------------------- --------------------------------------
James B. Farley, Director William L. Rouse, Jr., Director
<PAGE>
CERTIFICATION
The undersigned certifies that he is Secretary of ASHLAND INC. ("ASHLAND"),
a Kentucky corporation, and that, as such, he is authorized to execute this
Certificate on behalf of ASHLAND and further certifies that attached is a true
and correct copy of an excerpt from the minutes of a meeting of the Board of
Directors of ASHLAND duly called, convened and held on November 5, 1998, at
which a quorum was present and acting throughout.
IN WITNESS WHEREOF, I have signed and sealed this Certification this 15th
day of January, 1999.
/s/ Thomas L. Feazell
---------------------------------
Thomas L. Feazell, Secretary
(S E A L)
<PAGE>
UNIVERSAL SHELF OFFERING
- ------------------------
WHEREAS, on November 3, 1994, the Board of Directors authorized the Corporation
to issue from time to time, securities (the "1994 Securities"), not exceeding
$600,000,000 in the aggregate principal amount or in the aggregate gross sales
proceeds to the Corporation, the 1994 Securities may take the form of common
stock, preferred stock, debt securities, depositary shares, warrants to purchase
equity securities or warrants to purchase debt securities or any combination of
the foregoing;
WHEREAS, pursuant to the November 3, 1994 Board resolutions, the Corporation
filed with the Securities and Exchange Commission (the "Commission") a Form S-3
Registration Statement No. 33-57011 under the Securities Act of 1933, as
amended, (the "1933 Act") registering the 1994 Securities (the "1994
Registration Statement");
WHEREAS, pursuant to the November 3, 1994 Board Resolutions, the Corporation has
filed with the Commission: (a) on April 12, 1995, Post-Effective Amendment No.
1 to Form S-3 Registration Statement No. 33-57011, relating to: (i)
$200,000,000 Series G Medium Term Notes, due from 9 months or More from Date of
Issue (of which $20,000,000 aggregate principal amount remained to be issued
under the 1994 Registration Statement), and (ii) $100,000,000 in the
Corporation's Common Stock, par value $1.00 per share (of which approximately
$48,689,000 remained to be issued prior to termination of the offering), and (b)
on December 18, 1996, Post-Effective Amendment No. 2 to Form S-3 Registration
Statement No. 33-57011, relating to: (i) $220,000,000 Series H Medium Term
Notes, Due from 9 Months or More from Date of Issue (which included the
$20,000,000 unissued under the Series G Medium-Term Notes and of which
$220,000,000 aggregate principal amount remain to be issued under the 1994
Registration Statement (the "Series H MTNs"), and (ii) the termination of the
offering of the Corporation's Common Stock;
WHEREAS, the Corporation desires to expand the issuance of the 1994 Securities
by authorizing an additional amount up to $250,000,000 in aggregate principal
amount or in aggregate gross proceeds to the Corporation which may take the form
of common stock, preferred stock, debt securities, depositary shares, warrants
to purchase equity securities or warrants to purchase debt securities or any
combination of the foregoing (the "1998 Securities");
<PAGE>
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby authorizes
the issuance by the Corporation of the 1998 Securities; provided that: (i) the
total issuance of the 1994 Securities and the 1998 Securities shall not exceed
$850,000,000 in aggregate principal amount or in aggregate gross proceeds to the
Corporation, (ii) equity securities issued shall comply with the applicable
limitation contained in Rule 415(a)(4)(ii) promulgated under the 1933 Act, and
(iii) equity securities or warrants to purchase equity securities of the
Corporation shall be issued only with the prior approval of the Board of
Directors;
RESOLVED, that the Chairman of the Board, the President, the Executive Vice
President, any Senior Vice President, Administrative Vice President or Vice
President, the Treasurer and any Assistant Treasurer (the "Authorized Officers")
be, and each of them is, hereby authorized, acting singly, to prepare, execute
and file for and on behalf of the Corporation with the Commission, a
Registration Statement covering the previously registered but unissued Series H
MTNs, the remaining undesignated portion of the 1994 Securities and the 1998
Securities (the "Securities") (the "Registration Statement"); in connection
therewith, to execute and file any and all amendments to the Registration
Statement all in such forms as the Authorized Officers executing the same may
deem necessary or appropriate, their execution thereof to be the conclusive
evidence of such approval;
RESOLVED, that any Authorized Officer be, and each of them is, hereby
authorized, acting singly, to approve the form or any Prospectus or Prospectus
Supplements relating to the Securities registered under the Registration
Statement as may be necessary or appropriate, and to cause any such other
governmental agencies as may, in the opinion of the Corporation's counsel, be
required or appropriate;
RESOLVED, that the Authorized Officers be, and each of them is, hereby
authorized, acting singly, to prepare, execute and file with the Commission an
application on Form 8-A for the registration under the Securities Exchange Act
of 1934, as amended, of the Securities; in connection therewith, to execute and
file any and all amendments to such application all in such forms as the
Authorized Officers executing the same may deem necessary or appropriate, their
execution thereof to be the conclusive evidence of such approval;
<PAGE>
RESOLVED, the Authorized Officers be, and each of them is, hereby authorized,
acting singly, to approve the following matters relating to debt securities or
warrants to purchase debt securities issuable under the Registration Statement
(the "Debt Securities"): (a) the amount, timing and the general terms of an
offering or offerings of the Debt Securities; (b) all specific terms, conditions
and provisions with respect to such Debt Securities, including without
limitation, title, interest rate, maturity, redemption features, sinking fund
provisions, if any; and (c) all other actions necessary or appropriate in order
to implement such offering or offerings; provided, however, that without
derogating from the binding effect of the above, it is understood that the oral
concurrence by the majority of the members of the Finance Committee of the Board
of Directors with respect to (a) above shall be obtained prior to the issuance
of any Debt Securities other than medium term notes;
RESOLVED, that the Authorized Officers be, and each of them is, hereby
authorized acting singly, to negotiate, execute, acknowledge, deliver and
perform in the name and on behalf of the Corporation, in such number of
counterparts as any of the Authorized Officers shall deem proper, one or more
Underwriting Agreements or Distribution Agreements between the Corporation and
one or more underwriters or agents in connection with the issuance of the
Securities to be sold under the Registration Statement of the Corporation,
having such form and containing such terms and conditions not inconsistent with
these resolutions of the Board;
RESOLVED, that the Corporation may issue and sell the Securities registered
under the Registration Statement under and pursuant to one or more indentures,
including but not limited to the Indenture dated as of August 15, 1989 as
amended and restated as of August 15, 1990 entered into between the Corporation
and Citibank, N.A., or such other indentures that the Corporation may enter into
with a bank or trust company from time to time;
<PAGE>
RESOLVED, that the Authorized Officers be, and each of them is, hereby
authorized, acting singly, to make applicable to the New York Stock Exchange and
Chicago Stock Exchange for the listing thereon of the Securities sold under the
Registration Statement and in connection therewith to execute, in the name and
on behalf of the Corporation, and deliver and file, all such applications,
agreements and other papers as shall be necessary to accomplish such listings
(and, in particular, to execute and deliver an indemnification agreement with
said Exchanges, as a condition to its approval of such listing if facsimile
signatures of the duly Authorized Officers of the Corporation are employed for
the signature of said Securities on its behalf) and to authorize representatives
of the Corporation to appear before the committees or bodies of said Exchanges
as such appearances may be required, with authority to make changes in said
listing applications and in the arrangements made in connection therewith which
they shall deem necessary or desirable in order to comply with the requirements
of such listings;
RESOLVED, that it is desirable and in the best interest of the Corporation that
it securities be qualified or registered for sale in various states; that any
Authorized Officer be, and each of them is, hereby authorized, acting singly, to
determine the sates in which appropriate action shall be taken to qualify or
register for issue, offer, sale or trade all or such part of the Securities of
this Corporation as any Authorized Officer may deem advisable; that the
Authorized Officers be, and each of them is, hereby authorized, acting singly,
to perform on behalf of the Corporation any and all acts as they may deem
necessary or advisable in order to comply with the applicable laws of any such
states, and in connection therewith to execute and file all requisite papers and
documents, including, but not limited to, applications, reports, surety bonds,
irrevocable consents and appointments of attorneys for service of process; and
that the execution by any Authorized Officer of any such paper or document or
the doing of any act in connection with the foregoing matters shall conclusively
establish their authority therefor from this Corporation and the approval and
ratification by this Corporation of the papers and documents so executed and the
action so taken;
<PAGE>
RESOLVED, that the Authorized Officers be, and each of them is, hereby
authorized, acting singly, to file, approve, execute, very, acknowledge, deliver
in the name and on behalf of the Corporation, under its corporate seal or
otherwise, and perform under any and all notices, certificates, agreements,
instruments and documents and to take all notices, certificates, agreements,
instruments and documents and to take all such further action, including, but
not limited to, delegation of the authority granted by this and the foregoing
resolutions, and to pay all such expenses and taxes as in their judgment shall
be necessary, proper or advisable to carry out the intent and accomplish the
purposes of each of the foregoing resolutions
*****
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305 (b)(2) ____
________________________
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
_______________________
Ashland Inc.
(Exact name of obligor as specified in its charter)
Kentucky 61-0122250
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
50 E. RiverCenter Boulevard
Covington, Kentucky 41002
(Address of principal executive (Zip Code)
offices)
_________________________
Debt Securities
(Title of the indenture securities)
<PAGE>
3
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
33 Liberty Street
New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits.
List below all exhibits filed as a part of this Statement of
Eligibility.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as exhibits
hereto.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now
in effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration Statement
No. 2-29577).
<PAGE>
4
Exhibit 3 - Copy of authorization of the Trustee to exercise
corporate trust powers. (Exhibit 3 to T-1 to Registration Statement
No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1
to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
(as of September 30, 1998 - attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
__________________
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 12th day
of January, 1999.
CITIBANK, N.A.
By /s/ Nancy Forte
---------------
Nancy Forte
Trust Officer
<PAGE>
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
Citibank, N.A.
of New York in the State of New York, at the close of business on September 30,
1998, published in response to call made by Comptroller of the Currency, under
Title 12, United States Code, Section 161. Charter Number 1461 Comptroller of
the Currency Northeastern District.
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin........... $ 8,336,000
Interest-bearing balances...................................... 14,937,000
Held-to-maturity securities.................................... 0
Available-for-sale securities.................................. 33,505,000
Federal funds sold and securities purchased under
agreements to resell........................................... 11,948,000
Loans and lease financing receivables:
Loans and Leases, net of unearned income....................... $174,282,000
LESS: Allowance for loan and lease losses...................... 4,631,000
Loans and leases, net of un-earned income, allowance,
and reserve.................................................... 169,651,000
Trading assets................................................... 36,759,000
Premises and fixed assets (including capitalized leases)......... 3,757,000
Other real estate owned.......................................... 510,000
Investments in unconsolidated subsidiaries and
associated companies............................................. 1,252,000
Customers' liability to this bank on acceptances outstanding..... 1,611,000
Intangible assets................................................ 2,965,000
Other assets..................................................... 10,891,000
------------
TOTAL ASSETS..................................................... $296,122,000
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices............................................ $ 38,517,000
Noninterest-bearing.......................................... 12,875,000
Interest-bearing............................................... 25,642,000
In foreign offices, Edge and Agreement subsidiaries, and
IBFs............................................................ 162,357,000
Noninterest-bearing.......................................... 10,724,000
Interest-bearing................................................. 151,633,000
Federal funds purchased and securities sold under
agreements to repurchase........................................ 8,114,000
Trading liabilities.............................................. 31,664,000
Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
With a remaining maturity of one year or less................ 10,429,000
With a remaining maturity of more than one year
through three years......................................... 1,405,000
With a remaining maturity of more than three years........... 2,160,000
Bank's liability on acceptances executed and outstanding......... 1,684,000
Subordinated notes and debentures................................ 6,000,000
Other liabilities................................................ 15,590,000
------------
TOTAL LIABILITIES $277,920,000
============
EQUITY CAPITAL
Perpetual preferred stock and related surplus.................... 0
Common stock..................................................... $ 751,000
Surplus.......................................................... 7,771,000
Undivided profits and capital reserves........................... 10,629,000
Net unrealized holding gains (losses) on
available-for-sale securities................................... (245,000)
Cumulative foreign currency translation adjustments.............. (704,000)
-------------
TOTAL EQUITY CAPITAL............................................. $ 18,202,000
-------------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND
EQUITY CAPITAL................................................. $ 296,122,000
=============
</TABLE>
I, Roger W. Trupin, Controller of the above-named bank do hereby declare that
this Report of Condition is true and correct to the best of my knowledge and
belief.
ROGER W. TRUPIN
CONTROLLER
We, the undersigned directors, attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions and
is true and correct.
PAUL J. COLLINS )
JOHN S. REED ) Directors
WILLIAM R. RHODES )
