Registration No. 33-57181
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
PepsiCo, Inc.
(Exact name of registrant as specified in its charter)
North Carolina 5812 13-1584302
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification
organization) Code Number) Number)
Purchase, New York 10577-1444
(914) 253-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
DOUGLAS M. CRAM, Esq.
Vice President and Assistant General Counsel
PepsiCo, Inc.
Purchase, New York 10577-1444
(914) 253-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
WILLIAM M. HARTNETT, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
(212) 701-3000
Approximate date of commencement of proposed sale of the
securities to the public: From time to time after the effective
date of this Registration Statement as determined in light of
market conditions.
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 (the "Act"), other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
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 which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Act or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
PROSPECTUS
U.S. $3,322,000,000
P E P S I C O L O G O
DEBT SECURITIES AND WARRANTS
Due Not Less Than Nine Months from Date of Issue
PepsiCo, Inc., a North Carolina corporation (the "Company"), may
from time to time offer one or more of the following securities
under the Registration Statement (hereinafter defined) of which
this Prospectus forms a part: debt securities, consisting of
notes, debentures, and other evidences of unsecured indebtedness
(the "Debt Securities"), warrants to purchase Debt Securities
(the "Debt Warrants"), and other warrants, options, and unsecured
contractual obligations of the Company (the "Shelf Warrants")
(Debt Warrants and Shelf Warrants sometimes referred to
collectively as the "Warrants"), up to an aggregate initial
offering price of $3,322,000,000 or the equivalent thereof in one
or more foreign or composite currencies (any such foreign or
composite currency a "Specified Currency"). See "Important
Currency Exchange Information". Debt Securities and Warrants
(collectively, the "Securities" and each, individually, a
"Security") may be offered separately or together, in amounts, at
prices, and on terms to be determined at the time of sale.
The particular terms of any series of Debt Securities will be set
forth in a separate supplement to this Prospectus (each
a "Pricing Supplement"). Each Debt Security will bear interest
at either a fixed rate established by the Company at the date of
issue (a "Fixed Rate Debt Security") (which in the case of a Debt
Security issued at a discount from its principal amount (a
"Discount Debt Security") may be zero) or a floating rate (a
"Floating Rate Debt Security"). A Fixed Rate Debt Security may
pay a variable amount of principal and a Floating Rate Debt
Security may pay a variable amount of interest and/or principal,
in each case as determined by reference to the relative value of
one or more Specified Currencies, commodities, or instruments,
the level of one or more financial or non-financial indices, or
any other designated factor or factors (each such security an
"Indexed Debt Security"). The minimum denominations in which
Debt Securities of a particular series may be purchased will be
set forth in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, Debt Securities
will be issued in integral multiples of $1,000, will not be
redeemable or repayable prior to maturity, and will not be
subject to any sinking fund. Each Debt Security will be issued
in registered form and will be represented by a single global
certificate (a "Global Debt Security") or, at the option of the
Company, by a certificate registered in definitive form. Each
Global Debt Security will be deposited with The Depository Trust
Company, as depositary ("DTC"), or with any other depositary
appointed by the Company (DTC or such other depositary the
"Depositary"), and will be registered in the name of the
Depositary or a nominee thereof. Beneficial interests in a
Global Debt Security will be shown on, and transfers thereof will
be effected only through, records maintained by the Depositary
and its Participants (hereinafter defined). Except under the
circumstances described herein or in the applicable Pricing
Supplement, beneficial interests in a Global Debt Security will
not be issuable in definitive form. SEE "DESCRIPTION OF DEBT
SECURITIES--CURRENCY AND INDEX-RELATED RISK FACTORS" FOR A
DISCUSSION OF GENERAL RISKS ASSOCIATED WITH INVESTMENTS IN
INDEXED DEBT SECURITIES AND IN DEBT SECURITIES DENOMINATED OR
PAYABLE IN A SPECIFIED CURRENCY.
The particular terms of any series of Warrants, including the
designation, offering price, detachability, expiration date,
procedures and conditions relating to exercise, and information
regarding the underlying instrument, commodity, or index will be
set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement"). The applicable Prospectus Supplement
will also identify any material United States tax considerations
and any general risks associated with an investment in Warrants
of a given series. See "Description of Warrants".
In the event of a variance in the terms set forth in this
Prospectus and in the Pricing Supplement or Prospectus Supplement
applicable to a particular series of Securities (each such
supplement an "applicable Supplement"), the terms of the
applicable Supplement will govern.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS OR ANY APPLICABLE SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Securities may from time to time be offered and sold by the
Company directly to investors, through one or more agents, or to
underwriters for resale to investors. There is no agreement at
this time between the Company and any agent or underwriter with
respect to the Securities. However, it is anticipated that any
agreement between the Company and any agent or underwriter will
be in substantially the form of Distribution Agreement filed as
Exhibit 1 to the Registration Statement (hereinafter defined).
The name of any agent or underwriter involved in the offering of
any particular series of Securities (other than an agent acting
as purchaser for its own account) will be set forth in the
applicable Supplement (any such named agent or underwriter,
respectively, an "Agent" or "Underwriter"). It is not currently
anticipated that any series of Securities will be listed on any
securities exchange and there can be no assurance either that the
Securities will be sold or, if sold, that there will be a
secondary market for them. The Company or any Agent or
Underwriter may reject any offer to purchase Securities, in whole
or in part, whether or not solicited. The Company will have the
sole right to accept any offer to purchase Securities and
reserves the right to withdraw, cancel, or modify, without
notice, the offer to sell Securities contained in this Prospectus
and in any applicable Supplement. See "Plan of Distribution".
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum
Aggregate Minimum
Price to Commissions Proceeds to
Public (1) & Discounts the Company
(2)(3) (2)(3)(4)
Per Debt 100%(5) 0.75% 99.25%
Security
Per Warrant (6) 0.75% 99.25%
Total $3,322,000,000(7)(8) $24,915,000(7)(8) $3,297,085,000(7)(8)
- -----------------------------------------------------------------------------
</TABLE>
(1) The aggregate initial public offering price of all Debt
Securities and Warrants sold hereunder will not exceed
$3,322,000,000, or the equivalent thereof in one or more
Specified Currencies, as the case may be.
(2) The Company may pay commissions to Agents and offer
discounts to Underwriters, which commissions and discounts will
not, in the aggregate, exceed 0.75% of the aggregate initial
offering price of all Debt Securities and Warrants sold through
Agents and Underwriters. Any such commission or discount will be
identified in the applicable Supplement.
(3) An Agent or Underwriter may realize additional consideration
from its participation as broker or counterparty in one or more
swap transactions related to the issuance of Debt Securities or
Warrants. Each Agent and Underwriter will be indemnified by the
Company against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended.
(4) Before deduction of expenses payable by the Company
estimated at $1,302,000.00.
(5) Unless otherwise specified in the applicable Pricing
Supplement, Debt Securities will be issued at 100% of their
principal amount.
(6) The initial public offering price of any Warrants sold
hereunder will be set forth in the applicable Prospectus
Supplement.
(7) Includes up to $822,000,000 in initial public offering price,
$6,165,000 of discounts and commissions, and $815,835,000 of
minimum proceeds to the Company, of Debt Securities and Warrants
which, as of the date hereof, were eligible for sale under the
Company's prospectus dated April 8, 1994 relating to up to $2,500,000,000
in aggregate principal amount of debt securities and debt warrants.
(8) In U.S. dollars or the equivalent thereof in one or more
Specified Currencies, as the case may be.
This Prospectus may be used by Agents, Underwriters, and other
dealers in connection with offers and sales of Securities in
market-making transactions at negotiated prices relating to
prevailing market prices at the time of sale or otherwise. This
Prospectus may not be used to consummate the sale of any
Securities unless accompanied by the applicable Supplement.
The date of this Prospectus is January , 1995.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and, in accordance therewith, files reports, proxy
statements, and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information can be inspected and copied at
the public reference facilities maintained by the Commission at
450 Fifth Street, Room 1024, N.W., Washington, D.C. 20549, at
the Commission's New York Regional Office, 7 World Trade Center,
Room 1400, New York, New York 10048, and at its Chicago Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, Room
1024, N.W., Washington, D.C. 20549, at prescribed rates. Such
reports, proxy statements, and other information may also be
inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, and at
the offices of the Chicago Stock Exchange, Inc., 440 South
LaSalle Street, Chicago, Illinois 60605.
This Prospectus does not contain all of the information set
forth in the registration statement filed by the Company with the
Commission under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the offer contained herein.
Reference should be made to such registration statement (the
"Registration Statement"), the exhibits thereto, and the
documents incorporated by reference therein for further
information regarding the Company and the Securities.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with
the Commission, relating to the Company and its consolidated
subsidiaries, are incorporated by reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal
year ended December 25, 1993;
(b) the Company's Quarterly Report on Form 10-Q for the
twelve-week period ended March 19, 1994;
(c) the Company's Quarterly Report on Form 10-Q for the
twelve and twenty-four week periods ended June 11, 1994;
(d) the Company's Quarterly Report on Form 10-Q for the
twelve and thirty-six week periods ended September 3, 1994; and
All documents filed by the Company pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of the offering of
the Securities will be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in any
document incorporated or deemed to be incorporated by reference
herein will be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained in
any subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will furnish, without charge, to each person to
whom a copy of this Prospectus has been delivered, upon the oral
or written request of any such person, a copy of any or all of
the documents incorporated by reference herein, except the
exhibits to such documents (unless such exhibits are expressly
incorporated by reference therein). Requests should be directed
to the Manager of Shareholder Relations, PepsiCo, Inc., 700
Anderson Hill Road, Purchase, N.Y. 10577, telephone number (914)
253-3055.
IMPORTANT CURRENCY EXCHANGE INFORMATION
Unless otherwise provided in the applicable Pricing
Supplement, purchasers will be required to pay for each
non-U.S. dollar denominated Debt Security in the Specified
Currency, and payments of principal, premium, if any, and
interest, if any, on such Debt Security will be made in such
Specified Currency. Currently, there are limited facilities in
the United States for the conversion of U.S. dollars into foreign
currencies and vice versa. In addition, most banks do not
currently offer non-U.S. dollar denominated checking account
facilities in the United States and there may be significant
restrictions on other non-U.S. dollar denominated accounts
offered by banks in the United States. Accordingly, unless
alternative arrangements are made, payments of principal,
premium, if any, and interest, if any, on Debt Securities payable
in a Specified Currency will be made to an account at a bank
outside the United States. See "Description of Debt Securities--
Currency and Index-Related Risk Factors".
If the applicable Pricing Supplement provides for payments
of principal, premium, if any, and interest, if any, on a
non-U.S. dollar denominated Debt Security to be made in
U.S. dollars, the conversion of the Specified Currency into
U.S. dollars will be handled by the exchange rate agent
identified in the applicable Pricing Supplement. The costs of
such conversion will be borne by the Holder (see Glossary) of
such Debt Security through deductions from such payments.
References herein to "U.S. dollars", "U.S. $", and "$" are
to the lawful currency of the United States.
THE COMPANY
The Company was incorporated in Delaware in 1919 and was
reincorporated in North Carolina in 1986. Unless the context
indicates otherwise, the term "PepsiCo" as used in this
Prospectus means the Company and its various divisions and
subsidiaries. PepsiCo is engaged in the following domestic and
international business activities: beverages, snack foods, and
restaurants.
PepsiCo's beverage business consists of Pepsi-Cola North
America ("PCNA") and Pepsi-Cola International ("PCI"). PCNA
manufactures and sells beverages, primarily soft drinks and soft
drink concentrates in the United States and Canada. PCNA also
sells its concentrates to licensed independent and company-owned
bottlers and to joint ventures in which PepsiCo participates.
Under appointments from PepsiCo, bottlers manufacture, sell, and
distribute, within defined territories, carbonated soft drinks
and syrups bearing trademarks owned by PepsiCo, including
PEPSI-COLA, DIET PEPSI, MOUNTAIN DEW, SLICE, CRYSTAL, MUG, and,
within Canada, 7UP and DIET 7UP. In addition, PCNA has entered
into a joint venture with Thomas J. Lipton Co. that develops,
markets, and distributes ready-to-drink tea products under the
LIPTON trademark throughout the United States. PCNA has also
entered into a joint venture with Ocean Spray Cranberries, Inc.
to develop new juice products and, pursuant to a separate
distribution agreement, to distribute single-serve sizes of OCEAN
SPRAY juice products throughout the United States. PCI
principally sells soft drink concentrates to independent bottlers
that manufacture, sell, and distribute carbonated soft drinks
outside the United States and Canada under the PEPSI-COLA, DIET
PEPSI, MIRINDA, 7UP, PEPSI MAX, DIET 7UP, and other trademarks.
PepsiCo's snack food business consists of Frito-Lay, Inc.
("Frito-Lay") and PepsiCo Foods International ("PFI"). Frito-Lay
manufactures and sells a varied line of snack foods throughout
the United States and Canada, including such well-known products
as FRITOS brand corn chips, LAY'S in the United States and
RUFFLES brands potato chips, DORITOS and TOSTITOS brands tortilla
chips, CHEE.TOS brand cheese flavored snacks, ROLD GOLD brand
pretzels, SMARTFOOD brand cheese flavored popcorn, and SUNCHIPS
brand multigrain snacks. PFI manufactures and markets snack
foods and other food products outside the United States and
Canada, primarily through company-owned facilities and joint
ventures. Many of PFI's snack products, such as SABRITAS brand
potato chips in Mexico, are similar in taste to Frito-Lay snack
foods sold in the United States and Canada. PFI also sells a
variety of snack food products that appeal to local tastes,
including SMITHS Crisps and WALKERS Crisps, which are sold in the
United Kingdom, and cookies and confectioneries, which are sold,
for example, in Mexico by PFI's Gamesa and Sonric's units. In
addition, RUFFLES, CHEE.TOS, DORITOS, FRITOS and SUNCHIPS brands
snack foods have been introduced to international markets.
During 1992, PFI formed a joint venture with General Mills, Inc.,
called Snack Ventures Europe, combining PFI's businesses in
Spain, Portugal, and Greece with General Mills' snack food
businesses in France, Belgium, and the Netherlands.
PepsiCo's restaurant business principally consists of
Kentucky Fried Chicken Corporation ("KFC"), Pizza Hut, Inc.
("Pizza Hut"), and Taco Bell Corp. ("Taco Bell"). KFC is engaged
principally in the operation, development, and franchising of
take-out and eat-in restaurants featuring chicken and operating
under the names KENTUCKY FRIED CHICKEN and/or KFC. Pizza Hut is
engaged principally in the operation, development, and
franchising of a system of casual full-service family
restaurants, delivery/carry-out units, and kiosks operating under
the name of PIZZA HUT. The full service restaurants serve several
varieties of pizza as well as pasta, salads, and sandwiches.
Taco Bell is engaged principally in the operation, development,
and franchising of a chain of fast-service restaurants serving
moderately priced take-out and eat-in Mexican-style food,
including tacos, burritos, taco salads, and nachos, and operating
under the name TACO BELL. PFS, a division of PepsiCo, is engaged
in the operation of Pizza Hut, Taco Bell, and KFC supply systems
in the United States, Australia, Canada, Mexico and Puerto Rico.
The Company's executive offices are located at 700 Anderson
Hill Road, Purchase, New York 10577 (telephone number (914)
253-2000).
USE OF PROCEEDS
Except as otherwise provided in any applicable Supplement,
the net proceeds from the sale of Securities will be utilized by
the Company or its subsidiaries for general corporate purposes,
including the funding of acquisitions and share repurchases and
the refunding of commercial paper and other indebtedness.
Depending upon market conditions, the financial needs of the
Company, and other factors, the Company may, from time to time,
undertake additional financings. The amount and timing of such
financings, if any, cannot be determined at this time.
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges of the Company and
its consolidated subsidiaries for the fiscal years 1989 through
1993, inclusive, and for the 36-week period ended September 3,
1994, are set forth below. "Fixed charges" consist of interest
expense, capitalized interest, amortization of debt discount, and
a portion of net rental expense deemed to be representative of
the interest factor. The ratio of earnings to fixed charges is
calculated as income from continuing operations, before provision
for income taxes and cumulative effect of accounting changes,
where applicable, plus fixed charges (excluding capitalized
interest), plus amortization of capitalized interest, with the
sum divided by fixed charges.
<TABLE>
<CAPTION>
FISCAL YEARS
36-Week
Period
Ended
1989 1990 1991 1992 1993 September
3, 1994
<S> <C> <C> <C> <C> <C>
2.97 3.11 3.27 3.66 4.39 4.61
</TABLE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture,
dated as of December 14, 1994 (the "Indenture"), between the
Company and The Chase Manhattan Bank (National Association), as
trustee (the "Trustee"), a copy of which is incorporated by
reference as an exhibit to the Registration Statement of which
this Prospectus is a part. The statements herein concerning the
Indenture do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all of the
provisions of the Indenture, including the definitions of certain
terms. All capitalized terms used herein and not otherwise
defined have the meanings ascribed to such terms in the
Indenture. All capitalized terms used in an applicable Pricing
Supplement and not otherwise defined therein have the meanings
ascribed to such terms in this Prospectus.
THE TERMS AND CONDITIONS SET FORTH IN THIS PROSPECTUS WITH
RESPECT TO DEBT SECURITIES WILL APPLY TO EACH DEBT SECURITY
UNLESS OTHERWISE SPECIFIED HEREIN OR IN THE APPLICABLE PRICING
SUPPLEMENT.
General
The Debt Securities may be issued from time to time in an
aggregate principal amount that, together with the aggregate
initial offering price of Warrants that may be issued from time
to time hereunder, will not exceed $3,322,000,000 or the
equivalent thereof in one or more Specified Currencies. The
aggregate principal amount may be increased from time to time as
authorized by the Board of Directors of the Company. For the
purpose of this paragraph: (i) the principal amount of any
Discount Debt Security or of any Debt Security issued at a
premium over its face amount means the Issue Price (hereinafter
defined) of such Debt Security, and (ii) the principal amount of
any Debt Security denominated in a Specified Currency means the
U.S. dollar equivalent of the Issue Price of such Debt Security
as of its issue date. The Indenture does not limit the aggregate
principal amount of debt securities that the Company may issue
and does not limit the amount of additional indebtedness the
Company may incur. The Debt Securities will be unsecured and
unsubordinated obligations of the Company and will rank in parity
with all other unsecured and unsubordinated indebtedness of the
Company.
Debt Securities denominated in U.S. dollars will be issued
in integral multiples of $1,000 and in such denominations as will
be set forth in the applicable Pricing Supplement. The
authorized denominations of Debt Securities denominated in a
Specified Currency will be as set forth in the applicable Pricing
Supplement. The U.S. dollar equivalent of the principal amount
of a Debt Security denominated in a Specified Currency will be
determined on the basis of the noon buying rate in the City of
New York for cable transfers of such Specified Currency published
by the Federal Reserve Bank of New York (such rate the "Market
Exchange Rate") on the New York Business Day (hereinafter
defined) prior to the date the Company accepted the offer to
purchase such Debt Security. Determination of the Market
Exchange Rate will be made by the Exchange Rate Agent
(hereinafter defined).
Each Debt Security will be issued in fully registered form,
as a Global Debt Security, or, if provided in the applicable
Pricing Supplement, as a Debt Security in definitive form. Debt
Securities may be registered for transfer or exchange at the
Corporate Trust Office of the Trustee, at 4 Chase MetroTech
Center, Brooklyn, New York 11245. No service charge will be made
for any transfer or exchange of Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Except as
set forth below, beneficial interests in Global Debt Securities
will not be exchangeable for Debt Securities in definitive form.
See "Description of Debt Securities--Global Debt Securities".
Each Debt Security will mature on a date not less than nine
months from its issue date, as set forth in the applicable
Pricing Supplement. Debt Securities will not be redeemable at
the option of the Company or repayable at the option of the
Holder prior to maturity and will not be subject to any sinking
fund. The foregoing notwithstanding, the Company may purchase
Debt Securities at any time, at any price, in the open market or
otherwise, and may thereafter hold or resell such Debt
Securities, or surrender such Debt Securities to the Trustee for
cancellation, at the sole discretion of the Company.
The applicable Pricing Supplement will describe the
particular terms of each Debt Security to be sold pursuant
thereto, including (1) the principal amount and, if the principal
amount will be amortized over the life of the Debt Security, the
method of determining when and to what extent payments of
principal will be made prior to maturity or, if the principal
amount is variable, the face amount and any index, formula, or
other factor to which payment of principal is linked; (2) the
initial offering price (the "Issue Price"), if other than 100% of
the principal amount; (3) the date on which the Issue Price must
be paid (the "Settlement Date") and the manner in which such
payment must be made, if other than by wire transfer of
immediately available funds; (4) the interest rate or, if the
interest rate is variable, any index, formula, or other factor to
which payment of interest is linked; (5) the date from which
interest, if any, will accrue (the "Interest Accrual Date"), if
other than the date of issue; (6) the scheduled date or dates on
which interest, if any, will be payable (each an "Interest
Payment Date"); (7) the scheduled date or dates on which
principal and premium, if any, will be payable (each a "Principal
Payment Date"); (8) the date on which the Debt Security is
scheduled to mature (the "Scheduled Maturity Date"); (9) whether
principal, premium, if any, or interest, if any, may, at the
option of the Company or the Holder, be payable in a currency
other than the denominated currency of the Debt Security, and the
terms and conditions upon which such option may be exercised;
(10) whether and under what circumstances the Company will pay
additional amounts on the Debt Security in respect of any taxes,
assessments, or other governmental charges withheld or deducted
and, if so, whether the Company will instead have the option to
redeem the Debt Security; (11) any other terms or conditions upon
which the Debt Security may be redeemed or repaid by the Company
prior to its Scheduled Maturity Date; (12) any mandatory or
optional sinking fund provisions; (13) any Event of Default (as
defined in the Indenture) with respect to the Debt Security, if
not set forth in the Indenture; and (14) any additional terms or
provisions of the Debt Security, which will not in any event be
inconsistent with the terms and conditions of the Indenture.
Exchange Rate and Other Calculations
Any currency exchange rates and currency exchange
calculations to be made with respect to a given Debt Security
will be made by the exchange rate agent, which may be either the
Company or its appointed agent, as identified in the applicable
Pricing Supplement (the Company or any agent so identified in the
applicable Pricing Supplement the "Exchange Rate Agent"). Any
other calculations to be made with respect to a given Debt
Security will be made by the calculation agent, which may be
either the Company or its appointed agent, as identified in the
applicable Supplement (the Company or any agent so identified in
the applicable Pricing Supplement the "Calculation Agent"). All
determinations and calculations made by the Exchange Rate Agent
or the Calculation Agent, as the case may be, will be at the sole
discretion of the Exchange Rate Agent or the Calculation Agent,
as the case may be, and in the absence of manifest error will be
conclusive for all purposes and binding on the Holders of the
subject Debt Securities.
All currency amounts resulting from calculations with
respect to any Debt Security will be rounded, if necessary, to
the nearest one-hundredth of a unit, with five one-thousandths of
a unit being rounded upward -- e.g., 1.765 being rounded to 1.77
- -- except that in the case of the Japanese yen and the Italian
lire, such currency amounts will be rounded to the nearest whole
unit -- e.g., 99.5 yen being rounded to 100 yen. All percentages
resulting from any calculation with respect to any Debt Security
will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five
one-millionths of a percentage point rounded upward -- e.g.,
.09876545 (or 9.876545%) being rounded to .0987655 (or 9.87655%).
Payment Currency
If the applicable Pricing Supplement provides for payments
of principal, premium, if any, and interest, if any, on a
non-U.S. dollar denominated Debt Security to be made in
U.S. dollars at the option of the Holders thereof, the exchange
rate applicable to the conversion of the Specified Currency into
U.S. dollars will be based on the highest bid quotation (assuming
European-style quotation -- i.e., Specified Currency per
U.S. dollar) received by the Exchange Rate Agent on the second
New York Business Day prior to the applicable payment date from
three recognized foreign exchange dealers in the City of New York
(one of which may be the Exchange Rate Agent) for the purchase of
the aggregate amount of the Specified Currency payable on such
payment date, for settlement on such payment date, and at which
the applicable dealer timely commits to execute a contract. If
no such bid quotations are available, payments will be made in
the Specified Currency. All currency exchange costs will be
borne by the Holder of the Debt Security by deductions from such
payments.
If payments of principal, premium, if any, or interest, if
any, with respect to a Debt Security are required to be made in a
Specified Currency and such Specified Currency is not available
to the Company for any such payment due to the imposition of
exchange controls or other circumstances beyond the control of
the Company, or if such Specified Currency is no longer used by
the government of the country issuing such currency or is no
longer used or is no longer generally available for use for the
settlement of transactions by public institutions within the
international banking community, then the Company will be
entitled to satisfy its payment obligations with respect to such
Debt Security by making such payments in U.S. dollars. The
amount of each such payment in U.S. dollars will be computed on
the basis of the Market Exchange Rate in effect with respect to
such Specified Currency on the second New York Business Day prior
to the applicable payment date or, if the Market Exchange Rate in
effect on such date cannot be readily determined, then on the
basis of the highest bid quotation (assuming European-style
quotation -- i.e., Specified Currency per U.S. dollar) received
by the Exchange Rate Agent on the second New York Business Day
prior to the applicable payment date from three recognized
foreign exchange dealers in the City of New York (one of which
may be the Exchange Rate Agent) for the purchase of the aggregate
amount of the Specified Currency payable on such payment date,
for settlement on such payment date, and at which the applicable
dealer timely commits to execute a contract. No payment in
U.S. dollars made under such circumstances will constitute an
Event of Default.
If payments of principal, premium, if any, or interest, if
any, with respect to a Debt Security are required to be made in a
composite currency and the composition of such composite currency
is at any time altered (whether by the addition, elimination,
combination, or subdivision of one or more components, by
adjustment of the ratio of any component to the composite unit,
or by any combination of such events), then the Company will be
entitled to satisfy its payment obligations with respect to such
Debt Security by making such payments in such composite currency
as altered. See "Currency and Index-Related Risk Factors".
Interest and Principal Payments
The Holder in whose name a Debt Security is registered with
the Trustee at the close of business on any given Record Date
(see Glossary) will be entitled to the payment of principal,
premium, if any, and/or interest, if any, payable on the
applicable payment date (such Holder the "Holder of Record").
The Record Date with respect to a payment of principal (other
than a payment of principal payable on a Maturity Date) will be
the fifteenth day prior to the applicable Principal Payment Date.
The Record Date with respect to a payment of interest (other than
a payment of interest payable on a Maturity Date) will be the
fifteenth day prior to the applicable Interest Payment Date. The
initial interest payment on a Debt Security will be made on the
first Interest Payment Date occurring at least 15 calendar days
after the date of issue to the Holder of Record as of the
applicable Record Date. Any payment of principal, premium,
and/or interest payable on a Maturity Date will be payable to the
Holder in whose name the Debt Security is registered as of such
date.
Any U.S. dollar payment of principal, premium, if any, and
interest, if any, on a Debt Security, other than principal,
premium, if any, or interest, if any, payable on the Maturity
Date, will be made by check mailed to the registered address of
the Holder of Record as of the applicable Record Date.
U.S. dollar payments of principal, premium, if any, and interest,
if any, payable on the Maturity Date will be made in immediately
available funds upon presentation and surrender of the Debt
Security at the office of the Paying Agent located at 4 MetroTech
Center, Brooklyn, New York 11245. The foregoing notwithstanding,
(a) the Depositary, as Holder of Record of Global Debt
Securities, will be entitled to receive U.S. dollar payments of
principal, premium, if any, and interest, if any, by wire
transfer of immediately available funds, and (b) any Holder of
Record of $10,000,000 or more in aggregate principal amount of
Debt Securities of the same series issued in definitive form will
be entitled to receive U.S. dollar payments of principal,
premium, if any, and/or interest, if any, by wire transfer of
immediately available funds, provided, that the Paying Agent
receives from such Holder of Record a written request with
appropriate wire transfer instructions no later than 15 calendar
days prior to such date. Non-U.S. dollar payments of principal,
premium, if any, and interest, if any, on a Debt Security will be
made by wire transfer of funds in the Specified Currency to an
account maintained by the Holder of Record with a bank located
outside the United States, in accordance with appropriate written
wire transfer instructions to be provided by the Holder of Record
to the Paying Agent no later than 15 calendar days prior to the
applicable payment date. If such wire transfer instructions are
not so provided, such non-U.S. dollar payments on such Debt
Security will be made by check payable in the Specified Currency
mailed to the registered address of the Holder of Record.
Certain Debt Securities, including Discount Debt Securities,
may be considered to be issued with original issue discount. The
beneficial owners of such Debt Securities must include such
discount in income for United States federal income tax purposes
at a constant rate. See "United States Tax Considerations--OID
Debt Securities". If the principal of any Discount Debt Security
is declared to be immediately due and payable as described below
under "Description of Certain Indenture Provisions--Events of
Default", the amount of principal due and payable with respect to
such Discount Debt Security will be limited to the aggregate
principal amount of such Discount Debt Security multiplied by the
sum of its Issue Price (expressed as a percentage of the
aggregate principal amount) plus the original issue discount
amortized from the date of issue to the date of declaration (also
expressed as a percentage of the aggregate principal amount),
which amortization will be calculated using the "interest method"
(computed in accordance with generally accepted accounting
principles in effect on the date of declaration). Special
considerations applicable to any such Debt Securities will be set
forth in the applicable Pricing Supplement.
Fixed Rate Debt Securities
Each Fixed Rate Debt Security will bear interest at the rate
stated on the face thereof and in the applicable Pricing
Supplement until the principal thereof is paid or duly made
available for payment. Such interest will be computed on the
basis of a 360-day year of twelve 30-day months.
Interest payments on each Fixed Rate Debt Security will
include interest accrued from (and including) the Interest
Accrual Date or the last date in respect of which interest has
been paid, as the case may be, to (but excluding) the next
succeeding Interest Payment Date or the Maturity Date, as the
case may be. The interest rates that the Company will agree to
pay on newly-issued Fixed Rate Debt Securities are subject to
change without notice from time to time, but no such change will
affect any Fixed Rate Debt Security previously issued.
If any Interest Payment Date or Principal Payment Date
(including the Maturity Date) for any Fixed Rate Debt Security
would fall on a day that is not a New York Business Day, the
payment of interest and/or principal (and premium, if any) that
would otherwise be payable on such date will be postponed to the
next succeeding New York Business Day, and no additional interest
on such payment will accrue as a result of such postponement.
Floating Rate Debt Securities
Each Floating Rate Debt Security will bear interest until
the principal thereof is paid or duly made available for payment
at a rate to be determined by reference to the base rate
specified in the applicable Pricing Supplement (the "Base Rate"),
plus or minus the "Spread", if any, and/or (i) multiplied by the
"Spread Multiplier", if any, or (ii) divided by the "Spread
Divisor", if any. The "Spread" is the number of basis points
(each basis point being equal to one one-hundredth of a
percentage point) to be added to or subtracted from the Base
Rate. The "Spread Multiplier", if any, and the "Spread Divisor",
if any, are the amounts by which the Base Rate, or the Base Rate
as adjusted by the Spread, will be multiplied or divided. The
Spread, if any, the Spread Multiplier, if any, the Spread
Divisor, if any, and the period of maturity of the instrument or
obligation with respect to which the Base Rate is calculated (the
"Index Maturity") will be specified in the applicable Pricing
Supplement.
If specified in the applicable Pricing Supplement, a
Floating Rate Debt Security may also have either or both of the
following: (i) a maximum limitation, or ceiling, on the rate of
interest that may accrue during any interest period (a "Maximum
Interest Rate"), and (ii) a minimum limitation, or floor, on the
rate of interest that may accrue during any interest period (a
"Minimum Interest Rate"). In addition to any Maximum Interest
Rate that may be applicable to a Floating Rate Debt Security, the
interest rate on a Floating Rate Debt Security will be limited to
the maximum rate permitted by New York law, as the same may be
modified by United States law of general application.
The rate of interest on each Floating Rate Debt Security
will be reset daily, weekly, monthly, quarterly, semiannually,
annually, or otherwise, as specified in the applicable Pricing
Supplement (each such period an "Interest Period" and the first
day of any Interest Period an "Interest Reset Date"). The
foregoing notwithstanding (i) the interest rate in effect from
the Interest Accrual Date to the first Interest Reset Date will
be the initial interest rate specified in the applicable Pricing
Supplement (the "Initial Interest Rate"), (ii) the interest rate
in effect for the 15 calendar days prior to any Maturity Date
other than the Scheduled Maturity Date will be the interest rate
in effect on the fifteenth day preceding such Maturity Date, and
(iii) with respect to any Floating Rate Debt Security for which
interest is reset daily or weekly, the interest rate in effect
for the two-day period immediately preceding any Interest Payment
Date will be the interest rate that was in effect on the first
day of such two-day period. If any Interest Reset Date for a
Floating Rate Debt Security would otherwise be a day that is not
a New York Business Day, such Interest Reset Date will be the
next succeeding New York Business Day, provided, however, that in
the case of a Floating Rate Debt Security whose interest rate is
determined by reference to LIBOR (as defined in the applicable
Pricing Supplement), if the next succeeding New York Business Day
falls in the next succeeding calendar month, such Interest Reset
Date will be the immediately preceding New York Business Day.
Interest payments on a Floating Rate Debt Security will be
equal to the amount of interest accrued from (and including) the
Interest Accrual Date or from (and including) the last date to
which interest has been paid, as the case may be, to (but
excluding) the applicable Interest Payment Date, except that
interest payable on the Maturity Date will include interest
accrued to (but excluding) the Maturity Date. If any Interest
Payment Date (other than the Maturity Date) for any Floating Rate
Debt Security would otherwise be a day that is not a New York
Business Day, the payment of interest that would otherwise be
payable on such date will be postponed to the next succeeding New
York Business Day, provided, however, that in the case of a
Floating Rate Debt Security whose interest rate is determined by
reference to LIBOR (as defined in the applicable Pricing
Supplement), if the next succeeding New York Business Day falls
in the next succeeding calendar month, such Interest Payment Date
will be the immediately preceding New York Business Day. If the
Maturity Date for any Floating Rate Debt Security falls on a day
that is not a New York Business Day, the payment of principal,
premium, if any, and interest, if any, otherwise payable on such
date will be postponed to the next succeeding New York Business
Day, and no interest on such payment will accrue as a result of
such postponement.
Accrued interest on a Floating Rate Debt Security will be
calculated by multiplying the principal amount of such Floating
Rate Debt Security (or, in the case of a Floating Rate Debt
Security whose principal amount is determined by reference to a
specified index, the face amount of such Floating Rate Debt
Security) by an accrued interest factor. The accrued interest
factor will be computed as the sum of the interest factors
calculated for each day in the period for which interest is being
paid. The interest factor for any day in such period will be
computed by dividing the interest rate in effect on such day by
360, or as otherwise specified in the applicable Supplement.
Upon the request of the Holder of any Floating Rate Debt
Security, the Calculation Agent will provide the interest rate
then in effect and, if determined, the interest rate that will
become effective on the next Interest Reset Date.
Indexed Debt Securities
The Company may, from time to time, issue Indexed Debt
Securities with respect to which the principal amount payable on
any Principal Payment Date and/or the amount of interest payable
on any Interest Payment Date will be determined by reference to
the relative value of one or more Specified Currencies or
commodities, the level of one or more financial or non-financial
indices, and/or any other factor or factors identified in the
applicable Pricing Supplement (such identified currencies,
commodities, indices, and/or other factors applicable to the
determination of principal or interest payable with respect to a
given Debt Security the "applicable Index"). A Fixed Rate Debt
Security that is also an Indexed Debt Security may pay an
aggregate principal amount that is greater or less than the face
amount thereof, depending on the relative value or level of the
applicable Index. A Floating Rate Debt Security that is also an
Indexed Debt Security may pay interest and/or an aggregate
principal amount that is greater or less than the face amount
thereof, in each case depending on the relative value or level of
the applicable Index. Specific information regarding a
particular Indexed Debt Security, including the face amount
thereof, the method for determining the principal amount payable
on any Principal Payment Date (if applicable), and the method for
determining the amount of interest payable on any Interest
Payment Date (if applicable) will be set forth in the applicable
Pricing Supplement.
Global Debt Securities
All Debt Securities of a given series will be represented by
a single Global Debt Security issued in a denomination equal to
the aggregate principal amount of the Debt Securities represented
thereby. Upon issuance of a Global Debt Security, the respective
principal amounts of the Debt Securities represented thereby will
be credited by the Depositary, on its book-entry registration and
transfer system, to the account of one or more institutions that
have established an account with the Depositary (each such
institution a "Participant"). The particular accounts to be
credited will be designated by the underwriters or agents through
which the subject Debt Securities were sold, or by the Company if
the subject Debt Securities were offered and sold directly by the
Company. Ownership of beneficial interests in a Global Debt
Security will be limited to Participants and to those persons who
hold interests in a Global Debt Security through Participants.
Ownership of beneficial interests in a Global Debt Security will
be shown on, and transfers of such ownership will be effected
only through, records maintained by the Depositary (with respect
to beneficial interests of Participants) or by Participants (with
respect to beneficial interests of persons other than
Participants). As long as the Depositary or its nominee (as the
case may be) is the registered Holder of any Global Debt
Security, the Depositary or such nominee (as the case may be)
will be considered the sole owner and holder of the Debt
Securities represented thereby for all purposes under the
Indenture. Except under the circumstances described below,
owners of beneficial interests in a Global Debt Security will not
be entitled to have the underlying Debt Securities registered in
their names and will not receive or be entitled to receive
physical delivery of the underlying Debt Securities in definitive
form.
Payments of principal, premium, if any, and interest, if
any, with respect to Debt Securities represented by a Global Debt
Security will be made to the Depositary or its nominee, as the
case may be, as the registered owner thereof. None of the
Company, the Trustee, or any Paying Agent for the underlying Debt
Securities will have any responsibility or liability for any
aspect of the records relating to, or for payments made on
account of, beneficial ownership interests in a Global Debt
Security, or for maintaining, supervising, or reviewing any
records relating to such beneficial ownership interests.
The Company expects that, immediately upon receipt of any
payment of principal, premium, or interest with respect to the
Debt Securities represented by a Global Debt Security, the
Depositary will credit each Participant's account with the amount
of such payment that is proportionate to its respective ownership
interest in the principal amount of such Global Debt Security (as
shown on the records of the Depositary). Payments by
Participants to persons who hold beneficial interests in such
Global Debt Security through such Participants will be the
responsibility of such Participants; the Company expects that
such payments will be governed by standing instructions and
customary practices, as is now the case with respect to
securities registered in "street name" and held by financial
institutions for the accounts of customers.
Owners of beneficial interests in a Global Debt Security
will not receive or be entitled to receive physical delivery of
the underlying Debt Securities in definitive form, provided,
however, that (i) if the Depositary for any Debt Securities
represented by a Global Debt Security is at any time unwilling or
unable to continue as depositary, and a successor depositary is
not appointed by the Company within 90 days, the Company will
issue such Debt Securities in definitive form in exchange for
such Global Debt Security, (ii) the Company may, at any time and
in its sole discretion, determine not to have any Debt Securities
of a series represented by one or more Global Debt Securities, in
which event the Company will issue Debt Securities of such series
in definitive form in exchange for the related Global Debt
Security, and (iii) if the Company so provides with respect to a
series of Debt Securities represented by a Global Debt Security,
the Depositary may, on terms acceptable to the Company and the
Depositary, direct that one or more owners of a beneficial
interest in a Global Debt Security receive Debt Securities of
such series in definitive form and in a principal amount equal to
such beneficial interest in the Global Debt Security.
Unless and until it is exchanged in whole or in part for
Debt Securities in definitive form, a Global Debt Security may
not be transferred except as a whole by the Depositary to a
nominee of the Depositary, or by a nominee of the Depositary to
either the Depositary or another nominee of the Depositary, or by
the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary and, in any such case, with
the written consent of the Company.
Certain Indenture Provisions
Restrictive Covenant: The Indenture contains a covenant
that neither the Company nor any Restricted Subsidiary (see
Glossary) will incur, guarantee, or suffer to exist any
indebtedness for borrowed money ("Debt"), secured by any
mortgage, pledge or lien on any Restricted Property (see
Glossary) or on any shares of stock of any Restricted Subsidiary
unless the Debt Securities (and, at the option of the Company or
a Restricted Subsidiary, as the case may be, any other debt not
subordinate to the Debt Securities) are secured at least equally
and ratably with such Debt for as long as such Debt remains so
secured, subject to certain exceptions specified in the
Indenture. Such exceptions include: (i) liens existing prior to
the issuance of the Debt Securities; (ii) liens on property or
shares of stock of any corporation existing at the time such
corporation becomes a Restricted Subsidiary; (iii) liens on
property or shares of stock existing when acquired (including
acquisition through merger or consolidation) or securing the
payment of all or any part of the purchase price, construction,
or improvement thereof or securing any Debt incurred prior to, at
the time of, or within 120 days after the later of the
acquisition, the completion of construction, or the commencement
of full operation of such property or within 120 days after the
acquisition of such shares for the purpose of financing all or
any portion of the purchase price thereof or construction
thereon; (iv) liens in favor of the Company or a Restricted
Subsidiary; (v) certain liens in favor of, or required by
contracts with, governmental entities; (vi) any extension,
renewal, or replacement of any lien referred to in any of the
preceding clauses (i) through (vi); and (vii) liens otherwise
prohibited by such covenant, securing Debt which, together with
the aggregate amount of outstanding indebtedness secured by liens
otherwise prohibited by such covenant, does not exceed 10% of the
Company's Consolidated Net Tangible Assets (see Glossary). The
Indenture does not restrict the transfer of a Restricted Property
to an Unrestricted Subsidiary (see Glossary) or the change in
designation of a subsidiary owning a Restricted Property from a
Restricted Subsidiary to an Unrestricted Subsidiary.
There are no other restrictive covenants contained in the
Indenture. The Indenture does not contain any provision that
will restrict the Company from entering into one or more
additional indentures providing for the issuance of debt
securities or warrants, or from incurring, assuming, or becoming
liable with respect to any indebtedness or other obligation,
whether secured or unsecured, or from paying dividends or making
other distributions on its capital stock, or from purchasing or
redeeming its capital stock. The Indenture does not contain any
financial ratios or specified levels of net worth or liquidity to
which the Company must adhere. In addition, the Indenture does
not contain any provision that would require that the Company
repurchase, redeem, or otherwise modify the terms of any of the
Debt Securities upon a change in control or other event involving
the Company that may adversely affect the creditworthiness of the
Company or the value of the Debt Securities.
Consolidation, Merger, and Sale of Assets: The Indenture
provides that the Company may, without the consent of the Holders
of any of the Debt Securities then outstanding, consolidate or
merge with or into, or transfer or lease all or substantially all
of its assets to, any corporation that is organized and validly
existing under the laws of any domestic jurisdiction, and may
permit any such corporation to consolidate with or merge into the
Company or convey, transfer, or lease all or substantially all of
its assets to the Company, provided, (i) that either the Company
will be the surviving corporation or, if not, that the successor
corporation will expressly assume by a supplemental indenture the
due and punctual payment of the principal, premium, if any, and
interest, if any, on the Debt Securities and the performance of
every covenant of the Indenture to be performed or observed by
the Company, and (ii) the Company or such successor corporation
will not, immediately after such merger, consolidation, sale, or
conveyance, be in default in the performance of any such
obligations. In the event of any such consolidation, merger,
conveyance, or transfer, any such successor corporation will
succeed to and be substituted for the Company as obligor on the
Debt Securities with the same effect as if it had been named in
the Indenture as the "Company".
Modification of the Indenture: With certain exceptions, the
Holders of a majority in aggregate principal amount of
outstanding Debt Securities of a given series may, on behalf of
the Holders of all then outstanding Debt Securities of such
series, consent to a modification of the Indenture affecting all
such Holders' rights thereunder and/or under such Debt
Securities, provided, however, that the consent of the Holders of
at least 75% in aggregate principal amount of outstanding Debt
Securities of a given series must consent to extend the time for
payment of any installment of interest payable with respect to
such Debt Securities, and provided, further, that except to the
extent described in the immediately preceding proviso, the right
of any Holder of any outstanding Debt Security to receive payment
when due of any payment of principal, premium, or interest
payable with respect to such Debt Security, or to institute suit
for the enforcement of any such payment, will not be impaired or
affected without the consent of such Holder.
The Indenture may be modified by the Company and the Trustee
without the consent of any of the Holders of the Debt Securities
to (i) evidence the succession of another corporation to the
Company, (ii) add to the covenants of the Company,
(iii) surrender any right or power of the Company, (iv) cure any
ambiguity, (v) add any provisions expressly permitted by the
Trust Indenture Act of 1939, as amended, (vi) establish any form
of Debt Security, provide for the issuance of any series of Debt
Securities, set forth the terms of any series of Debt Securities,
or add to the rights of Holders of Debt Securities of any series,
(vii) evidence and provide for the acceptance of a successor
trustee, (viii) establish additional events of default, and
(ix) provide for the issuance of Debt Securities in bearer form
provided that no modification may be made with respect to the
matters described in clauses (ii), (iii), (iv), (vi), or
(viii) if it is reasonably determined that to do so would
adversely affect the interests of the Holders of any outstanding
Debt Securities of any series.
Events of Default, Notice, and Waiver: The Indenture
provides that each of the following events constitutes an Event
of Default with respect to a given series of Debt Securities
(other than any such series that has been issued under or
modified by a supplemental indenture or Board Resolution (as
defined in the Indenture) in which such event is specifically
deleted): (i) failure to make any payment of principal or
premium, if any, when due (whether at maturity, upon redemption,
at declaration, or otherwise) on the Debt Securities of such
series, (ii) failure to make any payment of interest when due on
the Debt Securities of such series, which failure is not cured
within 30 days, provided, however, that the Holders of not less
than 75% of the then outstanding Debt Securities of such series
shall not have consented to a postponement of such payment,
(iii) failure to make payment when due of any sinking fund or
purchase fund installment or analogous obligation, if any, on the
Debt Securities of such series, which failure is not cured within
30 days, (iv) failure of the Company to observe or perform any of
its other covenants or warranties under the Indenture for the
benefit of the Holders of such series, which failure is not cured
within 90 days after notice is given as specified in the
Indenture, and (v) certain events of bankruptcy, insolvency, or
reorganization of the Company. A default under other
indebtedness of the Company will not constitute a default under
the Indenture, and a default under one series of Debt Securities
will not constitute a default under any other series of Debt
Securities.
If any Event of Default described in clause (i), (ii), or
(iii) of the immediately preceding paragraph shall have occurred,
then either the Trustee or the Holders of no less than 51% in
aggregate principal amount of the outstanding Debt Securities of
the applicable series may declare the principal (or, in the case
of Discount Debt Securities, the portion thereof specified by the
terms thereof) of all outstanding Debt Securities of such series,
and the interest, if any, accrued thereon, to be immediately due
and payable. If any Event of Default described in clause (iv) or
(v) of the immediately preceding paragraph shall have occurred
and shall affect more than one series of Debt Securities, then
either the Trustee or the Holders of no less than 51% in
aggregate principal amount of the outstanding Debt Securities of
each affected series may declare the principal (or, in the case
of Discount Debt Securities, the portion thereof specified by the
terms thereof) of all outstanding Debt Securities of such series
and the interest, if any, accrued thereon, to be immediately due
and payable. However, declarations of default may be rescinded
and past defaults (other than any Event of Default described in
clause (ii) of the immediately preceding paragraph) may be waived
by the Holders of a majority in principal amount of the
outstanding Debt Securities of the applicable series.
The Indenture requires the Trustee to give to the Holders of
each series of Debt Securities notice of all uncured defaults
known to the Trustee with respect to such series within 90 days
after such default occurs (the term "default" used here to
include the Events of Default summarized above, exclusive of any
grace period or requirement that notice of default be given),
provided, however, that except in the case of a default in the
payment of principal, premium, if any, or interest, if any, on
the outstanding Debt Securities of such series, or a default in
the payment of any sinking fund or purchase fund installment or
analogous obligation with respect to such series of Debt
Securities, the Trustee will be protected in withholding such
notice if it in good faith determines that the withholding of
such notice is in the interests of the Holders of the outstanding
Debt Securities of such series.
No Holder of any Debt Securities of any series may institute
any action under the Indenture unless and until (i) such Holder
has given the Trustee written notice of an Event of Default,
(ii) the Holders of not less than 51% in aggregate principal
amount of the outstanding Debt Securities of such series have
requested the Trustee to institute proceedings in respect of such
Event of Default, (iii) such Holder or Holders has or have
offered the Trustee such reasonable indemnity as the Trustee may
require, (iv) the Trustee has failed to institute an action for
60 days thereafter, and (v) no inconsistent direction has been
given to the Trustee during such 60-day period by the Holders of
not less than 51% in aggregate principal amount of the
outstanding Debt Securities of such series.
The Holders of a majority in aggregate principal amount of
the outstanding Debt Securities of any series will have the
right, subject to certain limitations, to 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 such series of Debt
Securities. The Indenture provides that if an Event of Default
shall have occurred and be continuing, the Trustee, in exercising
its rights and powers under the Indenture, will be required to
use the degree of care of a prudent person in the conduct of his
or her own affairs. The Indenture further provides that the
Trustee will not be required to expend or risk its own funds, or
otherwise incur any financial liability in the performance of any
of its duties under the Indenture, unless it has reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is reasonably assured.
The Company is required to deliver to the Trustee, within
120 days after the end of each fiscal year, a certificate signed
by certain officers of the Company stating whether such officers
have obtained knowledge of any default by the Company in the
performance of certain covenants and, if so, specifying such
default.
Principal Amount of Debt Securities Denominated in a
Specified Currency: For the purposes of determining whether the
Holders of the requisite principal amount of Debt Securities
denominated in a Specified Currency have taken any action as
provided under the Indenture, the principal amount of such Debt
Securities will be deemed to be that amount of U.S. dollars that
could be obtained for such principal amount on the basis of the
spot rate of exchange into U.S. dollars for the Specified
Currency in which such Debt Securities are denominated (as
evidenced to the Trustee by a certificate provided by a financial
institution, selected by the Company, that maintains an active
trade in such Specified Currency, acting as conversion agent) as
of the date of the taking of such action.
Defeasance and Discharge of Covenants: The Indenture
provides that the Company, at its option, (i) will be discharged
from any and all obligations with respect to the Debt Securities
of any series (except for certain obligations to register the
transfer or exchange of such Debt Securities, to replace any such
Debt Securities that have been stolen, lost, or mutilated, and to
maintain paying agencies and hold moneys for payment in trust in
respect of such Debt Securities), or (ii) need not comply with
certain covenants of the Indenture with respect to the Debt
Securities of any series (including those described in the
preceding paragraphs captioned "Restrictive Covenant" and
"Consolidation, Merger, and Sale of Assets"), in each case:
(a) if the Company irrevocably deposits with the Trustee, in
trust, money, U.S. Government Obligations, and/or Equivalent
Government Securities (each as defined in the Indenture) which,
through the payment of interest thereon and principal thereof in
accordance with their respective terms, will provide money in an
amount sufficient to pay all the principal of (including any
mandatory sinking fund payments) and interest, if any, on, such
Debt Securities, (b) such Debt Securities will not thereby be
delisted from any stock exchange on which they may be listed,
(c) no Event of Default shall have occurred and be continuing
with respect to such Debt Securities, and (d) the Company
delivers to the Trustee an opinion of counsel to the effect that
such deposit and defeasance will not cause the Holders of such
Debt Securities to recognize income, gain, or loss for Federal
income tax purposes.
The Trustee: The Chase Manhattan Bank (National
Association), the Trustee under the Indenture, is also trustee
under other indentures under which unsecured debt of the Company
and its subsidiaries is outstanding, is a depositary of the
Company, has from time to time made loans to the Company and its
subsidiaries, and has performed other services for the Company
and its subsidiaries in the normal course of its business,
including the establishment and management of investment
accounts.
CURRENCY AND INDEX-RELATED RISK FACTORS
Currency Exchange Rates
Investments in Debt Securities denominated or payable in a
Specified Currency, and in Debt Securities the principal of
and/or interest on which will be determined by the relative value
of a Specified Currency, entail significant risks (over which the
Company has no control) that are not associated with similar
investments in Debt Securities denominated and payable in
U.S. dollars and bearing a fixed rate of interest. Such risks
include, without limitation, the possibility of significant
changes in the rate of exchange between the U.S. dollar and any
such Specified Currency and the possibility of the imposition or
modification of exchange controls by either the United States or
any foreign government with respect to such Specified Currency
(or component thereof, as the case may be), which risks generally
depend on domestic and international economic and political
events. In recent years, rates of exchange between the
U.S. dollar and certain foreign currencies have been highly
volatile and such volatility may occur in the future. The
exchange rate between the U.S. dollar and any Specified Currency
(or component thereof, as the case may be) is at any moment a
result of the supply and demand for such currencies and changes
in such exchange rate result over time from the interaction of
many factors, including rates of inflation, interest rate levels,
balances of payments, and the extent of governmental surpluses or
deficits in the countries that have issued such currencies.
These factors are in turn sensitive to the monetary, fiscal, and
trade policies pursued by such countries' governments and those
of other countries important to international trade and finance.
Fluctuations in any particular exchange rate that have occurred
in the past are not necessarily indicative, however, of
fluctuations in the rate that may occur during the term of any
Debt Security. Depreciation against the U.S. dollar of the
currency in which a Debt Security is payable would result in a
decrease in the effective yield of such Debt Security below its
coupon rate and, in certain circumstances, could result in the
loss to the investor on a U.S. dollar basis. In addition,
depending on the specific terms of a currency-linked Debt
Security, changes in exchange rates relating to any of the
currencies involved may result in a decrease in the effective
yield of such Debt Security and, in some circumstances, could
result in a loss to the investor of all or a substantial portion
of the principal thereof. See also "Indexed Payments" below.
Currency Exchange Controls
An investment in a Debt Security payable in a Specified
Currency is subject to the additional risk that such Specified
Currency may not be available at the time a payment of principal,
premium, if any, or interest, if any, on such Debt Security
becomes due. Governments have from time to time imposed exchange
controls affecting the general availability of certain Specified
Currencies and the imposition or modification of exchange
controls by either the United States or any foreign government
could affect the availability of one or more Specified Currencies
in the future. Even in the absence of such exchange controls,
the interaction of various economic and political factors could
result in the unavailability of one or more Specified Currencies
at any given time. If the Specified Currency in which any
payment under a Debt Security would otherwise be required is for
any reason not available at the time such payment becomes due,
the Company will make such payment in U.S. dollars on the basis
of the Market Exchange Rate on the date of such payment, or if
such rate of exchange is not then available, then on the basis of
the highest bid quotation (assuming European-style quotation --
i.e., Specified Currency per U.S. dollar) received by the
Exchange Rate Agent on the second New York Business Day prior to
the applicable payment date from three recognized foreign
exchange dealers in the City of New York (one of which may be the
Exchange Rate Agent) for the purchase of the aggregate amount of
the Specified Currency payable on such payment date, for
settlement on such payment date, and at which the applicable
dealer timely commits to execute a contract. No payment in
U.S. dollars made under such circumstances will constitute an
Event of Default. See "Description of Debt Securities--Payment
Currency".
Indexed Payments
Investments in Indexed Debt Securities the principal of
and/or interest on which will be determined by the relative value
or level of a designated Index entail significant risks (over
which the Company has no control) that are not associated with
similar investments in conventional fixed rate debt securities
paying a fixed amount of principal. The value or level of any
applicable Index (and, accordingly, the amount of principal
and/or interest, as the case may be, payable on an Indexed Debt
Security) may at any time be affected by the interaction of
various factors, including domestic and international economic
and political events. These factors may in turn be affected by
the monetary, fiscal, and trade policies pursued by the United
States and by other countries important to international trade
and finance. In addition, if the formula used to determine the
amount of principal and/or interest (as the case may be) payable
with respect to an Indexed Debt Security contains a multiple or
leverage factor, the effect of any fluctuation in such Index will
be increased. A decline in the relative value or level of such
Index would result in a decrease in the effective yield of the
applicable Indexed Debt Security and, in certain circumstances,
could result in a loss to the investor of all or a substantial
portion of the principal thereof. Fluctuations in any particular
Index that have occurred in the past are not necessarily
indicative of fluctuations in such Index that may occur during
the term of the applicable Indexed Debt Security.
Governing Law and Foreign Currency Judgments
The Indenture and the Debt Securities will be governed by
and construed in accordance with the laws of the State of New
York. United States courts have not customarily rendered
judgments for money damages denominated in any currency other
than the U.S. dollar. However, New York State law provides that
an action based upon an obligation (such as a Debt Security)
denominated in a currency other than U.S. dollars will be
rendered in the foreign currency of the underlying obligation and
converted into U.S. dollars at the rate of exchange prevailing on
the date of the entry of the judgment or decree.
THIS PROSPECTUS (AS SUPPLEMENTED BY ANY APPLICABLE PRICING
SUPPLEMENT) DOES NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN
INDEXED DEBT SECURITIES OR IN DEBT SECURITIES DENOMINATED OR
PAYABLE IN A SPECIFIED CURRENCY. THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS
THEY EXIST AT THE DATE OF THIS PROSPECTUS OR ANY APPLICABLE
PRICING SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN LEGAL, TAX, AND
FINANCIAL ADVISORS AS TO THE RISKS ENTAILED IN AN INVESTMENT IN
INDEXED DEBT SECURITIES OR IN DEBT SECURITIES DENOMINATED OR
PAYABLE IN A SPECIFIED CURRENCY. SUCH DEBT SECURITIES ARE NOT AN
APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH
RESPECT TO INVESTMENTS IN DERIVATIVE SECURITIES AND (WITH RESPECT
TO AN INVESTMENT IN DEBT SECURITIES DENOMINATED OR PAYABLE IN A
SPECIFIED CURRENCY OR IN DEBT SECURITIES WHOSE PRINCIPAL AND/OR
INTEREST WILL BE DETERMINED BY THE RELATIVE VALUE OF A SPECIFIED
CURRENCY) ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY
TRANSACTIONS.
The information set forth in this Prospectus and/or any
applicable Pricing Supplement is directed to prospective
purchasers who are residents of the United States. The Company
disclaims any responsibility to advise prospective purchasers as
to issues regarding the purchase or ownership of or receipt of
payments under any Debt Security by residents of countries other
than the United States except with respect to certain federal tax
issues. See "United States Tax Considerations- Non-United States
Holders". Persons who are not residents of the United States are
advised to consult their own legal, tax, and financial advisors
with regard to such matters.
UNITED STATES TAX CONSIDERATIONS
The following summary is a general discussion of certain
United States federal income tax consequences resulting from the
ownership and disposition of Debt Securities and does not address
the tax consequences of the ownership or disposition of Warrants.
A discussion of the material United States federal income tax
consequences, if any, resulting from the ownership and
disposition of Warrants of any particular series will be provided
in the applicable Prospectus Supplement.
This discussion deals only with Debt Securities held as
capital assets within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended to the date hereof (the "Code"),
and does not address special classes of holders, such as life
insurance companies, dealers in securities or foreign currencies,
tax exempt organizations, persons holding Debt Securities as a
hedge or hedged against currency risks, persons holding Debt
Securities as part of a straddle within the meaning of Section
1092 of the Code or as part of a conversion transaction within
the meaning of Section 1258(c) of the Code, or persons whose
functional currency (as defined in Section 985 of the Code) is
not the U.S. dollar. It does not deal with holders other than
the original purchaser and does not discuss the "market discount
rules" or the "acquisition premium rules". This discussion does
not include any description of the tax laws of any state or local
government or of any foreign government that may be applicable to
Debt Securities. The United States federal income tax
consequences of the ownership and disposition of a particular
Debt Security will depend, in part, on the particular terms of
the Debt Security as set forth in the applicable Pricing
Supplement.
This summary is based on the Code, and United States
Department of Treasury regulations, Internal Revenue Service
("IRS") rulings, and judicial decisions as of the date hereof,
all of which are subject to change at any time. Such changes may
be applied retroactively in a manner that could adversely affect
the holder of a Debt Security. These authorities are subject to
various interpretations and it is therefore possible that the
United States federal income tax treatment of any series of Debt
Securities may differ from the treatment described below.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE
DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. PERSONS
CONSIDERING THE PURCHASE OF DEBT SECURITIES SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP, AND DISPOSITION OF DEBT SECURITIES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS, AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
United States Holders
For purposes of this discussion, the term "United States
Holder" means a beneficial owner of a Debt Security that, for
United States federal income tax purposes, is (i) a citizen or
resident of the United States, (ii) a corporation, partnership,
or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or
(iii) an estate or trust subject to United States federal income
taxation without regard to the source of its income.
Payment of Interest. Interest paid on a Debt Security other
than interest on an "OID Debt Security" that is not "qualified
stated interest" (as such terms are defined below), generally
will be taxable to a United States Holder as ordinary interest
income at the time it is accrued or received, in accordance with
the United States Holder's method of accounting for federal
income tax purposes.
Original Issue Discount. The following discussion is a
summary of the principal United States federal income tax
consequences of the ownership and disposition of OID Debt
Securities, which for purposes of this discussion means any Debt
Security that is treated as having been issued with original
issue discount ("OID"), as described below. The rules governing
the tax treatment of OID Debt Securities may vary depending on
the specific terms of such Debt Security, as set forth in the
applicable Pricing Supplement. The following summary is based in
part upon the OID provisions of the Code and regulations issued
thereunder on January 27, 1994 (the "OID Regulations"). The OID
Regulations are to be effective generally for Debt Securities
issued on or after April 4, 1994.
A Debt Security will be treated as having been issued with
OID if its "stated redemption price at maturity" exceeds its
"issue price" by more than a de minimis amount. In general, the
excess of stated redemption price at maturity over issue price is
treated as de minimis if the amount of OID on the instrument is
less than 1/4 of 1 percent of the Debt Security's stated
redemption price at maturity multiplied by the number of complete
years from issuance to maturity. Under the OID Regulations,
special de minimis OID rules apply to certain types of debt
instruments, including installment obligations (defined by the
OID Regulations as debt instruments that provide for the payment
of any amount other than "qualified stated interest" prior to
maturity) and Variable Rate Debt Securities (defined below).
In general, the issue price of each Debt Security in a
particular offering will be the initial price at which a
substantial amount of that particular offering is sold. Under
the OID Regulations, if Debt Securities and Warrants are issued
together as an investment unit, the issue price for the unit is
determined by treating the investment unit as a debt instrument.
The issue price as so determined must be allocated between the
Debt Securities and the Warrants in the investment unit based on
their relative fair market values. Under the OID Regulations,
the Company's determination of the allocation will be binding
upon a holder unless the holder files a disclosure statement with
the holder's timely filed federal income tax return for the year
including the acquisition date of the investment unit. Notice
will be given in the applicable Pricing Supplement of the
Company's determination of the allocation of the issue price
where Debt Securities and Warrants are issued together as part of
an investment unit.
The stated redemption price at maturity of a Debt Security
is the total of all payments provided by the Debt Security other
than "qualified stated interest". Qualified stated interest
generally is stated interest that is unconditionally payable at
least annually in cash or in property (other than debt
instruments of the Company) at a single fixed rate applied to the
outstanding principal amount of the Debt Security. Interest is
payable at a single fixed rate only if the rate appropriately
takes into account the length of the interval between stated
interest payments.
United States Holders of OID Debt Securities (other than
certain "short-term OID Debt Securities", as defined below) will
be required to include OID in income for United States federal
income tax purposes in increasingly greater amounts in successive
"accrual periods" (as defined below), generally prior to the
receipt of corresponding cash payments, regardless of the
holder's method of accounting.
The amount of OID includible in the income of an initial
United States Holder for any taxable year is the sum of the daily
portions of OID with respect to the OID Debt Security for each
day during the taxable year or portion thereof in which such
United States Holder held the OID Debt Security ("accrued OID").
The daily portion of OID with respect to an OID Debt Security is
determined by allocating to each day in any "accrual period" a
ratable portion of the OID allocable to such accrual period. The
accrual periods may be of any length and may vary in length over
the term of the Debt Security provided that each accrual period
is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the final day of
an accrual period. In general, the amount of OID allocable to
any accrual period is an amount equal to the excess of (i) the
product of the adjusted issue price of the OID Debt Security at
the beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each
accrual period and adjusted for the length of the accrual period)
over (ii) the amount of qualified stated interest, if any,
allocable to the accrual period. The "adjusted issue price" of
the OID Debt Security at the beginning of any accrual period is
equal to the original issue price of the OID Debt Security plus
the sum of the daily portions of OID with respect to the OID Debt
Security for each prior accrual period (determined without regard
to the amortization of any premium, as described below), minus
any prior payments and any payments made on the first day of the
accrual period on the OID Debt Security that were not qualified
stated interest. The term "yield to maturity" generally means
the discount rate that, when used to compute the present value of
all principal and interest payments to be made under the Debt
Security, will produce an amount equal to the issue price of the
Debt Security. In determining OID allocable to an accrual
period, if an interval between payments of qualified stated
interest contains more than one accrual period the amount of
qualified stated interest payable at the end of the interval,
(including any qualified stated interest that is payable on the
first day of the accrual period immediately following the
interval), is allocated on a pro rata basis to each accrual
period in the interval and the adjusted issue price at the
beginning of each accrual period in the interval must be
increased by the amount of any qualified stated interest that has
accrued prior to the first day of the accrual period but is not
payable until the end of the interval. OID allocable to a final
accrual period is the difference between the amount payable at
maturity (other than a payment of qualified stated interest) and
the adjusted issue price at the beginning of the final accrual
period. If all accrual periods are of equal length, except for
either an initial shorter accrual period or an initial and a
final shorter accrual period, the amount of OID allocable to the
initial accrual period may be computed under any reasonable method.
The OID Regulations provide special rules for "Variable Rate
Debt Securities," generally defined as a Debt Security (i) with
an issue price that does not exceed the sum of the noncontingent
principal payments to be made on the Debt Security by more than a
specified amount and (ii) that provides for stated interest that
is compounded or paid at least annually, at the current value(s)
(as defined in the OID Regulations), of (A) one or more qualified
floating rates; (B) a single fixed rate and one or more qualified
floating rates; (C) a single objective rate; or (D) a single
fixed rate and a qualified inverse floating rate. In certain
circumstances, a Debt Security bearing an initial fixed rate for
a period of less than one year, followed by a qualified floating
rate or an objective rate, may be treated as a Variable Rate Debt
Security. A rate is a qualified floating rate if variations in
the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in
which the Debt Security is denominated. In addition, certain
multiples of a qualified floating rate will be treated as a
qualified floating rate. Restrictions on the maximum or minimum
stated interest rate, restrictions on the amount of increase or
decrease in the stated interest rate, or other similar
restrictions generally do not result in a rate failing to be
treated as a qualified floating rate provided that such
restrictions are fixed throughout the term of the Debt Security
or do not significantly alter the yield of the Debt Security. In
general, an objective rate is a rate (other than a qualified
floating rate) that is determined using a single formula that is
fixed throughout the term of the Debt Security and that is based
on either (i) the yield or changes in the price of one or more
items of actively traded personal property (other than stock or
debt of the Company or certain related parties); (ii) one or more
qualified floating rates; (iii) one or more rates where each
would be a qualified floating rate for a debt instrument
denominated in a currency other than the currency in which the
Debt Security is denominated; (iv) a combination of rates
described immediately above; or (v) any other variable rate
designated by the IRS. A rate is not an objective rate, however,
if it is reasonably expected that the rate will result in
significant front-loading or back-loading of interest. A
qualified inverse floating rate is an objective rate that is
equal to a fixed rate minus a qualified floating rate, provided
that the variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the cost of newly
borrowed funds.
For purposes of determining the OID accruals and the amount
of qualified stated interest, a Variable Rate Debt Security is
"converted" to an equivalent fixed rate debt instrument by
substituting an appropriate fixed rate (as specified by the OID
Regulations) for the variable rate or rates. The rules
applicable to fixed rate debt instruments, described above, are
then applied to determine OID accruals and the qualified stated
interest payments. In certain circumstances, if the interest
actually accrued or paid during an accrual period is greater or
less than the interest assumed to be accrued or paid under the
equivalent fixed rate debt instrument, appropriate adjustments
must be made to the qualified stated interest or OID allocable to
the accrual period. Notice will be given in the applicable
Pricing Supplement when the Company determines that a particular
Debt Security will be a Variable Rate Debt Security.
Alternative Payment Schedules. The OID Regulations provide
special rules for purposes of determining the yield and maturity
of a Debt Security that provides for one or more alternative
payment schedules applicable upon the occurrence of certain
contingencies, where the timing and amounts of the payments under
each alternative payment schedule are fixed as of the original
issue date. Except as provided in the next paragraph, the yield
and maturity of such a Debt Security are generally determined by
assuming that the payments will be made according to the stated
payment schedule. However, if based on all the facts and
circumstance as of the issue date, it is more likely than not
that the stated payment schedule will not occur, then yield and
maturity are computed based on the payment schedule most likely
to occur. Notice will be given in the applicable Pricing
Supplement when the Company determines that a particular Debt
Security will be deemed to have a payment schedule for federal
income tax purposes that is different than its stated payment
schedule. The payment schedule determined by the Company will be
binding on all holders of the Debt Security unless the holder
explicitly discloses, on a statement attached to the holder's
timely filed federal income tax return for the taxable year that
includes the acquisition date of the Debt Security, that such
holder's determination of yield and maturity is different from
the Company's determination.
For purposes of determining yield and maturity of a Debt
Security, one or more unconditional options of either the holder
or the Company to require payments to be made on the Debt
Security under one or more alternative payment schedules (e.g.,
an option to extend or an option to call a Debt Security at a
fixed premium) will be deemed exercised if exercise of such
option or options would change the yield on the Debt Security in
a manner which would benefit the party that holds such option or
options.
Under the OID Regulations, a Debt Security that provides for
one or more alternative payment schedules provides for qualified
stated interest to the extent of the lowest fixed rate at which
qualified stated interest would be payable under any of the
payment schedules.
If a contingency described above (including the exercise of
an option described in the preceding paragraph) actually occurs
or does not occur contrary to the assumptions made with respect
thereto, then for purposes of determining the accrual of OID, the
yield and maturity of the Debt Security are redetermined by
treating the Debt Security as reissued on the date of the change
in circumstances for an amount equal to its adjusted issue price
on such date.
Contingent Debt Securities. The OID Regulations do not
address the federal income tax treatment of Debt Securities which
provide for contingent principal or of Floating Rate Debt
Securities and Index Debt Securities that do not qualify as
Variable Rate Debt Securities ("Contingent Debt Securities").
The federal income tax consequences of the ownership and
disposition of a particular Debt Security, and whether it
constitutes a Contingent Debt Security, may depend, in part, on
the particular terms of the Debt Security as set forth in the
applicable Pricing Supplement. UNITED STATES HOLDERS SHOULD
CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE TAX TREATMENT
OF CONTINGENT DEBT SECURITIES.
Election by United States Holder. Under the OID
Regulations, a United States Holder may elect to treat all
interest on a Debt Security as OID. For purposes of this
election, interest includes stated interest, OID, de minimis OID,
and unstated interest, as adjusted for any amortizable bond
premium. The election is to be made for the taxable year in
which the United States Holder acquired the Debt Security and may
not be revoked without the consent of the IRS. UNITED STATES
HOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THIS
ELECTION.
Short-term OID Debt Securities. In the case of an OID Debt
Security that matures one year or less from the date of its
issuance (a "short-term OID Debt Security") all payments
(including all stated interest) are included in the stated
redemption price at maturity. Thus, United States Holders who
report income for United States federal income tax purposes on
the accrual method and certain other holders are required to
include OID in income currently (in lieu of stated interest).
The total OID will be equal to the excess of the stated
redemption price at maturity over the issue price of the short-
term OID Debt Security, unless the United States Holder elects to
compute the OID using tax basis instead of issue price. United
States Holders who report income for United States federal income
tax purposes on the accrual method and certain other holders are
required to accrue such OID on a short-term OID Debt Security on
a straight-line basis, unless an election is made to accrue the
OID under the constant yield method (based on daily compounding).
Generally, an individual and certain other cash method United
States Holders of short-term OID Debt Securities are not
required, but may elect, to include OID in their income
currently. In the case of a United Stated Holder who is not
required and does not elect to include OID in income currently,
any gain realized on the sale, exchange or retirement of a
short-term OID Debt Security will be ordinary income to the
extent of the OID accrued on a straight-line basis (or, if
elected, according to a constant yield method) through the date
of sale, exchange or retirement, reduced by any payments of
stated interest or other interest received. In addition, such
non-electing United States Holders who are not subject to the
current inclusion requirement described above will be required to
defer deductions of all or a portion of any interest paid on
indebtedness allocable to such short-term OID Debt Securities in
an amount not exceeding the deferred income.
Debt Securities Issued at a Premium. A United States Holder
that purchases a Debt Security at original issue for an amount in
excess of the sum of all amounts payable on the Debt Security
after the purchase date (other than qualified stated interest)
will be treated as having purchased the Debt Security at a
premium and will not be required to include OID, if any, in
income. Generally, a United States Holder may elect to amortize
such premium over the term of the Debt Security on a constant
yield method. If such election is made, the amount required to
be included in the United States Holder's income each year with
respect to interest on the Debt Security will be reduced by the
amount of premium amortized in such year. The premium on a Debt
Security held by a United States Holder that does not make such
an election will decrease the gain or increase the loss otherwise
recognized on the disposition of the Debt Security. Any election
to amortize premium applies to all bonds (other than bonds the
interest on which is excludable from gross income) held by the
United States Holder at the beginning of the first taxable year
to which the election applies or thereafter acquired by the
United States Holder, and is irrevocable without the consent of
the IRS. If the Debt Security is redeemable at a premium,
special rules may apply which could result in a deferral of the
amortization of some of the premium.
Reporting. The Company is required to report to the IRS the
amount of OID accrued on OID Debt Securities held of record by
certain United States Holders. The amount required to be
reported by the Company may not be equal to the amount of OID
required to be reported as taxable income by a holder of such OID
Debt Security.
Sale, Exchange, or Retirement of Debt Securities. A United
States Holder's adjusted tax basis in a Debt Security (other than
an OID Debt Security) generally will equal the cost of the Debt
Security to such holder, reduced by any amortized premium and by
payments on the Debt Security received by the holder, other than
qualified stated interest. A holder's tax basis in an OID Debt
Security will generally be the cost of the Debt Security to such
holder, increased by any OID previously included in the holder's
income and decreased by the amount of any payment to the holder
under the OID Debt Security, other than a payment of qualified
stated interest, and by any amortized premium. Upon the sale,
exchange, or retirement of a Debt Security, a United States
Holder will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or
retirement (other than amounts attributable to accrued OID or
interest not previously included in the income of the holder) and
such holder's adjusted tax basis in the Debt Security. Any gain
attributable to de minimis OID that is recognized on the sale or
exchange of a Debt Security is treated as capital gain if the
Debt Security is a capital asset in the hands of the holder.
Except as described above with respect to certain short-term OID
Debt Securities or as described below with respect to certain
Foreign Currency Debt Securities, such gain or loss will be
capital gain or loss and will be long-term capital gain or loss
if, at the time of sale or retirement, the Debt Security has been
held for more than one year. Net capital gains of individuals
are, under certain circumstances, taxed at lower rates than items
of ordinary income. The deductibility of capital losses,
however, may be limited.
Foreign Currency Debt Securities. The following discussion
summarizes the principal United States federal income tax
consequences to a United States Holder of the ownership and
disposition of Debt Securities that are denominated in a
Specified Currency or on which interest or principal are payable
in one or more Specified Currencies (a "Foreign Currency Debt
Security"). The following summary is based upon certain Treasury
Regulations issued pursuant to Section 988 of the Code.
Interest on a Debt Security paid in a Specified Currency,
other than interest on an OID Debt Security that is not qualified
stated interest, will be taxable to a United States Holder as
ordinary interest income at the time it is accrued or received,
in accordance with the United States Holder's method of
accounting for federal income tax purposes. The amount
recognized by a cash basis United States Holder is the
U.S. dollar value of the interest payment (determined on the
basis of the "spot rate" on the date such payment is received)
regardless of whether the payment is in fact converted to
U.S. dollars at that time. No exchange gain or loss is
recognized at the time of receipt of such payment by a cash basis
United States Holder.
Unless the election described below is made, the amount
recognized by an accrual basis United States Holder is the U.S.
dollar value of the interest that has accrued for the interest
accrual period (determined on the basis of the average exchange
rate for the interest accrual period). The average exchange rate
for the accrual period (or partial periods) is the simple average
of the exchange rates for each business day in such period (or
other method if such method is reasonably derived and
consistently applied). An accrual basis United States Holder
may elect to translate accrued interest income using the rate of
exchange on the last day of the accrual period or, with respect
to an accrual period that spans two taxable years, using the rate
of exchange on the last day of the taxable year. If the last day
of an accrual period is within five business days of the date of
receipt of the accrued interest, a United States Holder may
translate such interest using the rate of exchange on the date of
receipt. The above election will apply to all debt obligations
held by the United States Holder and may not be changed without
the consent of the IRS. Upon receipt of an interest payment in
the Specified Currency, an accrual basis United States Holder
will recognize foreign currency gain or loss to the extent of the
difference, if any, between the U.S. dollar value of such payment
(determined by translating the Specified Currency received at the
spot rate on the date of receipt) and the U.S. dollar value of
the interest income that such holder has previously included in
income with respect to such payment, which gain or loss will be
treated as ordinary income or loss.
In the case of a Foreign Currency Debt Security, the
U.S. dollar amount, if any, includible in income as OID for each
accrual period by a United States Holder is determined by
(i) calculating the amount of OID allocable to each accrual
period in the applicable Specified Currency using the constant
yield method described above, and (ii) translating the amount so
derived in the same manner as interest income accrued by a holder
on the accrual basis, as described above. In general, upon the
receipt of payment in the Specified Currency attributable to OID,
a United States Holder will recognize foreign currency gain or
loss equal to the difference, if any, between the U.S. dollar
value of the accrued OID (determined in the same manner as
interest income accrued by an accrual basis holder) and the U.S.
dollar value of such payment (determined by translating the
Specified Currency at the spot rate on the date of receipt),
which gain or loss will be treated as ordinary income or loss.
A United States Holder's tax basis in foreign currency
generally will be the U.S. dollar value thereof at the spot rate
on the date such foreign currency is acquired. The amount of
gain or loss recognized by a holder on a sale, exchange or other
disposition of foreign currency will be equal to the difference
between (i) the amount of U.S. dollars, the U.S. dollar value at
the spot rate of the foreign currency, or the fair market value
in U.S. dollars of the property, received by the holder upon such
sale, exchange or other disposition, and (ii) the holder's tax
basis in the foreign currency. Accordingly, a holder that
purchases a Foreign Currency Debt Security with previously owned
foreign currency will recognize gain or loss in an amount equal
to the difference, if any, between such holder's tax basis in the
foreign currency and the U.S. dollar value of the foreign
currency at the spot rate on the date of purchase of the Foreign
Currency Debt Security. Generally, any such gain or loss will be
ordinary income or loss.
A United States Holder's tax basis in a Foreign Currency
Debt Security will be the U.S. dollar value of the currency paid
for such Debt Security at the time of such purchase. Gain or
loss realized upon the sale, exchange or retirement of a Foreign
Currency Debt Security will be ordinary income or loss to the
extent it is attributable to fluctuations in exchange rates.
Such foreign currency gain or loss may not exceed the total gain
or loss on the sale or retirement of the Debt Security.
Generally, any gain or loss recognized upon the sale, exchange or
retirement of a Foreign Currency Debt Security, other than the
amount treated as foreign currency gain or loss, will be capital
gain or loss and will be long-term capital gain or loss if, at
the time of the disposition, the Debt Security was held for more
than one year.
Any foreign currency gain or loss that is treated as
ordinary income or loss, as described above, generally will not
be treated as interest income or expense except to the extent
provided in Treasury Regulations or administrative pronouncements
of the IRS.
In the case of a Foreign Currency Debt Security, bond
premium which a holder elects to amortize will be computed in the
relevant Specified Currency and will reduce interest income or
OID determined in such Specified Currency. At the time
amortizable bond premium offsets interest income, a United States
Holder may realize exchange gain or loss (taxable as ordinary
income or loss, but generally not as interest income or expense),
measured by the difference between exchange rates at that time
and at the time of the acquisition of the Debt Security.
Dual Currency Debt Securities. If so specified in an
applicable Pricing Supplement relating to a Foreign Currency Debt
Security, the Company may have the option to make all payments of
principal and interest scheduled after the exercise of such
option in a currency (the "Optional Payment Currency") other than
the Specified Currency. In general, payments under such Foreign
Currency Debt Securities (referred to herein as "Dual Currency
Debt Securities") will be taxed pursuant to the rules regarding
interest, OID, premium and foreign currency transactions
discussed above. However, a United States Holder of a Dual
Currency Debt Security with respect to which the Company's option
has been exercised may be considered to have exchanged a Debt
Security denominated in the Specified Currency for a Debt
Security denominated in the Optional Payment Currency. Whether
such a deemed exchange will require a United States Holder to
recognize gain or loss will depend on whether the exchange is
part of a recapitalization of the Company. If the Company
exercises its option to make future payments in the Optional
Payment Currency as part of a recapitalization that qualifies for
nonrecognition treatment, a United States Holder of a Dual
Currency Debt Security will not recognize gain or loss upon the
deemed exchange and the Holder's basis in the Debt Security will
be unchanged. If, however, the Company's exercise of this option
is not part of a recapitalization, a United States Holder may
recognize gain or loss, if any, equal to the difference between
the holder's basis in the Debt Security denominated in the
Specified Currency and the value of the Debt Security denominated
in the Optional Payment Currency.
Non-United States Holders
The payment of interest, premium and principal (including
any OID) on a Debt Security to any non-United States Holder will
not be subject to United States federal withholding tax (except
as discussed below with respect to backup withholding), provided
that in the case of a payment of interest, premium, or OID
(i) the beneficial owner of the Debt Security is subject to
United States federal income tax with respect to the Debt
Security on a net basis because the payments received with
respect to the Debt Security by such beneficial owner are
effectively connected with a U.S. trade or business of such
beneficial owner (in which case such beneficial owner may also be
subject to the "branch-profits tax" under Section 884 of the
Code) and such beneficial owner provides the Company with a
properly executed IRS Form 4224, (ii) such beneficial owner
provides the Company with a properly executed IRS Form 1001 (or
successor form) claiming an exemption from withholding under the
benefit of a tax treaty or (iii) (A) such beneficial owner does
not actually or constructively own ten percent or more of the
total combined voting power of all classes of stock of the
Company entitled to vote, (B) such beneficial owner is not a bank
whose receipt of interest on a Debt Security is described in
section 881(c)(3)(A) of the Code, (C) such beneficial owner is
not a controlled foreign corporation that is related to the
Company actually or constructively through stock ownership, and
(D) either (1) such beneficial owner certifies to the Company or
its agent, under penalties of perjury, that it is not a United
States Holder and provides its name and address on United States
Treasury Form W-8 (or suitable substitute form) or (2) a
securities clearing organization, bank or other financial
institution that holds customer's securities in the ordinary
course of its trade or business (a "financial institution") and
holds the Debt Security on behalf of the beneficial owner
certifies under penalties of perjury that such a Form W-8 (or
suitable substitute form) has been received from the beneficial
owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof.
Notwithstanding the foregoing, pursuant to the Revenue
Reconciliation Act of 1993 (the "1993 Act"), certain contingent
interest may be subject to United States federal withholding tax.
For purposes of this provision of the 1993 Act, contingent
interest includes interest that is determined by reference to
receipts, sales or other cash flow, income or profits, or a
change in value of any property of the issuer or a related
person. It also includes interest determined by reference to any
dividend, partnership distribution or similar payment made by the
issuer or a related person.
A non-United States Holder generally will not be subject to
United Stated federal income tax (and no tax generally will be
withheld) with respect to gain recognized on a sale, exchange or
redemption of a Debt Security, unless (i) the gain is effectively
connected with a trade or business of the non-United States
Holder in the United States, or (ii) in the case of a non-United
States Holder who is a nonresident alien individual and holds the
Debt Security as a capital asset, such Holder is present in the
United States for 183 or more days in the taxable year of the
sale or other disposition and certain other conditions are met.
A Debt Security held by an individual who at the time of
death is not a citizen or resident of the United States will not
be subject to United States federal estate tax as a result of
such individual's death if, at the time of such death, the
individual 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 and the income on the Debt Security
would not have been effectively connected with the conduct of a
trade or business by the individual in the United States.
Notwithstanding the foregoing, if interest on a Debt Security is
treated as contingent interest for purposes of the 1993 Act, as
described above, all or a portion of the value of such Debt
Security may be subject to United States federal estate tax as a
result of such individual's death.
Backup Withholding
The 31% "backup" withholding and information reporting
requirements generally apply to certain payments of principal
(including OID, if any) and to any payments of premium or
interest made within the United States. Information reporting
and backup withholding do not apply to payments of principal
(including OID, if any) or to any payments of premium or interest
made outside the United States by the Company provided the payor
does not have actual knowledge that the payee is a United States
Holder, and if the certification on United States Treasury Form
W-8, described under the section "non-United States Holders" is
received.
Payment of the proceeds from the sale of a Debt Security to
or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the
broker is a United States person, a controlled foreign
corporation for United States tax purposes, or a foreign person
50% or more of whose gross income is effectively connected with
the conduct of a trade or business within the United States for a
specified three-year period, information reporting will apply to
such payments unless such broker has documentary evidence in its
files of the owner's foreign status and has no actual knowledge
to the contrary, or the owner otherwise establishes an exemption.
Payment of the proceeds from a sale of a Debt Security 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 non-United States status or
otherwise establishes an exemption from information reporting and
backup withholding.
Backup withholding will generally not apply to United States
Holders other than certain non-corporate Holders who fail to
supply an accurate taxpayer identification number or who fail to
report all interest income required to be shown on their federal
income tax return. Any amounts withheld from a payment to a
United States Holder under the backup withholding rules will be
allowed as a refund or a credit against such holder's United
States federal income tax provided that the required information
is furnished to the Service.
DESCRIPTION OF WARRANTS
Each series of Debt Warrants will be issued under a Debt
Warrant Agreement to be entered into between the Company and The
Chase Manhattan Bank (National Association), in its capacity as
warrant agent (the "Debt Warrant Agent"), in substantially the
form that has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part (such agreement the
"Debt Warrant Agreement"), together with the applicable form of
warrant certificate (any such certificate a "Debt Warrant
Certificate"). Each series of Shelf Warrants will be issued
under a separate warrant agreement (each such agreement a "Shelf
Warrant Agreement") to be entered into between the Company and
The Chase Manhattan Bank (National Association), in its capacity
as warrant agent, or such other bank or trust company as may be
identified in the applicable Prospectus Supplement (in either
case, the "Shelf Warrant Agent"), and to be filed as an amendment
to the Registration Statement together with an appropriate form
of shelf warrant certificate (any such certificate a "Shelf
Warrant Certificate" and any Debt Warrant Certificate or Shelf
Warrant Certificate sometimes referred to as a "Warrant
Certificate"). The statements herein concerning the Debt Warrant
Agreement or any Shelf Warrant Agreement (the Debt Warrant
Agreement and any Shelf Warrant Agreement sometimes referred to
as a "Warrant Agreement") do not purport to be complete and are
subject to, and are qualified in their entirety by reference to,
all the provisions of the applicable Warrant Agreement and the
applicable Warrant Certificates, including the definitions of
certain terms.
THE TERMS AND CONDITIONS SET FORTH IN THIS PROSPECTUS WITH
RESPECT TO WARRANTS WILL APPLY TO EACH WARRANT UNLESS OTHERWISE
SPECIFIED HEREIN OR IN THE APPLICABLE PROSPECTUS SUPPLEMENT.
General
Warrants may be offered from time to time, independent of or
together with any series of Debt Securities. Prior to the
exercise of a Warrant, the holder thereof will not have any of
the rights of holders of any security or other instrument
underlying such Warrant. Unless otherwise provided in the
applicable Prospectus Supplement, a Warrant of any series may be
exercised at any time up to the close of business on the
expiration date set forth therein, after which time all
unexercised Warrants will become void. Registered Warrants of a
series will be exchangeable into registered Warrants of the same
series representing, in the aggregate, the number of Warrants
surrendered for exchange. Warrant Certificates may be presented
for transfer and, to the extent exchangeable, may be presented
for exchange, at the corporate trust office of the Debt Warrant
Agent or the Shelf Warrant Agent, as the case may be (any such
agent sometimes referred to as a "Warrant Agent").
The Warrant Agent with respect to any series of Warrants
will act solely as an agent of the Company in connection with the
applicable Warrant Certificates and will not assume any
obligation or relationship of agency or trust for or with any
registered holders or beneficial owners of the applicable Warrant
Certificates.
Debt Warrants
Each Debt Warrant will entitle the holder to purchase such
principal amount of Debt Securities at such exercise price as
will in each case be set forth in, or calculable from, the
applicable Prospectus Supplement. In addition, the applicable
Prospectus Supplement will set forth (i) the designation,
aggregate principal amount, and terms of the underlying Debt
Securities, (ii) if applicable, the designation and terms of any
Debt Securities with which such Debt Warrants are issued and the
number of such Debt Warrants issued with each such Debt Security,
(iii) the date, if any, on and after which such Debt Warrant and
the related Debt Securities will be separately transferable,
(iv) the date on which the right to exercise such Debt Warrant
will commence and the procedures and conditions relating to
exercise, (v) the date on which the right to exercise such Debt
Warrant will expire, (vi) a discussion of any material United
States tax considerations, (vii) a discussion of any material
risk factors, (viii) whether such Debt Warrant will be issued in
registered or bearer form and, if registered, where it may be
transferred and registered, and (ix) any other terms of such Debt
Warrant, which terms will in no event conflict with the terms or
provisions of the Debt Warrant Agreement.
Subject to any restrictions and additional requirements that
may be set forth in the applicable Prospectus Supplement, a Debt
Warrant may be exercised by delivery to the Debt Warrant Agent of
the subject Debt Warrant Certificate, properly completed and duly
executed, and of payment of the amount required to purchase the
related Debt Securities. The exercise price will be the price
applicable on the date of payment in full, as set forth in the
applicable Prospectus Supplement. As soon as practicable after
receipt by the Debt Warrant Agent at its corporate trust office
of such payment and of the Debt Warrant Certificate properly
completed and duly executed, the Company will issue and deliver
the Debt Securities that have been purchased upon such exercise.
If fewer than all the Debt Warrants represented by any Debt
Warrant Certificate are exercised, a new Debt Warrant Certificate
will be issued for the remaining amount of Debt Warrants.
Shelf Warrants
The Prospectus Supplement applicable to any particular Shelf
Warrant will describe (i) the designation and offering price of
such Shelf Warrant, (ii) whether such Shelf Warrant is for the
sale or purchase of any Specified Currency, commodity, or
security, (iii) whether the settlement value of such Shelf
Warrant at the time of exercise will be determined by the
relative value or level of any Index, (iv) if such Shelf Warrant
has been issued together with one or more Debt Securities, the
date on and after which such Shelf Warrant and any such Debt
Securities will be separately transferable, (v) the date on which
the right to exercise such Shelf Warrant will commence and the
procedures and conditions relating to exercise, (vi) the date on
which the right to exercise such Shelf Warrant will expire,
(vii) a discussion of any material United States tax
considerations, (viii) a discussion of any material risk factors,
(ix) whether such Shelf Warrant will be issued in registered or
bearer form and, if registered, where it may be transferred and
registered, and (x) any other terms of such Shelf Warrant, which
terms will in no event conflict with the terms and provisions of
the applicable Shelf Warrant Agreement.
Subject to any restrictions and additional requirements that
may be set forth in the applicable Prospectus Supplement, a Shelf
Warrant may be exercised by delivery to the Shelf Warrant Agent
of the subject Shelf Warrant Certificate, properly completed and
duly executed, and (except with respect to a Shelf Warrant
providing for cash settlement value) of payment of the amount
required to purchase the underlying currency, commodity, or
instrument. The exercise price will be the price applicable on
the date of payment in full, as set forth in the applicable
Prospectus Supplement. As soon as practicable after receipt by
the Shelf Warrant Agent at its corporate trust office of such
payment and of the Shelf Warrant Certificate properly completed
and duly executed, the Shelf Warrant Agent will buy or sell the
related currency, commodity, or instrument, or pay the settlement
value therefore, as the case may be. If fewer than all the Shelf
Warrants represented by any Shelf Warrant Certificate are
exercised, a new Shelf Warrant Certificate will be issued for the
remaining amount of Shelf Warrants.
PLAN OF DISTRIBUTION
The Company may appoint Agents to solicit offers to purchase
the Securities, each of whom will agree to use best efforts to
solicit such offers. The name of any such Agent, and the terms
of its agreement with the Company (including the amount of any
commission payable by the Company in connection with the sale of
Securities through an Agent) will be set forth in the applicable
Supplement. Each Agent will have the right, in its reasonable
discretion, to reject (in whole or in part) any offer to purchase
Securities solicited by such Agent. The Company may also, on its
own behalf, directly solicit offers to purchase Securities, at
any time, in any manner, upon any terms, and to any person. The
Company will have the sole right to accept offers to purchase
Securities and may reject (in whole or in part) any offer to
purchase Securities, whether solicited by the Company or an
Agent. Unless the Company otherwise agrees, payment of the
purchase price of Securities sold by the Company, whether
directly or through an Agent, will be required to be made in
immediately available funds.
The Company may also sell Securities to Underwriters at
discounts to be agreed upon at the time of sale. Such Securities
may be resold to investors and other purchasers at a fixed
offering price, at prevailing market prices, or at prices related
thereto at the time of such resale or otherwise, as determined by
the Underwriter and specified in the applicable Supplement.
After the initial public offering of Securities that are to be
resold by an Underwriter to investors and other purchasers at a
fixed public offering price, the public offering price,
concession, and discount may be changed. An Underwriter may also
sell Securities to other dealers, and may allow to one or more
such dealers a discount from the public offering price of such
Securities, but the aggregate of all such discounts allowed by
the Underwriter to other dealers with respect to such Securities
will not be in excess of the discount received by the Underwriter
from the Company with respect to such Securities. It is
anticipated that any underwriting agreement pertaining to any
Securities will provide that the Underwriter is obligated to
purchase all Securities taken by such Underwriter if any are
taken.
Underwriters and Agents participating in the distribution of
Securities may be deemed to be "underwriters" under the
Securities Act, and any discounts and commissions received by
them and any profit realized by them on resale of the Securities
may be deemed to be underwriting discounts and commissions within
the meaning of the Securities Act. Any such compensation
received by any such Underwriter or Agent from the Company will
be described in the applicable Supplement. It is anticipated
that the Company will enter into an agreement with each
Underwriter and Agent named in an applicable Supplement, in
substantially the form of Distribution Agreement filed as
Exhibit 1 to the Registration Statement, which agreement will
entitle such Underwriter or Agent to indemnification against
certain civil liabilities, including liabilities under the
Securities Act, or to contribution for payments it may be
required to make in respect thereof.
If so indicated in the applicable Supplement, the Company
will authorize Underwriters or other persons acting as the
Company's agents to solicit offers by certain institutions to
purchase Securities from the Company at the public offering price
set forth in such Supplement pursuant to delayed delivery
contracts providing for payment and delivery on the date or dates
stated in such Supplement. Institutions with which such
contracts, when authorized, may be made include commercial and
savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other
institutions, but will in all cases be subject to the approval of
the Company. The obligations of any purchaser under any such
delayed delivery contract will not be subject to any conditions
except that (i) the purchase of the Securities will not at the
time of delivery be prohibited under the laws of any jurisdiction
to which such purchaser is subject, and (ii) if the Securities
are also being sold to Underwriters, the Company will have sold
to such Underwriters the Securities not sold for delayed
delivery. The Underwriters and such other persons will not have
any responsibility in respect of the validity or performance of
such contracts.
None of the Securities will have an established trading
market when issued. It is not currently anticipated that the
Securities will be listed on any securities exchange. Agents,
Underwriters, and other dealers may make a market in the
Securities but will not be obligated to do so and may discontinue
any market-making at any time without notice. There can be no
assurance that the Securities offered hereby will be sold or, if
sold, that there will be a secondary market for them.
LEGAL OPINIONS
Unless otherwise indicated in any applicable Supplement, the
legality of the Securities offered hereby will be passed upon
(i) for the Company by Douglas Cram, Esq., Vice President and
Assistant General Counsel of the Company and, with respect to the
matters described herein under the caption "Federal Tax
Considerations", by Matthew M. McKenna, Esq., Vice President,
Taxes, of the Company, and (ii) for any Agents and Underwriters
by Cahill Gordon & Reindel (a partnership including a
professional corporation), New York, New York. Mr. Cram and
Mr. McKenna each own certain securities of the Company. Cahill
Gordon & Reindel renders legal services to the Company from time
to time.
EXPERTS
The consolidated financial statements and schedules of the
Company as of December 25, 1993 and December 26, 1992, and for
each of the fiscal years in the three-year period ended
December 25, 1993 included in the Company's Annual Report on Form
10-K for the fiscal year ended December 25, 1993, have been
audited by KPMG Peat Marwick LLP, independent auditors, as set
forth in their report thereon included in such Annual Report and
incorporated herein by reference. The report of KPMG Peat
Marwick LLP covering the December 25, 1993 financial statements
refers to the Company's adoption of the Financial Accounting
Standards Board's Statements of Financial Accounting Standards
No. 106, "Employers' Accounting For Postretirement Benefits Other
Than Pensions" and No. 109, "Accounting For Income Taxes" in
1992. Such consolidated financial statements and schedules are
incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting
and auditing.
With respect to the unaudited condensed consolidated interim
financial information of the Company and its subsidiaries for the
twelve-week period ended March 19, 1994, the twelve and
twenty-four week periods ended June 11, 1994, and the twelve and
thirty-six week periods ended September 3, 1994, incorporated by
reference herein, KPMG Peat Marwick LLP have reported that they
have applied limited procedures in accordance with professional
standards for a review of such information. However, their
separate reports included in the Company's quarterly reports on
Form 10-Q for the twelve-week period ended March 19, 1994, the
twelve and twenty-four week periods ended June 11, 1994, and the
twelve and thirty-six week periods ended September 3, 1994,
incorporated by reference herein, state that they did not audit
and they do not express an opinion on that condensed consolidated
interim financial information. Accordingly, the degree of
reliance on their reports on such information should be
restricted in light of the limited nature of the review
procedures applied. KPMG Peat Marwick LLP are not subject to the
liability provisions of Section 11 of the Securities Act for
their reports on the unaudited condensed consolidated interim
financial information because those reports are not "reports" or
a "part" of the Registration Statement prepared or certified by
accountants within the meaning of Sections 7 and 11 of the
Securities Act.
The financial statements incorporated herein by reference to
all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to
the filing of a post-effective amendment that indicates that all
securities offered hereby have been sold or that deregisters all
securities then remaining unsold, are or will be so incorporated
in reliance upon the reports of KPMG Peat Marwick LLP and any
other independent public accountants relating to such financial
information and upon the authority of such independent public
accountants as experts in accounting and auditing in giving such
reports to the extent that the particular firm has audited such
financial statements and consented to the use of their reports
thereon.
GLOSSARY
As used in the Prospectus or in any applicable Supplement
(unless otherwise defined therein), the terms set forth below are
defined as follows:
"Actual/Actual" means the actual number of days in the
applicable Interest Period in respect of which payment is being
made divided by 365 (or, if any portion of the applicable
Interest Period falls in a leap year, the sum of (A) the actual
number of days in that portion of the applicable Interest Period
falling in a leap year divided by 366 and (B) the actual number
of days in that portion of the applicable Interest Period falling
in a non-leap year divided by 365). See also "Actual/360",
"Actual/365 (Fixed)", "Bond Basis", and "Eurobond Basis".
"Actual/360" means the actual number of days in the
applicable Interest Period in respect of which payment is being
made divided by 360. See also "Actual/Actual", "Actual/365
(Fixed)", "Bond Basis", and "Eurobond Basis".
"Actual/365"--see "Actual/Actual".
"Actual/365 (Fixed)" means the actual number of days in the
applicable Interest Period in respect of which payment is being
made divided by 365. See also "Actual/Actual", "Actual/360",
"Actual/365 (Fixed)", "Bond Basis", and "Eurobond Basis".
"Agent"--see page 1 of the Prospectus.
"Base Rate"--see page 9 of the Prospectus.
"Bond Basis" means the number of days in the applicable
Interest Period in respect of which payment is being made divided
by 360 (the number of days to be calculated on the basis of a
year of 360 days with twelve 30-day months (unless (i) the last
day of the applicable Interest Period is the 31st day of a month
but the first day of the applicable Interest Period is a day
other than the 30th or 31st day of a month, in which case the
months that include that last day shall not be considered to be
shortened to a 30-day month, or (ii) the last day of the
applicable Interest Period is the last day of the month of
February, in which case the month of February shall not be
considered to be lengthened to a 30-day month).
"Business Day" when used in conjunction with a designated
city means any day other than a Saturday or Sunday that is
neither a legal holiday nor a day on which banking institutions
are authorized or required by law or regulation to be closed in
(i) London, England (with respect to a Debt Security the
principal of or interest on which will be determined by reference
to LIBOR), (ii) Brussels, Belgium (with respect to a Debt
Security denominated in ECUs or whose principal or interest will
be determined by reference to the relative value of the ECU), or
(iii) the financial center of the country issuing the Specified
Currency (with respect to a Debt Security denominated in a
Specified Currency other than the ECU or whose principal or
interest will be determined by reference to the relative value of
any Specified Currency other than the ECU). See also "New York
Business Day".
"Business Day Convention" means the convention for adjusting
any relevant date if it would otherwise fall on a day that is not
a Business Day. The following terms, when used in conjunction
with the term "Business Day Convention" and a date, shall mean
that an adjustment will be made if that date would otherwise fall
on a day that is not a Business Day so that:
(i) if "Following" is specified, that date will be the
first following day that is a Business Day;
(ii) if "Modified Following" or "Modified" is
specified, that date will be the first following day that is a
Business Day unless that day falls in the next calendar month, in
which case that date will be the first preceding day that is a
Business Day; and
(iii) if "Preceding" is specified, that date will be
the first preceding day that is a Business Day.
"CD Rate" with respect to any Interest Determination Date
means the rate set forth in H.15(519) for the period for the
specified Index Maturity under the caption "CDs (Secondary
Market)". If such rate does not appear in H.15(519) by
9:00 a.m., New York City time, on the Calculation Date relating
to such Interest Determination Date, the rate for such Interest
Determination Date will be the rate set forth in Composite 3:30
P.M. Quotations for U.S. Government Securities for such Interest
Determination Date for the Index Maturity under the caption
"Certificates of Deposit". If such rate does not appear in
either H.15(519) or Composite 3:30 P.M. Quotations for
U.S. Government Securities by 3:00 p.m., New York City time, on
the Calculation Date relating to such Interest Determination
Date, the rate for such Interest Determination Date will be the
arithmetic mean of the secondary market offered rates of three
leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in New York City as of 10:00 a.m., New York City time,
for such Interest Determination Date for negotiable U.S. Dollar
certificates of deposit of major United States money market banks
with a remaining maturity closest to the Index Maturity and in an
amount that is representative for a single transaction in the
relevant market at the relevant time.
"Calculation Agent"--see page 6 of the Prospectus.
"Calculation Date" when used with respect to any Interest
Determination Date means the date by which the applicable
interest rate must be determined, which date will be the earlier
of (i) the tenth calendar day following such Interest
Determination Date or, if such date is not a New York Business
Day, the first New York Business Day occurring after such 10-day
period or (ii) the New York Business Day immediately preceding
the applicable Interest Payment Date or Maturity Date, as the
case may be.
"Commercial Paper Rate" with respect to any Interest
Determination Date means the Money Market Yield (see below) of
the rate set forth in H.15(519) for that day opposite the Index
Maturity under the caption "Commercial Paper". If such rate does
not appear in H.15(519) by 9:00 a.m., New York City time, on the
Calculation Date relating to such Interest Determination Date,
the rate for such Interest Determination Date will be the Money
Market Yield of the rate set forth in Composite 3:30 P.M.
Quotations for U.S. Government Securities for such Interest
Determination Date in respect of the Index Maturity under the
caption "Commercial Paper" (with an Index Maturity of one month
or three months being deemed to be equivalent to an Index
Maturity of 30 days or 90 days, respectively). If such rate does
not appear in either H.15(519) or Composite 3:30 P.M. Quotations
for U.S. Government Securities by 3:00 p.m., New York City time,
on the Calculation Date relating to such Interest Determination
Date, the rate for such Interest Determination Date will be the
Money Market Yield of the arithmetic mean of the offered rates of
three leading dealers of U.S. commercial paper in New York City
as of 11:00 a.m., New York City time, for such Interest
Determination Date for U.S. dollar commercial paper of the Index
Maturity placed for industrial issuers whose bond rating is "AA"
or the equivalent from a nationally recognized rating agency.
"Composite 3:30 P.M. Quotations for U.S. Government
Securities" means the daily statistical release designated as
such, or any successor publication, published by the Federal
Reserve Bank of New York.
"Commission"--see page 2 of the Prospectus.
"Company"--see page 1 of the Prospectus.
"Consolidated Net Tangible Assets" is defined as the total
assets of the Company and its Restricted Subsidiaries (less
applicable depreciation, amortization, and other valuation
reserves), except to the extent resulting from write-ups of
capital assets (other than write-ups in connection with
accounting for acquisitions, in accordance with generally
accepted accounting principles), less all current liabilities
(excluding intercompany liabilities) and all intangible assets of
the Company and its Restricted Subsidiaries, all as set forth on
the most recent consolidated balance sheet of the Company and its
Restricted Subsidiaries, prepared in accordance with generally
accepted accounting principles.
"DTC"--see page 1 of the Prospectus.
"Debt Securities"--see page 1 of the Prospectus.
"Debt Warrant"--see page 1 of the Prospectus.
"Debt Warrant Agent"--see page 24 of the Prospectus.
"Debt Warrant Agreement"--see page 24 of the Prospectus.
"Debt Warrant Certificate"--see page 24 of the Prospectus.
"Depositary"--see page 1 of the Prospectus.
"Discount Debt Security"--see page 1 of the Prospectus.
"ECU" means the European Currency Unit and refers to a
single unit of the composite currency known as the "European
Currency".
"Eurobond Basis" means the number of days in the applicable
Interest Period in respect of which payment is being made divided
by 360 (the number of days to be calculated on the basis of a
year of 360 days with twelve 30-day months, without regard to the
date of the first day or last day of the applicable Interest
Period unless, in the case of the final applicable Interest
Period, the Scheduled Maturity Date is the last day of the month
of February, in which case the Month of February shall not be
considered to be lengthened to a 30-day month).
"Event of Default" is defined in the Indenture. See page 12
of the Prospectus for a discussion of Events of Default.
"Exchange Act"--see page 2 of the Prospectus.
"Exchange Rate Agent"--see page 6 of the Prospectus.
"Federal Funds Rate" with respect to any Interest
Determination Date means the rate set forth in H.15(519) for that
day opposite the caption "Federal Funds (Effective)". If such
rate does not appear in H.15(519) by 9:00 a.m., New York City
time, on the Calculation Date relating to such Interest
Determination Date, the rate for such Interest Determination Date
will be the rate set forth in Composite 3:30 P.M. Quotations for
U.S. Government Securities for such Interest Determination Date
under the caption "Federal Funds/Effective Rate". If such rate
does not appear in either H.15(519) or Composite 3:30 P.M.
Quotations for U.S. Government Securities by 3:00 p.m., New York
City time, on the Calculation Date relating to such Interest
Determination Date, the rate for such Interest Determination Date
will be the Money Market Yield of the arithmetic mean for the
last transaction in overnight U.S. dollar Federal Funds by three
leading brokers of U.S. dollar Federal Funds transactions in New
York City as of 11:00 a.m., New York City time, for such Interest
Determination Date.
"Fixed Rate Debt Security"--see page 1 of the Prospectus.
"Floating Rate Debt Security"--see page 1 of the Prospectus.
"Global Debt Security"--see page 1 of the Prospectus.
"Holder" means (i) with respect to a Debt Security issued in
definitive form, the beneficial owner of the Debt Security, and
(ii) with respect to a Debt Security of any series that is issued
in global form, the Depositary or a nominee thereof, in either
case as reflected on the Security Register (as defined in the
Indenture) maintained by the Trustee in its capacity as Paying
Agent.
"H.15(519)" means the weekly statistical release designated
as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System.
"Holder of Record"--see page 7 of the Prospectus.
"Index Maturity"--see page 9 of the Prospectus.
"Index" or "applicable Index"--see page 10 of the
Prospectus.
"Indexed Debt Security"--see page 1 of the Prospectus.
"Indenture"--see page 5 of the Prospectus.
"Initial Interest Rate"--see page 9 of the Prospectus.
"Interest Accrual Date"--see page 6 of the Prospectus.
"Interest Determination Date" with respect to any Interest
Reset Date means the date two Business Days prior to such
Interest Reset Date.
"Interest Payment Date"--see page 6 of the Prospectus.
"Interest Period"--see page 9 of the Prospectus.
"Interest Reset Date"--see page 9 of the Prospectus.
"Issue Price"--see page 6 of the Prospectus.
"LIBOR" with respect to any Interest Determination Date will
be the rate for deposits in U.S. dollars or the Specified
Currency (as the case may be) for a period of the Index Maturity
that appears on the Telerate Page: (a) 3740 (for Australian
Dollars); (b) 3740 (for Canadian Dollars); (c) 3750 (for Swiss
Francs); (d) 3750 (for Deutsche Marks); (e) 3740 (for French
Francs); (f) 3750 (for Pound Sterling); (g) 3740 (for Italian
Lire); (h) 3750 (for Japanese Yen); (i) 3740 (for Spanish
Pesetas); (j) 3750 (for U.S. dollars), and (k) 3750 (for European
Currency Units) as of 11:00 a.m., London Time, on such Interest
Determination Date. If such rate does not appear on the
specified Telerate Page by 9:00 a.m., New York City time, on such
Interest Determination Date, the rate for such Interest
Determination Date will be determined on the basis of the rates
at which deposits in U.S. dollars or in the Specified Currency
(as the case may be) are offered by four major banks in the
London interbank market as of approximately 11:00 a.m., London
time, on such Interest Determination Date to prime banks in the
London interbank market for a period of the Index Maturity
commencing on the applicable Interest Reset Date and in an amount
that is representative for a single transaction in the relevant
market at the relevant time. The Calculation Agent will request
the principal London office of each such bank to provide a
quotation of its rate. If at least two quotations are provided,
the rate for such Interest Determination Date will be the
arithmetic mean of the quotations. If fewer than two quotations
are provided as requested, the rate for such Interest Reset Date
will be the arithmetic mean of the rates quoted by major banks in
New York City or in the relevant financial center of the country
issuing the Specified Currency (as the case may be) as of
11:00 a.m., local time in New York City or in such financial
center, on such Interest Determination Date for loans in
U.S. dollars or in the Specified Currency (as the case may be) to
leading European banks for a period of the Index Maturity
commencing on such Interest Reset Date and in an amount that is
representative for a single transaction in the relevant market at
the relevant time.
"Market Exchange Rate"--see page 5 of the Prospectus.
"Maturity Date" means the date on which the entire principal
amount outstanding under a Debt Security becomes due and payable,
whether on the Scheduled Maturity Date or by declaration of
acceleration, call for redemption, or otherwise.
"Maximum Interest Rate"--see page 9 of the Prospectus.
"Minimum Interest Rate"--see page 9 of the Prospectus.
"Money Market Yield" means, in respect of any security with
a maturity of nine months or less, the rate for which is quoted
on a bank discount basis, a yield (expressed as a percentage)
calculated in accordance with the following formula:
<TABLE>
<S> <C> <C>
Money Market Yield = D X 360 X 100
-----------------
360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for a security, quoted on
a bank discount basis and expressed as a decimal, and "M" refers
to the actual number of days in the applicable Interest Period.
"New York Business Day" means any day other than a Saturday
or Sunday that is neither a legal holiday nor a day on which
banking institutions are authorized or required by law,
regulation, or executive order, to be closed in the City of New
York and: (i) with respect to any Debt Security denominated or
payable in ECUs, that is also a Brussels Business Day, (ii) with
respect to any Debt Security denominated or payable in any other
Specified Currency, that is also a Business Day in the financial
center of the country issuing such Specified Currency, and
(iii) with respect to any Debt Security the principal of or
interest on which will be determined by reference to LIBOR, that
is also a London Business Day. See also "Business Day".
"Participant"--see page 10 of the Prospectus.
"Paying Agent" means the agent appointed by the Company to
distribute amounts payable by the Company on the Debt Securities.
The Company has designated the Trustee as Paying Agent.
"PepsiCo" -- see page 3 of the Prospectus.
"Pricing Supplement" -- see page 1 of the Prospectus.
"Prime Rate" with respect to any Interest Determination Date
means the rate set forth in H.15(519) for that day opposite the
caption "Bank Prime Loan". If such rate does not appear in
H.15(519) by 9:00 a.m., New York City time, on the Calculation
Date relating to such Interest Determination Date, the rate for
such Interest Determination Date will be the arithmetic mean of
the rates of interest publicly announced by each bank that
appears on the Reuters Screen NYMF Page as such bank's prime rate
or base lending rate as in effect for that Interest Determination
Date as quoted on the Reuters Screen NYMF Page for such Interest
Determination Date or, if fewer than four rates appear on the
Reuters Screen NYMF Page for such Interest Determination Date,
the rate will be the arithmetic mean of the rates of interest
publicly announced by three major banks in New York City as its
U.S. dollar prime rate or base lending rate as in effect for such
Interest Determination Date. Each change in the prime rate or
base lending rate of any bank so announced by such bank will be
effective as of the effective date of the announcement or, if no
effective date is specified, as of the date of the announcement.
"Principal Payment Date" -- see page 6 of the Prospectus.
"Prospectus Supplement" -- see page 1 of the Prospectus.
"Record Date" means any date as of which the Holder of a
Debt Security will be determined by the Trustee for any purpose
described herein or in the Indenture, such determination to be
made as of the close of business on such date by reference to the
Security Register (as defined in the Indenture) maintained by the
Trustee in its capacity as Paying Agent.
"Registration Statement" -- see page 2 of the Prospectus.
"Restricted Property" is defined in the Indenture as any
single manufacturing or processing plant, office, building, or
warehouse owned or leased by the Company or a Restricted
Subsidiary, other than any such facility or portion thereof that,
in the opinion of the Board of Directors of the Company, is not
of material importance to the business conducted by the Company
and its Restricted Subsidiaries taken as a whole, provided, that
no such facility (or portion thereof) will be deemed of material
importance if its gross book value (before deducting accumulated
depreciation) is less than 2% of the Company's Consolidated Net
Tangible Assets.
"Restricted Subsidiary" is defined in the Indenture as any
subsidiary of the Company other than an Unrestricted Subsidiary.
"Scheduled Maturity Date" -- see page 6 of the Prospectus.
"Securities" -- see page 1 of the Prospectus.
"Securities Act" -- see page 2 of the Prospectus.
"Settlement Date" -- see page 6 of the Prospectus.
"Shelf Warrant" -- see page 1 of the Prospectus.
"Shelf Warrant Agent" -- see page 24 of the Prospectus.
"Shelf Warrant Agreement" -- see page 24 of the Prospectus.
"Shelf Warrant Certificate" -- see page 24 of the
Prospectus.
"Specified Currency" -- see page 1 of the Prospectus.
"Spread" -- see page 9 of the Prospectus.
"Spread Divisor" -- see page 9 of the Prospectus.
"Spread Multiplier" -- see page 9 of the Prospectus.
"Supplement" means any Pricing Supplement or Prospectus
Supplement.
"30/360" -- see "Bond Basis".
"30E/360" -- see "Eurobond Basis".
"360/360" -- see "Bond Basis".
"Trustee" -- see page 5 of the Prospectus.
"US Treasury Bill Rate" with respect to any Interest
Determination Date means the rate at which United States Treasury
bills are auctioned, as set forth in H.15(519) for that day
opposite the Index Maturity under the caption "U.S. Government
Security/Treasury Bills/Auction Average (Investment)". If such
rate does not appear in H.15(519) by 9:00 a.m., New York City
time, on the Calculation Date relating to such Interest
Determination Date, the rate for such Interest Determination Date
will be the Bond Equivalent Yield (as defined below) of the
auction average rate for those Treasury bills as announced by the
United States Department of the Treasury. If United States
Treasury bills of the Index Maturity are not auctioned during any
period of seven consecutive calendar days ending on and including
any Friday, and a U.S. Treasury Bill Rate would have been
available on the applicable Interest Determination Date if such
Treasury bills had been auctioned during that seven day period,
an Interest Determination Date will be deemed to have occurred on
the day during that seven-day period on which such Treasury bills
would have been auctioned in accordance with the usual practices
of the United States Department of the Treasury, and the rate for
that Interest Determination Date will be the Bond Equivalent
Yield of the rate set forth in H.15(519) for that day opposite
the Index Maturity under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market". If such interest
rate does not appear in H.15(519) by 3:00 p.m., New York City
time, on the Calculation Date relating to such Interest
Determination Date, the rate for such Interest Determination Date
will be the Bond Equivalent Yield of the arithmetic mean of the
secondary market bid rates of three primary United States
Government dealers in New York City as of approximately 3:30
p.m., New York City time, for such Interest Determination Date
for the issue of United States Treasury bills with a remaining
maturity closest to the Index Maturity.
For the purposes of this definition, the term "Bond
Equivalent Yield" is to be calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C>
Bond Equivalent Yield = D X N X 100
---------------
360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for the security, quoted
on a bank discount basis and expressed as a decimal, "N" refers
to 365 or 366, as the case may be, and "M" refers to the actual
number of days in the applicable Interest Period.
"Underwriter" -- see page 1 of the Prospectus.
"Unrestricted Subsidiary" means A&M Food Services, Inc.,
Kentucky Fried Chicken of California, Inc., Pizza Hut, Inc.,
Pizza Management, Inc., QSR, Inc., Taco Bell Corp., any
Subsidiaries thereof and any other Subsidiary of the Company (not
at the time designated a Restricted Subsidiary) (i) the major
part of whose business consists of finance, banking, credit,
leasing, insurance, financial services, or other similar
operations, or any combination thereof, (ii) substantially all
the assets of which consist of the capital stock of one or more
such Subsidiaries, or (iii) designated as such by the Company's
Board of Directors; provided that such designation will not
constitute a violation of the terms of the Securities.
"Warrant Agent" -- see page 25 of the Prospectus.
"Warrant Agreement" --see page 25 of the Prospectus.
"Warrant Certificate" -- see page 25 of the Prospectus.
No person has been authorized to give
any information or to make any
representations other than those U.S. $3,322,000,000
contained in or incorporated by
reference in this Prospectus or any
applicable Supplement in connection [PEPSICO LOGO]
with the offer contained herein or
therein and, if given or made, such Debt Securities and Warrants
information or representations must not Due Not Less Than Nine Months from
be relied upon as having been Date of Issue
authorized by the Company or by any
agent. Neither the delivery of this
Prospectus or any applicable Supplement
nor any sale made hereunder or
thereunder shall, under any PROSPECTUS
circumstances, create any implication
that there has been no change in the
affairs of the Company since the date
hereof or thereof, or that the January , 1995
information contained or incorporated
by reference herein or therein is
correct as of any time subsequent to
its date. Neither this Prospectus nor
any applicable Supplement constitutes
an offer to sell or a solicitation of
an offer to buy Debt Securities or
Warrants in any jurisdiction in which
such offer or solicitation is unlawful
or in which the person making such
offer or solicitation is not qualified
to do so.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Available Information 2
Incorporation of Certain Documents by 2
Reference
Important Currency Exchange Information 3
The Company 3
Use of Proceeds 4
Ratio of Earnings to Fixed Charges 4
Description of Debt Securities 5
General 5
Exchange Rate and Other 6
Calculations
Payment Currency 7
Interest and Principal 7
Payments
Fixed Rate Debt Securities 8
Floating Rate Debt 9
Securities
Indexed Debt Securities 10
Global Debt Securities 10
Certain Indenture 11
Provisions
Currency and Index-Related 14
Risk Factors
United States Tax 16
Considerations
Description of Warrants 24
General 25
Debt Warrants 25
Shelf Warrants 26
Plan of Distribution 26
Legal Opinions 27
Experts 27
Glossary A-1
</TABLE>
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:
Securities and Exchange Commission Registration Fee $ 862,068.97
Accounting Fees and Expenses* $ 165,000.00
Trustee's Fees and Expenses (including counsel fees)* $ 30,000.00
Blue Sky Fees and Expenses(including counsel fees)* $ 30,000.00
Printing and Engraving Fees* $ 10,000.00
Rating Agency Fees* $ 200,000.00
Miscellaneous* $ 4,931.03
---------------
Total $ 1,302,000.00
____________________
*Estimated
Item 15. Indemnification of Directors and Officers.
(i) Sections 55-8-50 through 55-8-58 of the North Carolina
Business Corporation Act provide as follows:
55-8-50. Policy statement and definitions.
(a) It is the public policy of this State to enable
corporations organized under this Chapter to attract and maintain
responsible, qualified directors, officers, employees and agents,
and, to that end, to permit corporations organized under this
Chapter to allocate the risk of personal liability of directors,
officers, employees and agents through indemnification and
insurance as authorized in this Part.
(b) Definition in this Part:
(1) "Corporation" includes any domestic or foreign
corporation absorbed in a merger which, if its separate existence
had continued, would have had the obligation or power to
indemnify its directors, officers, employees, or agents, so that
a person who would have been entitled to receive or request
indemnification from such corporation if its separate existence
had continued shall stand in the same position under this Part
with respect to the surviving corporation.
(2) "Director" means an individual who is or was a
director of a corporation or an individual who, while a director
of a corporation, is or was serving at the corporation's request
as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise. A
Director is considered to be serving any employee benefit plan at
the corporation's request if his duties to the corporation also
impose duties on, or otherwise involve services by, him to the
plan or to participants in or beneficiaries of the plan.
"Director" includes, unless the context requires otherwise, the
estate or personal representative of a director.
(3) "Expenses" means expenses of every kind in
defending a proceeding, including counsel fees.
(4) "Liability" means the obligation to pay a
judgment, settlement, penalty, fine (including an excise tax
assessed with respect to an employee benefit plan), or reasonable
expenses incurred with respect to a proceeding.
(4a) "Officer", "employee", or "agent" includes,
unless the context requires otherwise, the estate or personal
representative of a person who acted in that capacity.
(5) "Official capacity" means: (i) when used with
respect to a director, the office of director in a corporation;
and (ii) when used with respect to an individual other than a
director, as contemplated in G.S. 55-8-56, the office in a
corporation held by the officer or the employment or agency
relationship undertaken by the employee or agent on behalf of the
corporation. "Official capacity" does not include service for
any other foreign or domestic corporation or any partnership,
joint venture, trust, employee benefit plan, or other enterprise.
(6) "Party" includes an individual who was, is, or is
threatened to be made a named defendant or respondent in a
proceeding.
(7) "Proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
55-8-51. Authority to indemnify.
(a) Except as provided in subsection (d), a
corporation may indemnify an individual made a party to a
proceeding because he is or was a director against liability
incurred in the proceeding if:
(1) He conducted himself in good faith; and
(2) He reasonably believed (i) in the case of
conduct in his official capacity with the corporation, that his
conduct was in its best interests; and (ii) in all other cases,
that his conduct was at least not opposed to its best interest;
and
(3) In the case of any criminal proceeding, he
had no reasonable cause to believe his conduct was unlawful.
(b) A director's conduct with respect to an employee
benefit plan for a purpose he reasonably believed to be in the
interests of the participants in and beneficiaries of the plan is
conduct that satisfied the requirement of subsection (a)(2)(ii).
(c) The termination of a proceeding by judgment,
order, settlement, conviction, or upon a plea of no contest or
its equivalent is not, of itself, determinative that the director
did not meet the standard of conduct described in this section.
(d) A corporation may not indemnify a director under
this section:
(1) In connection with a proceeding by or in the
right of the corporation in which the director was adjudged
liable to the corporation; or
(2) In connection with any other proceeding
charging improper personal benefit to him, whether or not
involving action in his official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly
received by him.
(e) Indemnification permitted under this section in
connection with a proceeding by or in the right of the
corporation that is concluded without a final adjudication on the
issue of liability is limited to reasonable expenses incurred in
connection with the proceeding.
(f) The authorization, approval or favorable
recommendation by the board of directors of a corporation of
indemnification, as permitted by this section, shall not be
deemed an act or corporate transaction in which a director has a
conflict of interest, and no such indemnification shall be void
or voidable on such ground.
55-8-52. Mandatory indemnification.
Unless limited by its articles of incorporation, a
corporation shall indemnify a director who was wholly successful,
on the merits or otherwise, in the defense of any proceeding to
which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in
connection with the proceeding.
55-8-53. Advance for expenses.
Expenses incurred by a director in defending a proceeding
may be paid by the corporation in advance of the final
disposition of such proceeding as authorized by the board of
directors in the specific case or as authorized or required under
any provision in the articles of incorporation or bylaws or by
any applicable resolution or contract upon receipt of an
undertaking by or on behalf of the director to repay such amount
unless it shall ultimately be determined that he is entitled to
be indemnified by the corporation against such expenses.
55-8-54. Court-ordered indemnification.
Unless a corporation's articles of incorporation provide
otherwise, a director of the corporation who is a party to a
proceeding may apply for indemnification to the court conducting
the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court after giving any notice the
court considers necessary may order indemnification if it
determines:
(1) The director is entitled to mandatory
indemnification under G.S. 55-8-52, in which case the court
shall also order the corporation to pay the director's reasonable
expenses incurred to obtain court-ordered indemnification;
(2) The director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances,
whether or not he met the standard of conduct set forth in G.S.
55-8-51 or was adjudged liable as described in G.S. 55-8-51(d),
but if he was adjudged so liable his indemnification is limited
to reasonable expenses incurred.
55-8-55. Determination and authorization of
indemnification.
(a) A corporation may not indemnify a director under
G.S. 55-8-51 unless authorized in the specific case after a
determination has been made that indemnification of the director
is permissible in the circumstances because he has met the
standard of conduct set forth in G.S. 55-8-51.
(b) The determination shall be made:
(1) By the board of directors by majority vote of
a quorum consisting of directors not at the time parties to the
proceeding;
(2) If a quorum cannot be obtained under
subdivision (1), by majority vote of a committee duly designated
by the board of directors (in which designation directors who are
parties may participate), consisting solely of two or more
directors not at the time parties to the proceeding;
(3) By special legal counsel (i) selected by the
board of directors or its committee in the manner prescribed in
subdivision (1) or (2); or (ii) if a quorum of the board of
directors cannot be obtained under subdivision (1) and a
committee cannot be designated under subdivision (2), selected by
majority vote of the full board of directors (in which selected
directors who are parties may participate); or
(4) By the shareholders, but shares owned by or
voted under the control of directors who are at the time parties
to the proceeding may not be voted on the determination.
(c) Authorization of indemnification and evaluation as
to reasonableness of expenses shall be made in the same manner as
the determination that indemnification is permissible, except
that if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under
subsection (b)(3) to select counsel.
55-8-56. Indemnification of officers, employees, and
agents.
Unless a corporation's articles of incorporation provide
otherwise:
(1) An officer of the corporation is entitled to
mandatory indemnification under G.S. 55-8-52, and is entitled to
apply for court-ordered indemnification under G.S. 55-8-54, in
each case to the same extent as a director;
(2) The corporation may indemnify and advance expenses
under this Part to an officer, employee, or agent of the
corporation to the same extent as to a director; and
(3) A corporation may also indemnify and advance
expenses to an officer, employee, or agent who is not a director
to the extent, consistent with public policy, that may be
provided by its articles of incorporation, bylaws, general or
specific action of its board of directors, or contract.
55-8-57. Additional indemnification and insurance.
(a) In addition to and separate and apart from the
indemnification provided for in G.S. 55-8-51, 55-8-52, 55-8-54,
55-8-55 and 55-8-56, a corporation may in its articles of
incorporation or bylaws or by contract or resolution indemnify or
agree to indemnify any one or more of its directors, officers,
employees, or agents against liability and expenses in any
proceeding (including without limitation a proceeding brought by
or on behalf of the corporation itself) arising out of their
status as such or their activities in any of the foregoing
capacities; provided, however, that a corporation may not
indemnify or agree to indemnify a person against liability or
expenses he may incur on account of his activities which were at
the time taken known or believed by him to be clearly in conflict
with the best interests of the corporation. A corporation may
likewise and to the same extent indemnify or agree to indemnify
any person who, at the request of the corporation, is or was
serving as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise or as a trustee or
administrator under an employee benefit plan. Any provision in
any articles of incorporation, bylaw, contract, or resolution
permitted under this section may include provisions for recovery
from the corporation of reasonable costs, expenses, and
attorney's fees in connection with the enforcement of rights to
indemnification granted therein and may further include
provisions establishing reasonable procedures for determining and
enforcing the rights granted therein.
(b) The authorization, adoption, approval, or favorable
recommendation by the board of directors of a public corporation
of any provision in any articles of incorporation, bylaw,
contract or resolution, as permitted in this section, shall not
be deemed an act or corporate transaction in which a director has
a conflict of interest, and no such articles of incorporation or
bylaw provision or contract or resolution shall be void or
voidable on such grounds. The authorization, adoption, approval,
or favorable recommendation by the board of directors of a
nonpublic corporation of any provision in any articles of
incorporation, bylaw, contract or resolution, as permitted in
this section, which occurred prior to July 1, 1990, shall not be
deemed an act or corporate transaction in which a director has a
conflict of interest, and no such articles of incorporation,
bylaw provision, contract or resolution shall be void or voidable
on such grounds. Except as permitted in G.S. 55-8-31, no such
bylaw, contract, or resolution not adopted, authorized, approved
or ratified by shareholders shall be effective as to claims made
or liabilities asserted against any director prior to its
adoption, authorization, or approval by the board of directors.
(c) A corporation may purchase and maintain insurance on
behalf of an individual who is or was a director, officer,
employee, or agent of the corporation or who, while a director,
officer, employee, or agent of the corporation, is or was serving
at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee
benefit plan, or other enterprise, against liability asserted
against or incurred by him in that capacity or arising from his
status as a director, officer, employee, or agent, whether or not
the corporation would have power to indemnify him against the
same liability under any provision of this act.
55-8-58. Application of Part.
(a) If articles of incorporation limit indemnification or
advance for expenses, indemnification and advance for expenses
are valid only to the extent consistent with the articles.
(b) This Part does not limit a corporation's power to pay
or reimburse expenses incurred by a director in connection with
his appearance as a witness in a proceeding at a time when he has
not been made a named defendant or respondent to the proceeding.
(c) This Part shall not affect rights or liabilities
arising out of acts or omissions occurring before the effective
date of this act.
(ii) Section 3.07 of Article III of the By-Laws of the
Company provides as follows:
Unless the Board of Directors shall determine
otherwise, the Corporation shall indemnify, to the full extent
permitted by law, any person who was or is, or who is threatened
to be made, a party to an action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of
the fact that he, his testator or intestate, is or was a
director, officer or employee of the Corporation, or is or was
serving at the request of the Corporation, as a director, officer
or employee of another enterprise, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding. Such indemnification may, in the
discretion of the Board, include advances of a director's,
officer's or employee's expenses prior to final disposition of
such action, suit or proceeding. The right of indemnification
provided for in this Section 3.07 shall not exclude any rights to
which such persons may otherwise be entitled to contract or as a
matter of law.
(iii) Officers and directors of the Company are presently
covered by insurance which (with certain exceptions and within
certain limitations) indemnifies them against any losses arising
from any alleged wrongful act including any alleged error or
misstatement or misleading statement or wrongful act or omission
or neglect of duty.
Item 16. Exhibits.
1 Form of Distribution Agreement
3 Restated Articles of Incorporation.
4 (a) Indenture, dated as of December 14, 1994,
between PepsiCo, Inc. and The Chase Manhattan Bank (National
Association) as Trustee.
(b) Forms of Debt Securities (included as Exhibits A
and B to the Indenture filed herewith as Exhibit 4(a)).
(c) Form of Fixed Rate Note.
(d) Form of Floating Rate Note.
(e) Form of Debt Warrant Agreement.
(f) Form of Debt Warrant Certificate (included as
Annex A to the form of Debt Warrant Agreement filed herewith
as Exhibit 4(e)).
5 Opinion and consent of Douglas Cram, Esq., Vice
President and Assistant General Counsel of the Company.
8 Opinion and consent of Matthew M. McKenna, Esq.,
Vice President, Taxes of the Company.
12 PepsiCo, Inc. and its Consolidated
Subsidiaries Statement of Computation of Ratio of Earnings to
Fixed Charges (Unaudited).
15 Letter from KPMG Peat Marwick LLP regarding unaudited
financial information, incorporated herein by reference to
Exhibit 15 to the Company's Quarterly Reports on Form 10-Q
for the twelve-week period ended March 19, 1994, the twelve
and twenty-four week periods ended June 11, 1994, and the
twelve and thirty-six week periods ended September
3, 1994
23(a) Consent and Acknowledgment of KPMG Peat Marwick LLP.
(b) The consent of Douglas Cram, Esq. is contained in
his opinion filed as Exhibit 5 to this Registration Statement.
(c) The consent of Matthew M. McKenna, Esq. is
contained in his opinion filed as Exhibit 8 to this
Registration Statement.
24 Power of Attorney of PepsiCo, Inc. and certain of
its officers and directors, incorporated herein by reference
to Exhibit 24 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 25, 1993.
25 Form T-1 Statement of Eligibility and
Qualification under the Trust Indenture Act of 1939 of The
Chase Manhattan Bank (National Association).
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made of the securities registered hereby, 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 this 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 this Registration
Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
this Registration Statement or any material change to such
information in this Registration Statement.
provided, however, that the undertakings set forth in
paragraphs (i) and (ii) above 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 this 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; and
(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.
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 this Registration
Statement 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.
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
provisions described under Item 15 above, 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 such Act 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
PepsiCo, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and
has duly caused this Pre-Effective Amendment No. 1 to
Registration Statement No. 33-57181 to be signed on its behalf by
the undersigned, thereunto duly authorized, in Purchase, New York
on the 9th day of January, 1995.
PEPSICO, INC.
By:/s/ LAWRENCE F. DICKIE
_____________________
(Attorney-in-Fact)
Vice President, Associate General Counsel
and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933,
this Pre-Effective Amendment No. 1 to Registration Statement No.
33-57181 has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
D. WAYNE CALLOWAY* Chairman of the January 9, 1995
Board,
(D. Wayne Calloway) Chief Executive
Officer and
Director
ROBERT G. DETTMER* Executive Vice January 9, 1995
President and
(Robert G. Dettmer) Chief Financial
Officer
ROBERT L. CARLETON* Senior Vice
(Robert L. Carleton) President and
Controller
(Chief Accounting January 9, 1995
Officer)
JOHN F. AKERS*
(John F. Akers) Director January 9, 1995
ROBERT E. ALLEN*
(Robert E. Allen) Director January 9, 1995
ROGER A. ENRICO*
(Roger A. Enrico) Director January 9, 1995
JOHN J. MURPHY*
(John J. Murphy.) Director January 9, 1995
ANDRALL E. PEARSON*
(Andrall E. Pearson) Director January 9, 1995
SHARON PERCY
ROCKEFELLER*
(Sharon Percy Director January 9, 1995
Rockefeller)
ROGER B. SMITH*
(Roger B. Smith) Director January 9, 1995
ROBERT H. STEWART,
III*
(Robert H. Stewart, Director January 9, 1995
III)
P. ROY VAGELOS*
(P. Roy Vagelos) Director January 9, 1995
ARNOLD R. WEBER*
(Arnold R. Weber) Director January 9, 1995
*By: /s/LAWRENCE F. DICKIE
__________________________
(Lawrence F. Dickie)
Attorney-in-Fact
INDEX TO EXHIBITS
DESCRIPTION EXHIBIT NO.
*Form of Distribution Agreement 1
*Restated Articles of Incorporation 3
*Indenture, dated as of December 14, 1994, 4(a)
between PepsiCo, Inc. and The Chase Manhattan
Bank (National Association) as Trustee
*Forms of Debt Securities (included as (b)
Exhibits A and B to the Indenture filed as
Exhibit 4(a) to this Registration Statement)
*Form of Fixed Rate Note (c)
*Form of Floating Rate Note (d)
*Form of Debt Warrant Agreement (e)
*Form of Debt Warrant Certificate (included (f)
as Exhibit A to the form of Debt Warrant
Agreement filed as Exhibit 4(e) to this
Registration Statement)
*Opinion and Consent of Douglas Cram, Esq., 5
Vice President and Assistant General Counsel
of the Company
*Opinion and Consent of Matthew M. McKenna, 8
Esq., Vice President, Taxes of the Company
*PepsiCo, Inc. and its Consolidated 12
Subsidiaries Statement of Computation of
Ratio of Earnings to Fixed Charges
(Unaudited)
*Letter from KPMG Peat Marwick LLP regarding 15
unaudited financial information, incorporated
herein by reference to Exhibit 15 to the
Company's Quarterly Reports on Form 10-Q for
the twelve-week period ended March 19, 1994,
the twelve and twenty-four week periods ended
June 11, 1994, and the twelve and thirty-six
week periods ended September 3, 1994
Consent and Acknowledgment of KPMG Peat
Marwick LLP 23(a)
*The consent of Douglas Cram, Esq. is
contained in his opinion filed as Exhibit 5
to this Registration Statement
*The consent of Matthew M. McKenna, Esq. is
contained in his opinion filed as Exhibit 8
to this Registration Statement
*Power of Attorney of PepsiCo and certain of 24
its officers and directors, incorporated
herein by reference to Exhibit 25 to
PepsiCo's Annual Report on Form 10-K for the
fiscal year ended December 25, 1993
*Form T-1 Statement of Eligibility and 25
Qualification under the Trust Indenture Act
of 1939 of The Chase Manhattan Bank (National
Association)
_______________________
* Incorporated by reference
Consent of Independent Auditors
We consent to the use of our audit report dated February 1, 1994
on the consolidated financial statements and schedules of
PepsiCo, Inc. and subsidiaries as of December 25, 1993 and
December 26, 1992 and for each of the years in the three year
period ended December 25, 1993 incorporated herein by reference
in the Pre-Effective Amendment No. 1 to the Registration Statement on
Form S-3 and in the related prospectus of PepsiCo, Inc. pertaining to
the registration of $3,322,000,000 in principal amount of debt securities and
warrants for PepsiCo, Inc. and to the reference to our Firm under
the heading "Experts" in the Registration Statement.
Our report refers to PepsiCo's adoption of the provisions of the
Financial Accounting Standards Board's Statements of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and No. 109,
"Accounting for Income Taxes" in 1992.
KPMG Peat Marwick LLP
New York, New York
January 6, 1995
<PAGE>
PepsiCo, Inc.
Purchase, New York
Re: The Pre-Effective Amendment No. 1 to the Registration Statement on
Form S-3 and in the related prospectus of PepsiCo, Inc. pertaining
to the registration of $3,322,000,000 in principal amount of debt
securities and warrants for PepsiCo, Inc.
With respect to the subject registration statement, we acknowledge our
awareness of the use therein of our reports dated April 26, 1994, July
19, 1994 and October 11, 1994 related to our reviews of interim
financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such reports
are not considered part of a registration statement prepared or
certified by an accountant or a report prepared or certified by an
accountant within the meaning of sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG PEAT MARWICK LLP
New York, New York
January 6, 1995
