Registration No. 33-64243
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 (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) 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.
<PAGE>
PROSPECTUS
U.S. $4,587,000,000
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 $4,587,000,000 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".
<PAGE>
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>
Maximum
Aggregate Minimum
Price to Commissions & Proceeds to
Public (1) Discounts the Company
(2)(3) (2)(3)(4)
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Per Debt 100%(5) 0.75% 99.25%
Security
Per Warrant (6) 0.75% 99.25%
Total $4,587,000,000 $34,402,500(7)(8) $4,552,597,500(7)(8)
(7)(8)
- -----------------------------------------------------------------------
</TABLE>
(1) The aggregate initial public offering price of all Debt
Securities and Warrants sold hereunder will not exceed
$4,587,000,000, 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 $1,550,000.00.
(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 $2,087,000,000 in initial public offering
price, $15,652,500.00 of discounts and commissions, and
$2,071,347,500 -- 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
January 11, 1995, relating to up to $3,322,000,000 in
aggregate principal amount of debt securities and 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 November , 1995.
<PAGE> 2
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 31, 1994;
(b) the Company's Quarterly Report on Form 10-Q
for the twelve weeks ended March 25, 1995;
(c) the Company's Quarterly Report on Form 10-Q
for the twelve and twenty-four weeks ended
June 17, 1995; and
(d) the Company's Quarterly Report on Form 10-Q
for the twelve and thirty-six weeks ended
September 9, 1995.
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.
<PAGE> 3
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 sells its concentrates to licensed independent
and company-owned bottlers ("Pepsi-Cola 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, MUG
and, within Canada, 7UP and DIET 7UP (the foregoing are
sometimes referred to as "Pepsi-Cola beverages"). The
Pepsi/Lipton Tea Partnership, a joint venture of PCNA and
Thomas J. Lipton Co., develops and sells tea concentrate to
Pepsi-Cola bottlers and develops and markets ready-to-drink
tea products under the LIPTON trademark. Such products are
distributed by Pepsi-Cola bottlers throughout the United
States. A joint venture between PCNA and Ocean Spray
Cranberries, Inc. develops new juice products under the
OCEAN SPRAY trademark. Pursuant to a separate distribution
agreement, Pepsi-Cola bottlers distribute single-serve sizes
of OCEAN SPRAY juice products throughout the United States.
PCI manufactures and sells soft drinks and soft drink
concentrates outside the United States and Canada. PCI
sells its concentrates to Pepsi-Cola bottlers and to joint
ventures in which PepsiCo participates. Under appointments
from PepsiCo, bottlers manufacture, sell and distribute,
within defined territories, Pepsi-Cola beverages bearing
PEPSI-COLA, DIET PEPSI, MIRINDA, PEPSI MAX, 7UP, DIET 7UP
and other trademarks. Principal international markets
include Mexico, Saudi Arabia, Argentina, Spain, the United
Kingdom, Thailand, Venezuela, Brazil and China.
<PAGE> 4
PepsiCo's snack food business consists of Frito-Lay
North America ("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 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 outside the
United States and Canada through company-owned facilities
and joint ventures. On most of the European continent,
PepsiCo's snack food business consists of Snack Ventures
Europe, a joint venture between PepsiCo and General Mills,
Inc., in which PepsiCo owns a 60% interest. Many of PFI's
snack food products, such as SABRITAS brand potato chips in
Mexico, are similar in taste to Frito-Lay snacks sold in the
United States and Canada. PFI also sells a variety of snack
food products which appeal to local tastes including, for
example WALKERS CRISPS, which are sold in the United
Kingdom, and GAMESA cookies and SONRIC'S candies, which are
sold in Mexico. In addition, RUFFLES, CHEE.TOS, DORITOS,
FRITOS and SUNCHIPS brand snack foods have been introduced
to international markets. Principal international markets
include Mexico, the United Kingdom, Spain, Brazil, Poland,
the Netherlands, France, and Australia.
PepsiCo's worldwide restaurant business principally
consists of Pizza Hut, Inc. ("Pizza Hut"), Taco Bell Corp.
("Taco Bell"), KFC Corporation ("KFC") and PepsiCo
Restaurants International ("PRI").
Pizza Hut is engaged principally in the operation,
development and franchising of a system of casual full
service family restaurants, delivery/carryout units and
kiosks operating under the name PIZZA HUT throughout the
United States and Canada. 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 system of fast-service
restaurants serving carryout and dine-in moderately priced
Mexican-style food, including tacos, burritos, taco salads
and nachos and operating under the name TACO BELL throughout
the United States and Canada.
KFC is engaged principally in the operation,
development and franchising of a system of carryout and dine-
in restaurants featuring chicken and operating under the
names KENTUCKY FRIED CHICKEN and/or KFC throughout the
United States and Canada.
PRI is engaged principally in the operation and
development of casual dining and fast-service restaurants,
delivery units and kiosks which sell PIZZA HUT, KFC and, to
a lesser extent, TACO BELL products outside the United
States and Canada.
PFS, a division of PepsiCo, is engaged in the
distribution of food, supplies and equipment to company-
owned, franchised and licensed PIZZA HUT, TACO BELL and KFC
restaurants in the United States, Australia, Canada, Mexico,
Puerto Rico and Poland.
The Company's executive offices are located at 700
Anderson Hill Road, Purchase, New York 10577 (telephone
number (914) 253-2000).
<PAGE> 5
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 1990
through 1994, inclusive, and for the 36 weeks ended
September 9, 1995, 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 and
adjusted for joint ventures and minority interests, net,
with the sum divided by fixed charges.
<TABLE>
<CAPTION>
FISCAL YEARS
----------------
<S> <C> <C> <C> <C> <C>
36 Weeks
1990 1991 1992 1993 1994 Ended
September 9,
1995
3.09 3.27 3.65 4.38 4.31 4.54
</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.
<PAGE> 6
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
$4,587,000,000 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
the Company and will rank in parity with all other
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
<PAGE> 7
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
<PAGE> 8
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
<PAGE> 9
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
<PAGE> 10
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,
<PAGE> 11
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,
<PAGE> 12
(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
<PAGE> 13
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 corpor-
ation 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
<PAGE> 14
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
<PAGE> 15
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,
<PAGE> 16
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.
<PAGE> 17
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.
<PAGE> 18
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
<PAGE> 19
Company) at asingle 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
<PAGE> 20
failing to betreated 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
<PAGE> 21
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"). Regulations addressing the federal income tax
treatment of Contingent Debt Securities were issued in proposed
form on December 16, 1994 and are proposed to be effective for
Contingent Debt Securities issued on or after the date that is
60 days after the date the regulations are issued in final form.
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
<PAGE> 22
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
<PAGE> 23
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
<PAGE> 24
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.
<PAGE> 25
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
<PAGE> 26
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.
<PAGE> 27
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
<PAGE> 28
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 schedule of
the Company as of December 31, 1994 and for each of the
fiscal years in the three-year period ended December 31,
1994, included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, 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 31, 1994
financial statements refers to the Company's adoption of the
Financial Accounting Standards Board's Statement of
Financial Accounting Standard No. 112, "Employers'
Accounting for Postemployment
<PAGE> 29
Benefits," in 1994 and change in its method for calculating
the market-related value of pension plan assets used in the
determination of pension expense in 1994 and 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 schedule 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 for the twelve
weeks ended March 25, 1995, the twelve and twenty-four weeks
ended June 17, 1995 and the twelve and thirty-six weeks
ended September 9, 1995, 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 weeks ended March 25, 1995, the
twelve and twenty-four weeks ended June 17, 1995 and the twelve and
thirty-six weeks ended September 9, 1995, 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.
<PAGE> A-1
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
<PAGE> A-2
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 7 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
<PAGE> A-3
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 25 of the Prospectus.
"Debt Warrant Agreement"--see page 25 of the
Prospectus.
"Debt Warrant Certificate"--see page 25 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 13 of the Prospectus for a discussion of Events of
Default.
"Exchange Act"--see page 2 of the Prospectus.
"Exchange Rate Agent"--see page 7 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.
<PAGE> A-4
"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 8 of the Prospectus.
"Index Maturity"--see page 9 of the Prospectus.
"Index" or "applicable Index"--see page 11 of the
Prospectus.
"Indexed Debt Security"--see page 1 of the Prospectus.
"Indenture"--see page 5 of the Prospectus.
"Initial Interest Rate"--see page 10 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 10 of the Prospectus.
"Interest Reset Date"--see page 10 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
<PAGE> A-5
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 6 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 6 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>
<CAPTION>
<S> <C> <C> <C> <C> <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 11 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
<PAGE> A-6
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 25 of the Prospectus.
"Shelf Warrant Agreement" -- see page 25 of the
Prospectus.
"Shelf Warrant Certificate" -- see page 25 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.
<PAGE> A-7
"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>
<CAPTION>
<S> <C> <C> <C> <C> <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 26 of the Prospectus.
"Warrant Agreement" --see page 25 of the Prospectus.
<PAGE> A-8
"Warrant Certificate" -- see page 25 of the Prospectus.
<PAGE>
No person has been authorized to give
any information or to make any
representations other than those U.S. $4,587,000,000
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 November , 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 OF CONTENTS
Page
Available Information 2
Incorporation of Certain Documents by 2
Reference
Important Currency Exchange Information 3
The Company 3
Use of Proceeds 5
Ratio of Earnings to Fixed Charges 5
Description of Debt Securities 5
General 6
Exchange Rate and Other
Calculations 6
Payment Currency 6
Interest and Principal
Payments 8
Fixed Rate Debt Securities 9
Floating Rate Debt 9
Securities
Indexed Debt Securities 10
Global Debt Securities 11
Certain Indenture
Provisions 12
Currency and Index-Related
Risk Factors 15
United States Tax
Considerations 17
Description of Warrants 25
General 26
Debt Warrants 26
Shelf Warrants 27
Plan of Distribution 27
Legal Opinions 28
Experts 28
Glossary A-1
<PAGE> II-1
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 $ 500,000.00
Commission Registration Fee
Accounting Fees and Expenses* $ 165,000.00
Trustee's Fees and Expenses $ 30,000.00
(including counsel fees)*
Blue Sky Fees and Expenses $ 30,000.00
(including counsel fees)*
Printing and Engraving Fees* $ 10,000.00
Rating Agency Fees* $ 810,000.00
Miscellaneous* $ 5,000.00
_____________
Total $1,550,000.00
____________________
*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:
Section 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
<PAGE> II-2
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.
Section 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
<PAGE> II-3
(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.
Section 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.
Section 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.
Section 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.
Section 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.
<PAGE> II-4
(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.
Section 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.
Section 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
<PAGE> II-5
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.
Section 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.
<PAGE> II-6
(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 Subsidiaries
Statement of Computation of Ratio of Earnings
to Fixed Charges (Unaudited).
15 Letter from KPMG Peat Marwick LLP
regarding unaudited interim financial
information ("Accountants' Acknowledgment"), incorporated
herein by reference to Exhibit 15 to the
Company's Quarterly Reports on Form 10-Q for
the twelve weeks ended March 25, 1995, the
twelve and twenty-four weeks ended June, 17,
1995 and the twelve and thirty-six weeks
ended September 9, 1995.
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 31, 1994.
25 Form T-1 Statement of
Eligibility and Qualification under the Trust
Indenture Act of 1939 of The Chase Manhattan
Bank (National Association).
<PAGE> II-7
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.
<PAGE> S-1
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 33-64243 to be signed on its
behalf by the undersigned, thereunto duly authorized, in
Purchase, New York on the 17th day of November, 1995.
PEPSICO, INC.
By: /s/ EDWARD V. LAHEY, JR.
-----------------------------
Edward V. Lahey,Jr.
(Attorney-in-Fact)
Senior Vice President, General
Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the date indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
D. WAYNE CALLOWAY* Chairman of the November 17, 1995
(D. Wayne Calloway Board,
Chief Executive
Officer and
Director
ROBERT G. DETTMER* Executive Vice November 17, 1995
(Robert G. Dettmer) President and
Chief Financial
Officer
ROBERT L. CARLETON* Senior Vice
(Robert L. Carleton) President and
Controller
(Chief Accounting November 17, 1995
Officer)
JOHN F. AKERS*
(John F. Akers) Director November 17, 1995
ROBERT E. ALLEN*
(Robert E. Allen) Director November 17, 1995
ROGER A. ENRICO Vice Chairman of
(Roger Enrico)* the Board and
Chairman and Chief
Executive Officer, November 17, 1995
PepsiCo Worldwide
Restaurants
JOHN J. MURPHY*
(John J. Murphy.) Director November 17, 1995
ANDRALL E. PEARSON*
(Andrall E. Pearson) Director November 17, 1995
SHARON PERCY
ROCKEFELLER*
(Sharon Percy Director November 17, 1995
Rockefeller)
ROGER B. SMITH*
(Roger B. Smith) Director November 17, 1995
ROBERT H. STEWART,
III*
(Robert H. Stewart, Director November 17, 1995
III)
<PAGE> S-2
FRANKLIN A. THOMAS
(Franklin A. Thomas) Director November 17, 1995
P. ROY VAGELOS*
(P. Roy Vagelos) Director November 17, 1995
ARNOLD R. WEBER*
(Arnold R. Weber) Director November 17, 1995
By: /s/ EDWARD V. LAHEY, JR.
---------------------------
(Edward V. Lahey, Jr.)
Attorney-in-Fact
<PAGE> E-1
INDEX TO EXHIBITS
DESCRIPTION EXHIBIT NO.
*Form of Distribution Agreement 1
*Restated Articles of Incorporation of 3
PepsiCo, Inc., which is incorporated herein
by reference from Exhibit 4(a) to PepsiCo's
Registration Statement on Form S-3
(Registration No. 57181).
*Indenture, dated as of December 14, 1994, 4(a)
between PepsiCo, Inc. and The Chase Manhattan
Bank (National Association) as Trustee, which
is incorporated herein by reference from
Exhibit 4(a) to PepsiCo's Registration
Statement on Form S-3 (Registration No.
57181).
*Forms of Debt Securities (included as (b)
Exhibits A and B to the Indenture which is
incorporated herein by reference from Exhibit
4(a) to PepsiCo's Registration Statement on
Form S-3 (Registration No. 57181)).
*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 which is incorporated herein by
reference from 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 Subsidiaries Statement of 12
Computation of Ratio of Earnings to Fixed
Charges (Unaudited)
*Letter from KPMG Peat Marwick LLP regarding 15
unaudited interim financial ("Accountants'
Acknowledgment") information, incorporated
herein by reference to Exhibit 15 to the
Company's Quarterly Reports on Form 10-Q for
the twelve weeks ended March 25, 1995, the
twelve and twenty-four weeks ended June 17,
1995 and the twelve and thirty-six weeks
ended September 9, 1995.
*Consent and Acknowledgment of KPMG Peat 23(a)
Marwick LLP
*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 24 to
PepsiCo's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994
Form T-1 Statement of Eligibility and 25
Qualification under the Trust Indenture Act
of 1939 of The Chase Manhattan Bank (National
Association)
__________________________________________
* Previously filed or incorporated by reference
</TABLE>
November 17, 1995
Dear Sirs:
I am Vice President, Taxes of PepsiCo, Inc., a corporation organized under
the laws of the State of North Carolina (the "Company"). I have acted as tax
counsel for the Company in connection with the registration of $4,587,000,000 in
aggregate offering price of the (i) the Company's debt securities, consisting of
notes, debentures, and other evidences of unsecured indebtedness (the "Debt
Securities"), proposed to be issued under an Indenture, dated as of December 14,
1994, between the Company and the Chase Manhattan Bank (National Association),
as Trustee (the "Indenture"), included as an exhibit to the Registration
Statement (as defined below), (ii) warrants to purchase Debt Securities (the
"Debt Warrants"), proposed to be issued under a debt warrant agreement to be
entered into between the Company and The Chase Manhattan Bank, (National
Association), as Debt Warrant Agent (the "Debt Warrant Agreement"), in
substantially the form included as an exhibit to the Registration Statement, and
(iii) other warrants, options, and unsecured contractual obligations of the
Company (the "Shelf Warrants"), proposed to be issued under one or more shelf
warrant agreements to be entered into between the Company and The Chase
Manhattan Bank (National Association), or such other bank or trust company as
may be identified in any supplement to the Prospectus filed as part of the
Registration Statement (any such agreement a "Shelf Warrant Agreement"), in
substantially the form to be filed as an exhibit to the Registration Statement
at or prior to the issuance of any Shelf Warrants subject thereto. You have
requested my opinion in connection with the Registration Statement on Form S-3
relating to the Debt Securities, Debt Warrants and Shelf Warrants
(collectively, the "Securities"), which Registration Statement is being filed by
the Company with the Securities and Exchange on this date (the "Registration
Statement")
It is my opinion that if the offering of the Securities is conducted in the
manner described in the Prospectus filed as part of the Registration Statement
(the "Prospectus"), and if the terms of any series of Securities are as
contemplated by the Prospectus, then the statements contained in the section of
the Prospectus entitled "United States Tax Considerations" accurately describe
certain United States federal income tax consequences of ownership and
disposition of the Securities, except, with respect to Debt Warrants or Shelf
Warrants, which consequences will be discussed in the applicable Prospectus
Supplement to be filed hereafter.
<PAGE>
I do not purport to be expert in, or to express any opinion concerning, the
laws of any jurisdiction other than the federal laws of the United States of
America. I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name in the Registration Statement
under the caption "Legal Matters". In giving this consent, I do not admit that I
am in the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ MATTHEW M. MCKENNA
Matthew M. McKenna
Vice President, Taxes
Securities Act of 1933 File No. _________
(If application to determine eligibility of
trustee for delayed offering pursuant to
Section 305 (b) (2))
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
- --------------------------------------------------------------------------------
SECTION 305(b)(2)___________________
------------------
THE CHASE MANHATTAN BANK
(National Association)
(Exact name of trustee as specified in its charter)
13-2633612
(I.R.S. Employer Identification Number)
1 Chase Manhattan Plaza, New York, New York
(Address of principal executive offices)
10081
(Zip Code)
----------------
PEPSICO, Inc.
(Exact name of obligor as specified in its charter)
North Carolina
(State or other jurisdiction of incorporation or organization)
13-1584302
(I.R.S. Employer Identification No.)
700 Anderson Hill Road
Purchase, New York
(Address of principal executive offices)
10577
(Zip Code)
----------------------------------
Debt Securities
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of The Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The Trustee is not the obligor, nor is the Trustee directly or
indirectly controlling, controlled by, or under common control with
the obligor.
(See Note on Page 2.)
Item 16. List of Exhibits.
List below all exhibits filed as a part of this statement of eligibility.
*1. -- A copy of the articles of association of the trustee as now in
effect . (See Exhibit T-1 (Item 12) , Registration No. 33-55626.)
*2. -- Copies of the respective authorizations of The Chase Manhattan
Bank (National Association) and The Chase Bank of New York
(National Association) to commence business and a copy of
approval of merger of said corporations, all of which documents
are still in effect. (See Exhibit T-1 (Item 12), Registration
No. 2-67437.)
*3. -- Copies of authorizations of The Chase Manhattan Bank
(National Association) to exercise corporate trust powers, both
of which documents are still in effect. (See Exhibit T-1
(Item 12), Registration No. 2-67437).
*4. -- A copy of the existing by-laws of the trustee. (See Exhibit T-1
(Item 12(a)), Registration No. 33-60809.)
*5. -- A copy of each indenture referred to in Item 4, if the obligor
is in default. (Not applicable).
*6. -- The consents of United States institutional trustees required
by Section 321(b) of the Act.
(See Exhibit T-1, (Item 12), Registration No. 22-19019.)
7. -- A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising
or examining authority.
- -------------------
*The Exhibits thus designated are incorporated herein by reference. Following
the description of such Exhibits is a reference to the copy of the Exhibit
heretofore filed with the Securities and Exchange Commission, to which there
have been no amendments or changes.
<PAGE>
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by
the trustee of all facts on which to base a responsive answer to Item 2 the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by
an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, The Chase Manhattan Bank (National Association), a corporation
organized and existing under the laws of the United States of America, has
duly caused this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized , all in the City of New York,
and the State of New York, on the 13th day November, 1995
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By: /s/ Valerie Dunbar
----------------------------
Vice President
<PAGE>
Exhibit 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
The Chase Manhattan Bank, N.A.
of New York in the State of New York, at the close of business on June 30, 1995,
published in response to call made by Comptroller of the Currency, under title
12, United States Code, Section 161.
Charter Number 2370 Comptroller of the Currency Northeastern District
Statement of Resources and Liabilities
<TABLE>
<CAPTION>
ASSETS Thousands
of Dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin........................ $ 4,279,000
Interest-bearing balances................................................. 6,752,000
Held to maturity securities..................................................... 1,779,000
Available-for-sale securities............................................. 4,607,000
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold........................................................ 1,307,000
Securities purchased under agreements to resell.......................... 207,000
Loans and lease financing receivable:
Loans and leases, net of unearned income.................................. $55,234,000
LESS: Allowance for loan and lease losses................................ 1,095,000
LESS: Allocated transfer risk reserve.................................... 0
-----------
Loans and leases, net of unearned income,
allowance, and reserve.................................................... 54,139,000
Trading assets.................................................................. 13,459,000
Premises and fixed assets (including capitalized
leases)........................................................................ 1,824,000
Other real estate owned 413,000
Investments in unconsolidated subsidiaries and associated 33,000
companies.......................................................................
Customers' liability to this bank on acceptances outstanding 1,141,000
Intangible assets............................................................... 934,000
Other assets.................................................................... 6,947,000
---------
TOTAL ASSETS.................................................................... $97,821,000
===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices........................................................ $ 30,648,000
Noninterest-bearing...................................................... $ 11,207,000
Interest-bearing......................................................... 19,441,000
----------
In foreign offices, Edge and Agreement subsidiaries, and IBFs:.................. 35,397,000
Noninterest-bearing...................................................... $ 3,024,000
Interest-bearing......................................................... 32,373,000
----------
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its Edge
and Agreement subsidiaries, and in IBFs:
Federal funds purchased.................................................. 1,781,000
Securities sold under agreements to repurchase........................... 217,000
Demand notes issued to the U.S. Treasury....................................... 25,000
Trading liabilities............................................................ 10,479,000
Other borrowed money:
With original maturity of one year or less......................... 2,050,000
With original maturity of more than one year....................... 433,000
Mortgage indebtedness and obligations under capitalized leases.................. 40,000
Bank's liability on acceptances executed and outstanding........................ 1,148,000
Subordinated notes and debentures............................................... 1,960,000
Other liabilities............................................................... 6,239,000
---------
TOTAL LIABILITIES 90,417,000
----------
Limited-life preferred stock and related surplus................................ 0
</TABLE>
<TABLE>
<CAPTION>
EQUITY CAPITAL
<S> <C>
Perpetual preferred stock and related surplus................................... 0
Common stock.................................................................... 921,000
Surplus......................................................................... 4,069,000
Undivided profits and capital reserves.......................................... 1,650,000
Net unrealized holding gains (losses) on available-for-sale
securities...................................................................... (47,000)
Cumulative foreign currency translation
adjustments..................................................................... 11,000
------
TOTAL EQUITY CAPITAL 7,404,000
---------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK,
AND EQUITY CAPITAL...............................
$ 97,821,000
============
</TABLE>
I, Lester J. Stephens, Jr., Senior Vice President and Controller of the above
named bank do hereby declare that this Report of Condition is true and correct
to the best of my knowledge and belief. (Signed) Lester J. Stephens, Jr
We the undersigned directors, attest to the correctness of this statement of
resources and liabilities. We declare that it has been examined by us, and to
the best of our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.
(Signed) Thomas G. Labrecque
(Signed) Richard J. Boyle Directors
(Signed) Donald H. Trautlein
