<PAGE> 1
As filed pursuant to Rule 424(b)(5)
Registration No. 333-18569
PROSPECTUS SUPPLEMENT
(To Prospectus Dated March 13, 1997)
$3,170,575,000
(COCA-COLA ENTERPRISES INC. LOGO)
MEDIUM-TERM NOTES
DUE FROM AND EXCEEDING NINE MONTHS FROM DATE OF ISSUE
Coca-Cola Enterprises Inc. (the "Company") may offer from time to time up to
$3,170,575,000 aggregate amount (or the equivalent thereof in foreign currencies
or currency units) of its unsecured Medium-Term Notes (the "Notes"), subject to
reduction under certain circumstances as a result of the sale of other
securities of the Company under the Prospectus to which this Prospectus
Supplement relates. The Notes will bear interest at fixed rates ("Fixed Rate
Notes") or variable rates ("Floating Rate Notes"). The interest rates on Fixed
Rate Notes, which may be zero in the case of certain Notes issued at a price
representing a substantial discount from the principal amount payable upon
maturity, the method of determining the interest rates on Floating Rate Notes
and the issue prices and maturity dates of the Notes will be established by the
Company from time to time and will be set forth in supplements hereto ("Pricing
Supplements"). Interest rates, the methods of determining interest rates and
issue prices are subject to change by the Company, but no such change will
affect any Note theretofore issued or as to which an offer to purchase has been
accepted by the Company. The Notes will have maturities from and exceeding nine
months from their respective dates of issue. See "Description of Notes".
The Notes may be denominated in U.S. dollars or in such foreign currencies or
currency units as may be designated by the Company at the time of offering and
set forth in a Pricing Supplement (the "Specified Currency"). Unless otherwise
specified in the applicable Pricing Supplement, interest on each Fixed Rate Note
will accrue from its date of issue and will be payable, at the option of the
original purchaser, either semi-annually in arrears on each June 1 and December
1 or annually in arrears on each June 15, and at maturity (or, if applicable,
upon redemption at the option of the Company or upon repayment at the option of
the holders of the Notes (the "Holders")). The interest rate on Floating Rate
Notes will be determined by reference to the "CD Rate", the "Commercial Paper
Rate", the "Federal Funds Rate", "LIBOR", the "Prime Rate", the "Treasury Rate"
or other interest rate formula, and may be adjusted by a "Spread" or "Spread
Multiplier", as defined herein. Interest on each Floating Rate Note will accrue
from its date of issue and will be payable as set forth in the applicable
Pricing Supplement and at maturity (or, if applicable, upon redemption or
repayment).
The principal amount payable at maturity and/or the interest payable on each
Note may be determined by reference to the relationship between two or more
specified currencies, by reference to one or more equity or other indices and/or
formulae or the price of one or more specified commodities or by such other
methods as may be described in the applicable Pricing Supplement (an "Indexed
Note"). Fixed Rate Notes may pay a legal amount in respect of both principal and
interest amortized over the life of the Note (an "Amortizing Note"). The Notes
will not be subject to redemption or repayment prior to their stated maturity
unless otherwise specified in the applicable Pricing Supplement.
The Notes will be issued in fully registered certificated or book-entry form in
denominations of $1,000 or any integral multiple thereof. Ownership of
beneficial interests in Notes in book-entry form will be shown on, and transfers
thereof will be effected only through, records maintained by The Depository
Trust Company, as Depository, and its participants. Owners of beneficial
interests in Notes issued in book-entry form will be entitled to physical
delivery of Notes in certificated form in the principal amount of their
respective beneficial interests only under the limited circumstances described
herein. See "Description of Notes -- Book-Entry Notes".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
<S> <C> <C> <C>
Per Note.................. 100.000% .125% - .750% 99.875% - 99.250%
Total..................... $3,170,575,000 $3,963,219 - $23,779,313 $3,166,611,781 - $3,146,795,688
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes will
be issued at 100% of their principal amount.
(2) The Company will pay commissions to Salomon Brothers Inc and Lehman
Brothers, Lehman Brothers Inc. (the "Agents") in the form of discounts,
ranging from .125% to .750% of the principal amount of any Note, depending
upon maturity, and may sell Notes to either Agent, as principal, for resale
to investors or other purchasers at varying prices relating to prevailing
market prices at the time of resale, as determined by such Agent.
Commissions on Notes with maturities of more than 40 years will be at rates
negotiated by the Company and the Agents at the time of sale. Unless
otherwise indicated in the applicable Pricing Supplement, a Note sold to an
Agent as principal will be purchased by such Agent at a price equal to 100%
of the principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Note of identical maturity and may be
resold by such Agent. No commission will be payable on any sales made
directly by the Company.
(3) Assuming Notes are issued at 100% of their principal amount and before
deducting expenses payable by the Company estimated at $1,472,576.
The Notes are being offered on a continuing basis by the Company through the
Agents, which have agreed to use their best efforts to solicit purchases of the
Notes, and Notes may also be sold to either Agent, as principal, for resale to
investors or other purchasers. The Company reserves the right to sell Notes
directly to investors on its own behalf in those jurisdictions where it is
permitted to do so. The Notes will not be listed on any securities exchange, and
there can be no assurance that the Notes offered by this Prospectus Supplement
will be sold or that there will be a secondary market for the Notes. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Company or either Agent may reject any order in whole or in part.
See "Plan of Distribution" in this Prospectus Supplement.
SALOMON BROTHERS INC LEHMAN BROTHERS
The date of this Prospectus Supplement is March 13, 1997.
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DESCRIPTION OF NOTES
The following description of the particular terms of the Notes (which
represent a series of, and are referred to in the accompanying Prospectus as,
"Debt Securities") supplements and, to the extent, if any, inconsistent
therewith, replaces the description of the general terms and provisions of the
Debt Securities set forth in the accompanying Prospectus to which reference is
hereby made. The particular terms of the Notes offered by this Prospectus
Supplement and each Pricing Supplement will be described herein and therein.
Certain capitalized terms used herein are defined in the accompanying
Prospectus.
The Company may issue and sell additional Debt Securities in other series
pursuant to the accompanying Prospectus and, such Debt Securities, if issued and
sold, will reduce the aggregate principal amount of Notes that may be issued and
sold pursuant to this Prospectus Supplement. The aggregate principal amount of
the Notes may also be reduced by the aggregate principal amount of any
additional series of medium-term notes of the Company in bearer or registered
form issued and sold outside the United States concurrently with the offering of
the Notes (the "Bearer Notes"). Upon any public offering or sale pursuant to the
Prospectus of any other series of Debt Securities, such series of Debt
Securities and the particular terms of such offers or sales will be described in
a Prospectus Supplement or Prospectus Supplements relating thereto.
GENERAL
The Notes will be issued under an Indenture between the Company and The
Chase Manhattan Bank, formerly known as Chemical Bank (as successor by merger to
Manufacturers Hanover Trust Company), as trustee (the "Trustee"), dated as of
July 30, 1991, as amended by the First Supplemental Indenture dated as of
January 29, 1992 (the "Indenture"), which is more fully described in the
accompanying Prospectus. The following summaries of certain provisions of the
Indenture do not purport to be complete, are subject to, and are qualified in
their entirety by reference to, all of the provisions of the Indenture,
including the definitions therein of certain terms. The terms and conditions set
forth below will apply to each Note unless otherwise specified in the applicable
Pricing Supplement.
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that Debt Securities may
be issued in one or more series up to the aggregate principal amount which may
be authorized from time to time by the Company. The Company may, from time to
time, without the consent of the Holders of the Notes, provide for the issuance
of additional Notes or other Debt Securities under the Indenture. As used
herein, "Holder" includes the Depository (as hereinafter defined) with respect
to Notes issued in book-entry form.
All Debt Securities, including the Notes, issued and to be issued will be
unsecured and will rank pari passu with all other Debt Securities and other
unsecured and unsubordinated indebtedness of the Company from time to time
outstanding. However, since the Company is primarily a holding company, the
right of the Company, and hence the rights of creditors of the Company
(including the Holders), to participate in any distribution of the assets of any
subsidiary upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the extent
that claims of the Company itself as a creditor of the subsidiary may be
recognized.
The Notes will be offered on a continuing basis and will mature on any
Business Day (as hereinafter defined) from and exceeding nine months from the
date of issue, as selected by the purchaser and agreed to by the Company, and
may be subject to redemption or repayment prior to maturity at the price or
prices specified in the applicable Pricing Supplement. Floating Rate Notes will
mature on an Interest Payment Date (as hereinafter defined). Each Note will bear
interest at either (a) a fixed rate or (b) a floating rate determined by
reference to a Base Rate (as hereinafter defined), which may be adjusted by
adding or subtracting the Spread or multiplying by the Spread Multiplier (as
hereinafter defined).
The Notes will be issued only in fully registered certificated or
book-entry form and, except as may be otherwise provided in the applicable
Pricing Supplement, in U.S. dollar denominations of $1,000 or any integral
multiple thereof. Notes issued in certificated form may be transferred or
exchanged at the offices described in "-- Payment of Principal and Interest"
below. In the event Notes are issued in book-entry form
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through the facilities of The Depository Trust Company, New York, New York (the
"Depository"), transfers or exchanges may be similarly effected through a
participating member of the Depository. See "-- Book-Entry Notes" below. No
service charge will be made for any registration of transfer or exchange of
Notes issued in certificated form, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
PAYMENT OF PRINCIPAL AND INTEREST
Payments on Notes issued in book-entry form will be made to the Depository.
See "-- Book-Entry Notes" below. In the case of Notes issued in certificated
form, principal, premium, if any, and interest will be payable, the transfer of
the Notes will be registrable, and Notes will be exchangeable for Notes bearing
identical terms and provisions at the office or agency of the Trustee in New
York City designated for such purpose; provided, however, that payment of
interest, other than interest at maturity (or on the date of redemption or
repayment, if a Note is redeemed or repaid prior to maturity), may be made at
the option of the Company by check mailed to the address of the person in whose
name the applicable Note is registered at the close of business on the relevant
Regular Record Date (as hereinafter defined) as shown on the applicable Security
Register or by wire transfer to an account maintained by the person entitled
thereto as specified in the Security Register. Interest will be payable on each
date specified in the Note on which an installment of interest is due and
payable (an "Interest Payment Date") and at maturity (or, if applicable, upon
redemption or repayment). If the original issue date of a Note is between a
Regular Record Date and an Interest Payment Date, the initial interest payment
will be made on the Interest Payment Date following the next succeeding Regular
Record Date to the registered Holder on such next succeeding Regular Record
Date.
Interest payments will be in the amount of interest accrued from and
including the next preceding Interest Payment Date in respect of which interest
has been paid or duly provided for (or from and including the date of issue, if
no interest has been paid with respect to such Note), to but excluding the
applicable Interest Payment Date (an "Interest Accrual Period"). However, in the
case of Floating Rate Notes on which the interest rate is reset daily or weekly,
unless otherwise specified in the applicable Pricing Supplement, the interest
payments will include interest accrued only from but excluding the Regular
Record Date through which interest has been paid (or from and including the date
of issue, if no interest has been paid with respect to such Note) through and
including the Regular Record Date next preceding the applicable Interest Payment
Date, except that the interest payment on the maturity date (or, if applicable,
the date of redemption or repayment) will include interest accrued to but
excluding such date. In the case of Notes issued in certificated form, payment
of principal, premium, if any, and interest payable at maturity (or, if
applicable, upon redemption or repayment) on each Note will be paid in
immediately available funds against presentation of the Note at the office of
the Trustee, which is currently located at 55 Water Street, New York, New York
10041, Attention: Corporate Trust and Agency Group, provided that the Notes in
certificated form are presented to the Trustee in time for the Trustee to make
such payments in such funds in accordance with its normal procedures. Interest
payable at maturity (or, if applicable, upon redemption or repayment) will be
payable to the person to whom the principal of the Note shall be paid.
Notwithstanding the above, a Holder of $10,000,000 or more in aggregate
principal amount of Notes issued in certificated form having the same Interest
Payment Date will be entitled to receive payments of interest (other than at
maturity or, if applicable, upon redemption or repayment) by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received by the Trustee on or before the Regular Record Date immediately
preceding the applicable Interest Payment Date.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all
dollar amounts used in or resulting from such calculation on Floating Rate Notes
will be rounded to the nearest cent (with one-half cent being rounded upward).
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REDEMPTION AND REPAYMENT
The Notes will be subject to redemption by the Company on and after the
initial redemption date, if any, fixed at the time of sale and set forth in the
applicable Pricing Supplement and in the applicable Note (the "Initial
Redemption Date"). If no Initial Redemption Date is indicated with respect to a
Note, such Note will not be redeemable prior to maturity. On and after the
Initial Redemption Date with respect to any Note, such Note will be redeemable
in whole or in part in increments of $1,000 at the option of the Company at a
redemption price (the "Redemption Price") determined in accordance with the
following paragraph, together with interest thereon payable to the date of
redemption, on notice given no more than 60 nor less than 30 days prior to the
date of redemption.
The Redemption Price for each Note subject to redemption shall initially be
equal to a certain percentage (the "Initial Redemption Percentage") of the
principal amount of such Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date with respect to such Note by a
percentage (the "Annual Redemption Percentage Reduction") of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount. The Initial Redemption Percentage and any Annual Redemption Percentage
Reduction with respect to each Note subject to redemption prior to maturity will
be fixed at the time of sale and set forth in the applicable Pricing Supplement
and in the applicable Note.
The Notes will be subject to repayment at the option of the Holders thereof
in accordance with the terms of the Notes on their respective optional repayment
dates, if any, fixed at the time of sale and set forth in the applicable Pricing
Supplement and in the applicable Note (the "Optional Repayment Dates"). If no
Optional Repayment Date is indicated with respect to a Note, such Note will not
be repayable at the option of the Holder prior to maturity. On any Optional
Repayment Date with respect to any Note, such Note will be repayable in whole or
in part in increments of $1,000 at the option of the Holder thereof at a price
equal to 100% of the principal amount to be repaid, together with interest
thereon payable to the Optional Repayment Date, on notice given by such Holder
to the Company not more than 60 nor less than 30 days prior to the Optional
Repayment Date.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issue at the rate
per annum stated on the face thereof until the principal amount thereof is paid
or made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, interest on Fixed Rate Notes will be payable, at the option
of the original purchaser, either semi-annually in arrears on June 1 and
December 1 of each year or annually in arrears on June 15 of each year, to the
persons in whose names the Notes are registered at the close of business on the
fifteenth day of the calendar month preceding such Interest Payment Date (the
"Regular Record Date"). Interest is also payable at maturity (or, if applicable,
upon redemption or repayment). Unless otherwise specified in the applicable
Pricing Supplement, interest on Fixed Rate Notes will be computed on the basis
of a 360-day year of twelve 30-day months. If any Interest Payment Date or the
maturity date (or the date of redemption or repayment) of a Fixed Rate Note
falls on a day that is not a Business Day, the payment will be made on the next
Business Day as if it were made on the date such payment was due, and no
interest will accrue on the amount so payable for the period from and after such
Interest Payment Date or the maturity date (or the date of redemption or
repayment), as the case may be.
FLOATING RATE NOTES
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Interest on Floating Rates Notes
will be determined by reference to a "Base Rate", which may be the "CD Rate"
("CD Rate Notes"), the "Commercial Paper Rate" ("Commercial Paper Rate Notes"),
the "Federal Funds Rate" ("Federal Funds Rate Notes"), "LIBOR" ("LIBOR Notes"),
the "Prime Rate" ("Prime Rate Notes"), the "Treasury Rate" ("Treasury Rate
Notes") or such other Base Rate as is set forth in such Pricing Supplement and
Note, based upon the Index Maturity and adjusted by a Spread
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or Spread Multiplier, if any, as specified in the applicable Pricing Supplement.
The "Index Maturity" is the period to maturity of the instrument or obligation
with respect to which the Base Rate is calculated. The "Spread" is the number of
basis points above or below the Base Rate applicable to such Floating Rate Note,
and the "Spread Multiplier" is the percentage of the Base Rate applicable to the
interest rate for such Floating Rate Note. The Spread, Spread Multiplier, Index
Maturity and other variable terms of the Floating Rate Notes are subject to
change by the Company from time to time, but no such change will affect any
Floating Rate Note theretofore issued or as to which an offer has been accepted
by the Company.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually, as specified in the
applicable Pricing Supplement. The "Interest Reset Date" will be, in the case of
Floating Rate Notes which reset daily, each Business Day; in the case of
Floating Rate Notes which reset weekly, the Wednesday of each week (with the
exception of weekly reset Treasury Rate Notes, which reset the Tuesday of each
week, except as specified below); in the case of Floating Rate Notes which reset
monthly, the third Wednesday of each month; in the case of Floating Rate Notes
which reset quarterly, the third Wednesday of March, June, September and
December; in the case of Floating Rate Notes which reset semi-annually, the
third Wednesday of the two months specified in the applicable Pricing
Supplement; and in the case of Floating Rate Notes which reset annually, the
third Wednesday of the month specified in the applicable Pricing Supplement. If
any Interest Reset Date for any Floating Rate Note would otherwise be a day that
is not a Business Day, such Interest Reset Date shall be postponed to the next
succeeding day that is a Business Day, except that in the case of a LIBOR Note,
if such Business Day is in the next succeeding calendar month, such Interest
Reset Date will be the next preceding Business Day. Unless otherwise specified
in the applicable Pricing Supplement, "Business Day" with respect to any Note
means any day, other than a Saturday or Sunday, that meets each of the following
applicable requirements: the day is (a) not a day on which banking institutions
are authorized or required by law or regulation to be closed in New York City,
(b) if the Note is denominated in a Specified Currency other than U.S. dollars
or European Currency Units ("ECU"), (x) not a day on which banking institutions
are authorized or required by law or regulation to close in the principal
financial center of the country issuing the Specified Currency and (y) a day on
which banking institutions in such financial center are carrying out
transactions in such Specified Currency, (c) if the Note is denominated in ECU,
(x) not a day on which banking institutions are authorized or required by law or
regulation to close in Luxembourg and (y) an ECU clearing day, as determined by
the ECU Banking Association in Paris and (d) if such Note is a LIBOR Note, a
London Business Day. "London Business Day" means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.
The interest rate applicable to each Interest Accrual Period commencing on
an Interest Reset Date will be the rate determined by reference to the
applicable Base Rate determined as of the "Interest Determination Date". If the
Base Rate is the CD Rate, the Commercial Paper Rate, the Federal Funds Rate or
the Prime Rate, the Interest Determination Date pertaining to an Interest Reset
Date will be the second Business Day preceding the Interest Reset Date. If the
Base Rate is LIBOR, the Interest Determination Date pertaining to an Interest
Reset Date will be the second London Business Day preceding the Interest Reset
Date. If the Base Rate is the Treasury Rate, the Interest Determination Date
pertaining to an Interest Reset Date will be the day of the week in which the
Interest Reset Date falls on which Treasury bills normally would be auctioned;
provided, however, that if as a result of a legal holiday an auction is held on
the Friday of the week preceding the Interest Reset Date, the related Interest
Determination Date will be such preceding Friday; and provided further, that if
an auction falls on any Interest Reset Date, then the Interest Reset Date will
instead be the first Business Day following such auction.
A Floating Rate Note may also have either or both of the following: (i) a
maximum limit, or ceiling, on the rate of interest which may be applicable
during any Interest Accrual Period; and (ii) a minimum limit, or floor, on the
rate of interest which may be applicable during any Interest Accrual Period. In
addition to any specified maximum interest rate which may be applicable to any
Floating Rate Note, the interest rate on the Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application. Under present New York
law, the maximum rate of interest is 25% per annum on a simple interest basis.
The limit may not apply to Floating Rate Notes in which $2,500,000 or more has
been invested.
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The applicable Pricing Supplement will specify for each Floating Rate Note
the following terms: the Base Rate, Initial Interest Rate, Interest Reset Period
and Interest Reset Dates, Interest Payment Period and Interest Payment Dates,
Regular Record Dates, Index Maturity, Maturity Date, Maximum Interest Rate and
Minimum Interest Rate, if any, the Spread or Spread Multiplier, if any, and, if
applicable, the Initial Redemption Date, Initial Redemption Percentage, Annual
Redemption Percentage Reduction and Optional Repayment Date.
Each Floating Rate Note will bear interest from the date of issue at the
rates determined as described below until the principal thereof is paid or
otherwise made available for payment. Except as provided below, interest will be
payable, in the case of Floating Rate Notes which reset daily, weekly or
monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year; in the case of Floating Rate
Notes which reset quarterly, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes which reset
semi-annually, on the third Wednesday of the two months of each year specified
in the applicable Pricing Supplement; and in the case of Floating Rate Notes
which reset annually, on the third Wednesday of the month specified in the
applicable Pricing Supplement and, in each case, at maturity.
If any Interest Payment Date for any Floating Rate Note would fall on a day
that is not a Business Day with respect to such Note, such Interest Payment Date
will be the following day that is a Business Day with respect to such Note,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding day that is a Business Day with respect to such LIBOR Note. If the
maturity date (or date of redemption or repayment) of any Floating Rate Note
would fall on a day that is not a Business Day, the payment of interest and
principal (and premium, if any) may be made on the next succeeding Business Day,
and no interest on such payment will accrue for the period from and after the
maturity date (or the date of redemption or repayment).
The "Regular Record Date" with respect to Floating Rate Notes will be the
date 15 calendar days (whether or not a Business Day) prior to the Interest
Payment Date.
With respect to a Floating Rate Note, unless otherwise specified in the
applicable Pricing Supplement, accrued interest is calculated by multiplying the
principal amount of such Floating Rate Note by an accrued interest factor. Such
accrued interest factor is computed by adding together the interest factors
calculated for each day from and including the date of issue, or from but
excluding the last date for which interest has been paid, to and including the
date for which accrued interest is being calculated. The interest factor for
each such day is computed by dividing the interest rate applicable to such day
by 360 in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds
Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual number of days in
the year in the case of Treasury Rate Notes.
Unless otherwise provided in the applicable Pricing Supplement, The Chase
Manhattan Bank, formerly known as Chemical Bank (as successor by merger to
Manufacturers Hanover Trust Company), the Trustee, will be the "Calculation
Agent". Upon the request of the Holder of any Floating Rate Note, the Trustee
will provide the interest rate then in effect and, if determined, the interest
rate that will become effective as a result of a determination made for the next
Interest Reset Date with respect to such Floating Rate Note. The "Calculation
Date", where applicable, pertaining to any Interest Determination Date will be
the tenth calendar day after such Interest Determination Date, or, if any such
day is not a Business Day, the next succeeding Business Day.
The interest rate in effect with respect to a Floating Rate Note from the
date of issue to the first Interest Reset Date (the "Initial Interest Rate")
will be specified in the applicable Pricing Supplement. The interest rate that
will become effective on each subsequent Interest Reset Date will be determined
by the Calculation Agent as follows:
CD RATE. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread or Spread Multiplier,
if any) specified in the CD Rate Notes and in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note (a "CD Interest Determination Date"), the rate on such date for negotiable
certificates of deposit having the Index Maturity in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates" or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)," or, if not so
published by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such CD Interest Determination Date, the CD Rate will be the rate on such CD
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified in the applicable Pricing Supplement as published by the
Federal Reserve Bank in its daily statistical release "Composite 3:30 P.M.
Quotations for U.S. Government Securities" or any successor publication of the
Federal Reserve Bank of New York ("Composite Quotations") under the heading
"Certificates of Deposit". If such rate is not yet published in either H.15(519)
or the Composite Quotations by 3:00 P.M., New York City time, on the Calculation
Date, then the CD Rate on such CD Interest Determination Date will be calculated
by the appropriate Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 3:00 P.M., New York City time, on such CD
Interest Determination Date, of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in New York City selected by such Calculation
Agent (after consultation with the Company) for negotiable certificates of
deposit of major United States money center banks of the highest credit standing
in the market for negotiable certificates of deposit with a remaining maturity
closest to the Index Maturity designated in the Pricing Supplement in the
denomination of $5,000,000; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting as set forth above, the CD
Rate will remain the CD Rate then in effect on such CD Interest Determination
Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a CD Interest Determination Date will
become effective on and as of the next succeeding Interest Reset Date; provided,
however, that the interest rate in effect for the period from the date of issue
to the first Interest Reset Date will be the Initial Interest Rate and the
interest rate in effect for the ten days immediately prior to the maturity date
(or the date of redemption or repayment) will be that in effect on the tenth day
preceding the maturity date (or the date of redemption or repayment).
COMMERCIAL PAPER RATE. Commercial Paper Rate Notes will bear interest at
the interest rates (calculated with reference to the Commercial Paper Rate and
the Spread or Spread Multiplier, if any) specified in the Commercial Paper Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date
relating to a Commercial Paper Rate Note (a "Commercial Paper Interest
Determination Date"), the Money Market Yield (calculated as described below) on
such date of the rate for commercial paper having the Index Maturity specified
in the applicable Pricing Supplement, as such rate shall be published in
H.15(519) under the heading "Commercial Paper". In the event that such rate is
not published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Commercial Paper Interest Determination Date, then the
Commercial Paper Rate will be the Money Market Yield on such Commercial Paper
Interest Determination Date of the rate for commercial paper of the specified
Index Maturity as published in Composite Quotations under the heading
"Commercial Paper". If by 3:00 P.M., New York City time, on such Calculation
Date such rate is not yet published in either H.15(519) or Composite Quotations,
then the Commercial Paper Rate for that Commercial Paper Interest Determination
Date will be calculated by the Calculation Agent and will be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York
City time, on such Commercial Paper Interest Determination Date of three leading
dealers of commercial paper in New York City selected by the Calculation Agent
for commercial paper of the specified Index Maturity placed for an industrial
issuer whose bond rating is "AA", or the equivalent, from a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Commercial Paper Rate with respect to such Commercial Paper
Interest Determination Date will remain the Commercial Paper Rate then in effect
on such Commercial Paper Interest Determination Date.
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"Money Market Yield" will be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360
------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Commercial Paper Interest
Determination Date will become effective on and as of the next succeeding
Interest Reset Date; provided, however, that the interest rate in effect for the
period from the date of issue to the first Interest Reset Date will be the
Initial Interest Rate and the interest rate in effect for the ten days
immediately prior to the maturity date (or the date of redemption or repayment)
will be that in effect on the tenth day preceding the maturity date (or the date
of redemption or repayment).
FEDERAL FUNDS RATE. Federal Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Federal Funds Rate and the
Spread or Spread Multiplier, if any) specified in the Federal Funds Rate Notes
and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to a
Federal Funds Rate Note (a "Federal Funds Interest Determination Date"), the
rate on that day for Federal Funds as published in H.15(519) under the heading
"Federal Funds (Effective)" or, if not so published by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Federal Funds Interest
Determination Date, the Federal Funds Rate will be the rate on such Federal
Funds Interest Determination Date as published in Composite Quotations under the
heading "Federal Funds/Effective Rate". If such rate is not yet published in
either H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Federal Funds Interest Determination
Date, the Federal Funds Rate for such Federal Funds Interest Determination Date
will be calculated by the Calculation Agent and will be the arithmetic mean of
the rates for the last transaction in overnight Federal Funds arranged by each
of three leading dealers of Federal Funds transactions in New York City selected
by the Calculation Agent as of 11:00 A.M., New York City time, on such Federal
Funds Interest Determination Date; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate with respect to such Federal Funds
Interest Determination Date will remain the Federal Funds Rate then in effect on
such Federal Funds Interest Determination Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Federal Funds Interest Determination
Date will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or the date of redemption or repayment) will be that in effect on the
tenth day preceding the maturity date (or the date of redemption or repayment).
LIBOR. LIBOR Notes will bear interest at the interest rates (calculated
with reference to LIBOR and the Spread or Spread Multiplier, if any) specified
in the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR"
will be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note (a "LIBOR Interest Determination Date"), LIBOR will be determined on
the basis of the offered rates for deposits in United States dollars for
the period of the Index Maturity specified in the applicable Pricing
Supplement, commencing on the second London Business Day immediately
following such LIBOR Interest Determination Date, which appear on the
Reuters Screen LIBO Page (as hereinafter defined) at approximately 11:00
A.M., London time, on that LIBOR Interest Determination Date. If at least
two such offered rates appear on the Reuters Screen LIBO Page, LIBOR for
such LIBOR Interest Determination Date will be
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the arithmetic mean of such offered rates as determined by the Calculation
Agent. If fewer than two offered rates appear, LIBOR for such LIBOR
Interest Determination Date will be determined as specified in (ii) below.
"Reuters Screen LIBO Page" means the display designated as Page "LIBO" on
the Reuters Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Reuters Screen LIBO Page as
specified in (i) above, the Calculation Agent will request the principal
London offices of each of four major banks in the London interbank market,
as selected by the Calculation Agent (after consultation with the Company),
to provide the Calculation Agent with its offered quotation for deposits in
United States dollars commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date for the period
of the Index Maturity designated in the applicable Pricing Supplement to
prime banks in the London interbank market at approximately 11:00 A.M.,
London time, on such LIBOR Interest Determination Date and in a principal
amount equal to an amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time. If at
least two such quotations are provided, LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted by three
major banks in New York City selected by the Calculation Agent (after
consultation with the Company) at approximately 11:00 A.M., New York City
time, on that LIBOR Interest Determination Date for loans in United States
dollars to leading European banks, having such Index Maturity and in a
principal amount equal to an amount of not less than U.S. $1,000,000 that
is representative for a single transaction in such market at such time;
provided, however, that if the banks in New York City selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence,
LIBOR with respect to such LIBOR Interest Determination Date will remain
LIBOR then in effect on such LIBOR Interest Determination Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a LIBOR Interest Determination Date
will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or the date of redemption or repayment) will be that in effect on the
tenth day preceding the maturity date (or the date of redemption or repayment).
PRIME RATE. Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread or Spread
Multiplier, if any) specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a Prime
Rate Note (a "Prime Interest Determination Date"), the rate set forth on such
date in H.15(519) under the heading "Bank Prime Loan". In the event that such
rate is not published prior to 9:00 A.M., New York City time, on the Calculation
Date pertaining to such Prime Interest Determination Date, then the Prime Rate
will be determined by the Calculation Agent and will be the arithmetic mean of
the rates of interest publicly announced by each bank that appears on the
Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base
lending rate as in effect for that Prime Interest Determination Date. If fewer
than four such rates but more than one such rate appear on the Reuters Screen
NYMF Page for the Prime Interest Determination Date, the Prime Rate will be
determined by the Calculation Agent and will be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Interest Determination
Date by four major money center banks in New York City selected by the
Calculation Agent. If fewer than two such rates appear on the Reuters Screen
NYMF Page, the Prime Rate will be determined by the Calculation Agent on the
basis of the rates furnished in New York City by the appropriate number of
substitute banks or trust companies organized and doing business under the laws
of the United States, or any State thereof, having total equity capital of at
least U.S. $500,000,000 and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates;
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provided, however, that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate will remain the Prime Rate in effect
on such Prime Interest Determination Date. "Reuters Screen NYMF Page" means the
display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or
such other page as may replace the NYMF page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks).
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Prime Interest Determination Date
will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or the date of redemption or repayment) will be that in effect on the
tenth day preceding the maturity date (or the date of redemption or repayment).
TREASURY RATE. Treasury Rate Notes will bear interest at the interest rates
(calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any) specified in the Treasury Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note (a "Treasury Interest Determination Date"), the rate
applicable to the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable Pricing
Supplement, as such rate is published in H.15(519) under the heading "Treasury
Bills-auction average (investment)" or, if not so published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Treasury Interest
Determination Date, the auction average rate (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
Treasury bills are usually sold at auction on Monday of each week unless that
day is a legal holiday, in which case the auction is usually held on the
following Tuesday, except that such auction may be held on the preceding Friday.
In the event that the results of the auction of Treasury bills having the
specified Index Maturity are not reported as provided above by 3:00 P.M., New
York City time, on such Calculation Date, or if no such auction is held in a
particular week, then the Treasury Rate will be calculated by the Calculation
Agent and will be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates, as of approximately
3:30 P.M., New York City time, on such Treasury Interest Determination Date, of
three leading primary United States government securities dealers selected by
the Calculation Agent, for the issue of Treasury bills with a remaining maturity
closest to the applicable Index Maturity; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Treasury Rate with respect to such Treasury Interest
Determination Date will remain the Treasury Rate then in effect on such Treasury
Interest Determination Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Treasury Interest Determination Date
will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or the date of redemption or repayment) will be that in effect on the
tenth day preceding the maturity date (or the date of redemption or repayment).
MULTI-CURRENCY, CURRENCY INDEXED AND OTHER INDEXED NOTES
If any Note is not to be denominated in U.S. dollars, certain provisions
with respect thereto will be set forth in a foreign currency Pricing Supplement
which will state the Specified Currency, including composite currencies such as
the European Currency Unit, in which the principal, premium, if any, and
interest with respect to such Note are to be paid, along with any other terms
relating to the non-U.S. dollar denomination.
The Notes may be issued with the principal amount payable at maturity to be
determined with reference to the exchange rate of a Specified Currency relative
to an index (the "Currency Index"), each as set forth in the applicable Pricing
Supplement ("Currency Indexed Notes"). Holders of such Notes may receive a
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principal amount at maturity (or upon redemption or repayment, if applicable)
that is greater than or less than the face amount of the Note depending upon the
relative value at maturity of the Specified Currency compared to the Currency
Index. Information as to the method for determining the principal amount payable
at maturity (or upon redemption or repayment, if applicable), the relative value
of the Specified Currency compared to the applicable Currency Index and certain
additional risks and tax considerations associated with investment in Currency
Indexed Notes will be set forth in the applicable Pricing Supplement.
The Notes also may be issued as Indexed Notes, other than Currency Indexed
Notes, the principal amount of which payable at maturity and/or the interest
thereon may be determined by reference to one or more equity or other indices
and/or formulae or the price of one or more specified commodities or by such
other methods or formulae as may be specified by the Company in the applicable
Pricing Supplement. The Pricing Supplement relating to such an Indexed Note will
describe, as applicable, the method by which the amount of interest payable and
the amount of principal payable on the maturity date in respect of such an
Indexed Note will be determined, certain special tax consequences to Holders of
such Indexed Note, certain risks associated with an investment in such Indexed
Note and other information relating to such Indexed Note.
PAYMENTS ON AMORTIZING NOTES
Amortizing Notes are securities for which payments of principal and
interest are made in equal installments over the life of the security. Interest
on each Amortizing Note will be computed on the basis of a 360-day year of
twelve 30-day months. Payments with respect to Amortizing Notes will be applied
first to interest due and payable thereon and then to the reduction of the
unpaid principal amount thereof. A table setting forth repayment information in
respect of each Amortizing Note will be provided to the original purchaser and
will be available, upon request, to subsequent Holders.
BOOK-ENTRY NOTES
The Notes may be issued in whole or in part in book-entry form represented
by one or more fully registered Notes (each, a "Book-Entry Note") which will be
deposited with, or on behalf of, the Depository and registered in the name of
the Depository's nominee. Except as set forth below, a Book-Entry Note may not
be transferred except as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any nominee to a successor of
the Depository or a nominee of such successor. The Depository currently only
accepts securities which have a specified currency of U.S. dollars.
The Depository has advised the Company and the Agents that it is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934
(the "Exchange Act"). The Depository was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depository's participants
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations, some of which
(and/or their representatives) own the Depository. Access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by the Depository only through
participants.
Upon the issuance of Notes by the Company represented by a Book-Entry Note,
the Depository will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Notes represented by such Book-Entry
Note to the accounts of participants. The accounts to be credited shall be
designated by the Agents or the underwriters of such Notes, as the case may be,
or by the Company, if such Notes are offered and sold directly by the Company.
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If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Notes in certificated form in exchange for each
Book-Entry Note. The Company may also at any time determine not to have Notes
represented by one or more Book-Entry Notes, and, in such event, will issue
Notes in certificated form in exchange for the Book-Entry Note or Notes
representing such Notes. In addition, if any event shall have happened and be
continuing that constitutes or, after notice or lapse of time, or both, would
constitute an Event of Default with respect to the Notes, the Holders will be
entitled to receive Notes in certificated form in exchange for the Book-Entry
Note or Notes representing such Notes. In any such instance, an owner of a
beneficial interest in a Book-Entry Note will be entitled to physical delivery
in certificated form of Notes equal in principal amount to such beneficial
interest and to have such Notes registered in its name. Notes so issued in
certificated form will be issued in denominations of $1,000 or any integral
multiple thereof and will be issued in fully registered form only.
For a more complete description of Book-Entry Notes, see "Description of
Debt Securities -- Global Securities" in the accompanying Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain United States federal
income tax consequences expected to apply to initial purchasers of Notes. The
discussion does not cover all aspects of federal taxation that may be relevant
to particular purchasers and does not address state, local, foreign or other tax
laws. This summary is based upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code") and upon existing, temporary, and proposed
Treasury Regulations, administrative rulings, and judicial decisions currently
in effect, all of which are subject to change (possibly with retroactive
effect). There can be no assurance that the Internal Revenue Service (the "IRS")
will not take different positions from those stated herein.
The discussion below generally addresses only Notes held as "capital
assets" (generally, property held for investment purposes) within the meaning of
Section 1221 of the Code by the Holder who is the original beneficial owner and
generally does not address special tax situations, such as Notes held by
insurance companies, tax-exempt organizations, banks, taxpayers subject to the
alternative minimum tax, foreign persons (except to the extent specifically
provided below), dealers in securities or currencies, or Notes held as a hedge
or hedged against currency risks. Except to the extent discussed below under
"United States Alien Holders," this summary is not applicable to non-United
States persons not subject to United States Federal income tax on their
worldwide income. PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AND TO REVIEW ANY RELATED PRICING SUPPLEMENT CONCERNING THE FEDERAL,
STATE, LOCAL AND OTHER TAX CONSEQUENCES, IF ANY, OF ACQUIRING, HOLDING AND
DISPOSING OF NOTES, AS WELL AS PROSPECTS FOR ENACTMENT AND IMPACT OF FUTURE TAX
LEGISLATION, TREASURY REGULATIONS OR OTHER PRONOUNCEMENTS.
STATED INTEREST
In general, interest payments on a Note calculated on the basis of a single
fixed rate of interest, or a variable rate tied to a single objective index of
market interest rates, that is actually and unconditionally payable at fixed
periodic intervals of one year or less over the entire term of the Note
(including short periods) ("qualified periodic interest payments") will be
includable in the Holder's gross income as ordinary interest income in
accordance with such Holder's method of tax accounting.
ORIGINAL ISSUE DISCOUNT NOTES
Notes with a term greater than one year may be issued with original issue
discount for United States federal income tax purposes ("Original Issue Discount
Notes"). Original issue discount may arise because the stated principal amount
at maturity of an Original Issue Discount Note exceeds its "issue price," or
because the Original Issue Discount Note provides for payments other than
qualified periodic interest payments (as
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defined above) (such as Notes the terms of which provide for irregular accrual
periods or rates based on multiple indices). Under a de minimis rule, if the
amount of the original issue discount is less than one-quarter of one percent
(one-sixth of one percent in the case of an Amortizing Note) of the Note's
"stated redemption price at maturity" multiplied by the number of full years
from the Note's issue date to its maturity date, the Note will not be considered
to be issued with original issue discount. The stated redemption price at
maturity of an Original Issue Discount Note generally will equal all payments
due under the Original Issue Discount Note other than qualified periodic
interest payments, and the issue price of such Original Issue Discount Note will
generally be equal to the initial offering price at which a substantial amount
of such Original Issue Discount Notes are sold to the public. Holders of
Original Issue Discount Notes will be required to include amounts in gross
income for federal income tax purposes in advance of the receipt of the cash to
which such income is attributable. The amount of original issue discount to be
included in income in any tax period will be determined using a constant yield
to maturity method, with the result that Holders generally will have to include
in income increasingly greater amounts of original issue discount in successive
periods. Any amounts included in income as original issue discount will increase
a Holder's tax basis in the Original Issue Discount Note.
A legend setting forth the total amount of original issue discount with
respect to an Original Issue Discount Note will appear on the face of an
Original Issue Discount Note, and the Company will report annually to the IRS
and to each Holder, the original issue discount accrued with respect to an
Original Issue Discount Note. Prospective holders are advised to consult their
tax advisors with respect to the particular original issue discount
characteristics of any Original Issue Discount Note that is being purchased.
VARIABLE RATE NOTES
Floating Rate Notes and Indexed Notes ("Variable Notes") are subject to
special rules. A Variable Note that provides for stated interest at one or more
qualified floating rates, a single fixed rate and one or more qualified floating
rates, a single objective rate, or a single fixed rate and a single objective
rate that is a qualified inverse floating rate throughout the term thereof
generally will qualify as a "variable rate debt instrument." In general, the
amount and accrual of original issue discount and qualified stated interest on
such a Variable Note is calculated by converting it into a debt instrument with
an appropriate fixed rate and then applying the general original issue discount
rules.
If a Variable Note does not qualify as a "variable rate debt instrument,"
then the Variable Note would be treated as a contingent payment debt obligation.
A United States Holder of such an instrument generally must include future
contingent and noncontingent interest payments in income as such interest
accrues based upon a projected payment schedule. Moreover, in general, any gain
recognized by a United States Holder on the sale, exchange, or retirement of a
contingent payment debt instrument will be treated as ordinary income and a
portion of any loss realized could be treated as ordinary loss as opposed to
capital loss (depending upon the circumstances).
The proper United States Federal income tax treatment of Variable Notes
that are treated as contingent payment debt obligations will be more fully
described in the applicable Pricing Supplement. Investors considering the
purchase of Variable Notes should consult their own tax advisors.
SHORT-TERM DISCOUNT NOTES
In general, a cash method Holder of a Note issued with original issue
discount that matures one year or less from the date of its issuance
("Short-Term Discount Notes") is not required to accrue original issue discount
for United States federal income tax purposes unless it elects to do so (if such
election is not made, such Holder may be subject to limitations on the
deductibility of interest on indebtedness incurred to purchase or carry such
Short-Term Discount Notes). An accrual method Holder is required to include in
income currently the accrued original issue discount on such Short-Term Discount
Notes determined on a ratable accrual basis unless an election is made to accrue
the original issue discount under the constant yield method (based on daily
compounding); such an election, once made, cannot be revoked. In the case of a
Holder who is not required, and who does not elect, to include the original
issue discount in income currently, any gain
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realized on the sale, exchange, retirement or other taxable disposition of the
Short-Term Discount Note will be ordinary income to the extent of the original
issue discount accrued through the date of sale, exchange, retirement or other
taxable disposition.
FLOATING RATE NOTES
If the Base Rate for a Floating Rate Note is not described under
"Description of the Notes -- Floating Rate Notes" certain additional tax
considerations may arise and will be described in the applicable Pricing
Supplement.
AMORTIZABLE BOND PREMIUM
As a general rule, if a Holder's tax basis in a Note (which is usually its
purchase price) exceeds the sum of all amounts payable on the Note other than
qualified stated interest, such excess may constitute amortizable bond premium
which the Holder may elect to amortize under the constant yield to maturity
method over the remaining term of the Note. Any such election will also apply to
all other debt instruments held by the taxpayer during the year in which the
election is made and to all debt instruments acquired thereafter. The amount
amortized in any year will be treated as a reduction of the Holder's interest
income from the Note. In addition, a Holder who elects to amortize bond premium
must reduce his tax basis in the Note by the amount of the premium amortized in
any year.
If a Note could be called at a premium prior to maturity, the call date is
treated as the Note's maturity date and the amount of bond premium must be
determined by treating the amount payable on such call date as the amount
payable at maturity if such a determination produces a smaller amortizable bond
premium than the method described in the preceding paragraph. In such case, the
Note will be treated as maturing on such date for the amount payable, and, if
not actually redeemed on such date, the Note will be treated as having been
reissued on such date for the amount so payable. If a Note purchased at a
premium is actually redeemed prior to its maturity, a Holder who has elected to
amortize bond premium may deduct any remaining unamortized bond premium as an
ordinary loss in the taxable year of redemption. A Holder who has not so elected
may recognize a capital loss on such a redemption.
SALE, EXCHANGE OR RETIREMENT
Upon the sale, exchange, retirement or other taxable disposition of a Note,
a Holder will recognize taxable gain or loss, if any, equal to the difference
between the amount realized on the sale, exchange, retirement or other taxable
disposition (other than amounts attributable to, and taxable as, accrued
interest or original issue discount) and such Holder's adjusted tax basis in
such Note. A Holder's adjusted tax basis in a Note generally will equal such
Holder's initial investment in the Note increased by any original issuer
discount included in income and decreased by the amount of any payments
received, other than qualified stated interest payments, and amortizable bond
premium taken with respect to such Note. Except as described above in
"Short-Term Discount Notes" and in certain other limited circumstances (e.g.,
the rules applicable to Foreign Currency Notes), such gain or loss will be
capital gain or loss and will be long-term capital gain or loss if the Note has
been held for more than one year at the time of such sale, exchange or
retirement. However, if the Holder is a cash basis taxpayer, amounts received
attributable to unpaid interest (other than original issue discount) will be
taxed as interest income. The excess of net long-term capital gains over net
short-term capital losses may be taxed at a lower United States federal income
tax rate than ordinary income for certain non-corporate taxpayers. The
distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
FOREIGN CURRENCY NOTES
For purposes of the following discussion it is assumed that the functional
currency of a United States Holder is the U.S. dollar. It is also assumed that,
in the case of a Holder who is an individual, expenses incurred in connection
with the acquisition, holding or disposition of a Note or foreign currency, if
any, meet the deductibility requirements of Section 162 or 212 of the Code.
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Interest Payments and Original Issue Discount. In general, interest on a
Note denominated in a foreign currency (a "Foreign Currency Note") (whether
received in the Specified Currency or U.S. dollars) will be taxable to a United
States Holder as ordinary interest income at the time it is accrued or is
received in accordance with the United States Holder's method of accounting for
tax purposes. Regardless of whether an interest payment is in fact converted to
U.S. dollars, the amount of interest income (including any original issue
discount) required to be included in income (the "Includible Amount") will
generally be (i) in the case of cash basis taxpayer, the U.S. dollar value of
the foreign currency interest payment based on the exchange rate in effect on
the date of receipt or payment plus the amount of any accrued original issue
discount and (ii) in the case of an accrual basis taxpayer, the U.S. dollar
value of the accrued amounts based on (x) the average exchange rate in effect
during the interest accrual period or (y) if an election is made under Treasury
Regulation Section 1.988-2(b)(2)(iii) for taxable years beginning after March
17, 1992 (the "Section 988 Election"), the exchange rate on the last day of the
interest accrual period or on the date of the receipt of the interest payment
(if such date is within five business days of the last day of the interest
accrual period). The amount of original issue discount on a Foreign Currency
Note required to be included in income for a cash basis taxpayer will be
computed for any accrual period in the relevant foreign currency and then
translated into a U.S. dollar value based on (i) the average exchange rate in
effect during such accrual period or (ii) the exchange rate on the last day of
the interest accrual period if a Section 988 Election is made. The Section 988
Election is made by filing a statement with the Holder's first return for a
taxable year in which the Section 988 Election is effective. The Section 988
Election must be applied consistently to all debt instruments held by the Holder
at the beginning of the first taxable year to which the election applies, and
cannot be changed without the consent of the Commissioner of the IRS.
Until a Section 988 Election is effective, an accrual basis taxpayer will
be required to recognize gain or loss upon the receipt of interest payments on a
Foreign Currency Note attributable to fluctuations in currency exchange rates
("Foreign Currency Exchange Gain or Loss") between the dates of accrual and
receipt, equal to the difference, if any, between (i) the U.S. dollar value of
the Specified Currency interest payment based on the exchange rate in effect on
the date of receipt and (ii) the Includible Amount. Any such Foreign Currency
Exchange Gain or Loss will be ordinary income or loss. Rules similar to those
described above with respect to accrual basis taxpayers apply to both cash and
accrual basis Holders of Foreign Currency Notes that are issued with original
issue discount.
Purchase, Sale and Retirement. A United States Holder's tax basis in a
Foreign Currency Note will be the U.S. dollar value of the Specified Currency
amount paid for such Foreign Currency Note based on the exchange rate in effect
on the date of purchase of the Foreign Currency Note, plus the U.S. dollar value
of any accrued original issue discount on the Foreign Currency Note, plus, in
the case of an accrual basis Holder, any accrued but unpaid interest. A Holder
who converts U.S. dollars to a foreign currency and immediately uses that
currency to purchase a Foreign Currency Note denominated in the same currency
normally will not recognize Foreign Currency Exchange Gain or Loss in connection
with such conversion and purchase. If a Holder purchases a Foreign Currency Note
with previously owned foreign currency, the Holder will recognize Foreign
Currency Exchange Gain or Loss in an amount equal to the difference, if any,
between such Holder's U.S. dollar tax basis in the foreign currency and the U.S.
dollar fair market value of the foreign currency based on the exchange rate in
effect on the date of purchase of the Note.
Gain or loss will be recognized upon the sale, exchange or retirement of a
Foreign Currency Note equal to the difference, if any, between the U.S. dollar
value of the foreign currency received upon the sale, exchange or retirement and
the U.S. dollar tax basis in the Foreign Currency Note. Any gain or loss
recognized with respect to the principal amount of the Foreign Currency Note
will be deemed to be Foreign Currency Exchange Gain or Loss, taxable as ordinary
income or loss, up to the amount determined by multiplying the original purchase
price paid by the Holder (expressed in the relevant foreign currency) by the
change in the relevant exchange rate (expressed in U.S. dollars per unit of the
relevant foreign currency) between the date on which the Holder acquired the
Foreign Currency Note and the date on which the Holder received payment in
respect of the sale, exchange or retirement of the Foreign Currency Note. Any
gain or loss recognized by such a Holder in excess of this amount, plus the
Foreign Currency Exchange Gain or Loss recognized with
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<PAGE> 16
respect to accrued original issue discount and, in the case of accrual basis
Holders, accrued but unpaid interest (as described above), will be capital gain
or loss.
Exchange of the Foreign Currency. The foreign currency received as
interest on a Foreign Currency Note or on the sale or retirement of a Foreign
Currency Note will have a tax basis equal to its U.S. dollar value based on the
exchange rate in effect at the time such interest is received or at the time of
sale or retirement. Upon sale or other disposition of the foreign currency
(including its use to purchase the Foreign Currency Notes or upon exchange for
U.S. dollars), a Holder will recognize Foreign Currency Exchange Gain or Loss,
generally taxable as ordinary income or loss, equal to the difference, if any,
between such Holder's tax basis in the foreign currency disposed of and the
amount of U.S. dollars received or the U.S. dollar fair market value of other
property received (in the case of property denominated in a different foreign
currency, such as Foreign Currency Notes, the U.S. dollar fair market value
shall be based on the exchange rate in effect on the date of such disposition).
CURRENCY INDEXED AND OTHER INDEXED NOTES
Tax considerations associated with an investment in Currency Indexed Notes
and other Indexed Notes will be described in the applicable Pricing Supplement.
UNITED STATES ALIEN HOLDERS
The term "United States Alien Holder" means any Holder of a Note who, for
United States federal income tax purposes, is a foreign corporation, a
nonresident alien individual or a foreign estate or trust. For purposes of the
discussion below, each partner of a foreign partnership that is a Holder of a
Note is also considered a Holder of the Note, and payments to the partnership
will be considered to be payments to the partners.
Under present United States federal income and estate tax law:
(a) payments of principal (including original issue discount on
Original Issue Discount Notes as defined above) and any premium and
interest on the Notes by the Company or any of its paying agents to any
United States Alien Holder or its agent generally will not be subject to
United States withholding tax, provided that in the case of such Notes (1)
the Holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote, (2) the Holder is not (i) a bank receiving interest pursuant to a
loan agreement entered into in the ordinary course of its trade or business
or (ii) a "controlled foreign corporation" for federal income tax purposes
that is related to the Company through stock ownership, (3) such interest
payments are not effectively connected with a United States trade or
business of the Holder, and (4) either (i) the Holder certifies to the
Company or its agent, under penalties of perjury, that it is not a United
States person and provides its name and address or (ii) a securities
clearing organization, bank or other financial institution which holds
customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the Note certifies to the Company or its
agent under penalties of perjury that such statement has been received from
the Holder by it or by a financial institution between it and the Holder
and furnishes the payor with a copy thereof;
(b) a Holder of a Note who is a United States Alien will not be
subject to United States federal income tax on gain realized on the sale,
exchange or redemption of a Note, unless (1) the gain is effectively
connected with a trade or business carried on by such Holder within the
United States or (2) the Holder is an individual who is present in the
United States for 183 days or more in the taxable year of disposition and
certain other requirements are met; and
(c) a Note or coupon held by an individual who at the time of death is
not a citizen or resident of the United States for United States estate tax
purposes generally will not be subject to United States federal estate tax
as a result of such individual's death if (1) the income from the Note was
not effectively connected with a United States trade or business of the
Holder and (2) the individual does not
S-16
<PAGE> 17
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote.
Information reporting and backup withholding do not apply to payments of
principal and interest (including original issue discount, if any) on the Notes
or to payments made with respect to the Notes if the certification described in
clause (a)(4) of this section is received, provided in each case that the
Company does not have actual knowledge that the Holder is a United States
person. Such certification is effective only with respect to payments of
interest (including original issue discount) made to the certifying United
States Alien Holder after the issuance of the certificate in the calendar year
of its issuance and the two immediately succeeding calendar years.
Payments of the proceeds from the sale of a Note to or through a foreign
office of a broker or the foreign office of a custodian, nominee or other agent
acting on behalf of the Holder of a Note will not be subject to information
reporting or backup withholding, except that if the broker is a United States
person, a controlled foreign corporation, or a foreign person 50% or more of
whose gross income, over a specified three-year period, is from a United States
trade or business, information reporting may apply to such payments. Under
proposed Treasury Regulations, backup withholding may apply to any payment which
such custodian, nominee or other agent is required to report if such custodian,
nominee or other agent has actual knowledge that the payee is a United States
Holder. Interest paid with respect to a Note and payment of the proceeds from a
sale of a Note to or through the United States office of a broker received by
United States Alien Holder will not be subject to information reporting and
backup withholding if the payor has received the appropriate certification
statement. The appropriate certification procedures require that the Holder
certify as to its status as a United States Alien and provide its name and
address.
Any amounts withheld under the backup withholding rules from a payment to a
Holder would 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 IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through the Agents which have agreed to use their best efforts to solicit
purchasers of the Notes. The Company will pay each Agent a commission which,
depending on the maturity of the Notes, will range from .125% to .750% of the
principal amount of any Note sold through such Agent. Commissions on Notes with
maturities of more than 40 years will be at rates negotiated by the Company and
the Agents at the time of sale and disclosed in the applicable Pricing
Supplement. The Company may also sell Notes to either Agent, as principal, at a
discount from the principal amount thereof, and the Agent may later resell such
Notes to investors or other purchasers at varying prices related to prevailing
market prices at the time of resale as determined by such Agent. After any
initial public offering of Notes to be resold to purchasers at a fixed public
offering price, the public offering price and any concession or discount may be
changed. In addition, an Agent may offer Notes purchased by it as principal to
other dealers. Notes sold by such Agent to a dealer may be sold at a discount
and, unless otherwise specified in the applicable Pricing Supplement, such
discount allowed will not be in excess of the discount received by such Agent
from the Company. The Company also may offer and sell Notes directly to
purchasers in those jurisdictions in which it is permitted to do so and may
solicit or accept offers to purchase Notes through broker-dealers other than the
Agents, provided that the terms and conditions of any such purchases through or
by broker-dealers other than the Agents are substantially the same as would have
applied had such purchase been through or by an Agent. No commission will be
payable by the Company on Notes sold directly by the Company.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject orders in whole or in part whether placed
directly by the Company or through one of the Agents or a broker-dealer other
than an Agent. Each Agent or any other broker-dealer will have the right, in its
discretion reasonably exercised, to reject any offer to purchase Notes received
by it, in whole or in part.
S-17
<PAGE> 18
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in New York City on the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market, but it is not obligated to
do so, and there can be no assurance that there will be a secondary market for
the Notes or liquidity in the secondary market if one develops. From time to
time, each of the Agents may make a market in the Notes.
Concurrently with the offering of the Notes as described herein, the
Company may offer outside the United States an additional series of medium-term
notes, which may have terms substantially similar to the terms of the Notes
offered hereby (but will constitute a separate series for purposes of the
Indenture), and which may be offered in bearer or registered form. Any Bearer
Notes will be offered pursuant to agency agreements with certain investment
banks to be named, acting as agents for the Company. Pursuant to such agency
agreements, such investment banks may also purchase Bearer Notes as principals
for their own accounts for resale, and the Company may make direct sales of the
Bearer Notes on its own behalf. For this purpose, "United States" means the
United States of America (including the fifty states and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction. Any Bearer Notes so offered and sold will reduce correspondingly
the principal amount of Notes which may be offered by this Prospectus Supplement
and the Prospectus.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933. The Company has agreed to indemnify each of the Agents
against, or to make contributions relating to, certain liabilities, including
liabilities under such Act. The Company has agreed to reimburse each of the
Agents for certain expenses. Each of the Agents may engage in transactions with,
or perform services for, the Company in the ordinary course of business.
S-18
<PAGE> 19
PROSPECTUS
Coca-Cola Enterprises Inc. LOGO
SENIOR DEBT SECURITIES,
DEBT WARRANTS AND CURRENCY WARRANTS
Coca-Cola Enterprises Inc. (the "Company") intends to sell from time to
time its senior debt securities (the "Debt Securities"), warrants to purchase
Debt Securities (the "Debt Warrants") and warrants to receive from the Company
the cash value in U.S. dollars of the right to purchase ("Currency Call
Warrants") and to sell ("Currency Put Warrants" and, together with the Currency
Call Warrants, the "Currency Warrants") such foreign currencies or units of two
or more currencies as shall be designated by the Company at the time of
offering, from which the Company will receive proceeds of up to $3,170,575,000
(or the equivalent in foreign denominated currencies or units of two or more
currencies, based on the applicable exchange rate at the time of offering, as
shall be designated by the Company at the time of offering). The Debt
Securities, Debt Warrants and Currency Warrants, which are collectively called
the "Securities," may be offered either jointly or separately and will be
offered to the public on terms determined by market conditions at the time of
sale.
The Debt Securities will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company.
Debt Securities of a series may be issuable in registered form without
coupons ("Registered Securities"), in bearer form with or without coupons
attached ("Bearer Securities") or in the form of one or more global securities
(each a "Global Security"). Bearer Securities will be offered only to non-United
States persons and to offices located outside the United States of certain
United States financial institutions.
Each issue of Securities may vary, where applicable, as to aggregate
principal amount, maturity date, public offering or purchase price, interest
rate or rates and timing of payments thereof, provision for redemption or
sinking fund requirements, if any, exercise provisions, currencies of
denomination or currencies otherwise applicable thereto, selection of indices or
formulae and any other variable terms, and methods of distribution. The
accompanying Prospectus Supplement (the "Prospectus Supplement") sets forth the
specific terms with regard to the Securities in respect of which this Prospectus
is being delivered.
SEE "RISK FACTORS RELATING TO CURRENCIES AND CURRENCY WARRANTS" ON PAGE 3
FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
THE CURRENCY WARRANTS OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The Securities will be sold directly, through agents, underwriters or
dealers as designated from time to time or through a combination of such
methods. If agents of the Company or any dealers or underwriters are involved in
the sale of the Securities in respect of which this Prospectus is being
delivered, the names of such agents, dealers or underwriters and any applicable
commissions or discounts are set forth in or may be calculated from the
Prospectus Supplement with respect to such Securities. The net proceeds to the
Company from such sale will be the purchase price less such commission in the
case of an agent, the purchase price in the case of the dealer, or the public
offering price less such discount in the case of an underwriter and less, in
each case, other attributable issuance expenses. See "Plan of Distribution."
---------------------
THE DATE OF THIS PROSPECTUS IS MARCH 13, 1997.
<PAGE> 20
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY AGENT, UNDERWRITER OR DEALER. THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENTS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN
OR THEREIN IS CORRECT AS OF ANYTIME SUBSEQUENT TO ITS DATE.
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 and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and New York Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants, like the Company, that
file electronically. The address of such site is http://www.sec.gov. The
Company's Common Stock is listed on The New York Stock Exchange, and such
reports, proxy and information statements and other information concerning the
Company may also be inspected at the offices of The New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement under
the Securities Act of 1933, as amended, with respect to the Securities offered
hereby (the "Registration Statement"). This Prospectus does not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Reference is made to the Registration Statement and to the exhibits relating
thereto for further information with respect to the Company and the Securities
offered hereby. Statements contained herein concerning any document filed as an
exhibit to the Registration Statement are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 and Current Reports on Form 8-K dated December 31, 1996, February 10,
1997 (as amended) and February 18, 1997, filed with the Commission pursuant to
Section 13 of the Exchange Act under File No. 1-9300 are hereby incorporated by
reference into this Prospectus.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the Securities shall hereby be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus and the
Prospectus Supplement to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein or in the Prospectus Supplement modifies or supersedes such
statement. Any such statement so modified or superseded
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<PAGE> 21
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus or the Prospectus Supplement.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus and the Prospectus Supplement is
delivered, on written or oral request of such person, a copy of any or all of
the foregoing documents incorporated by reference into this Prospectus (without
exhibits to such documents other than exhibits specifically incorporated by
reference into such documents). Requests for such copies should be directed to
the office of the Treasurer, Coca-Cola Enterprises Inc., 2500 Windy Ridge
Parkway, Suite 700, Atlanta, Georgia 30339; telephone number (770) 989-3051.
RISK FACTORS RELATING TO CURRENCIES AND CURRENCY WARRANTS
Debt Securities denominated or payable in foreign currencies and Currency
Warrants may entail significant risks. These risks include, without limitation,
the possibility of significant fluctuations in the foreign currency markets.
These risks will vary depending upon the currency or currencies involved, and in
the case of any Currency Warrants, the particular terms of such Currency
Warrants. These risks will be more fully described in a Prospectus Supplement
relating thereto.
3
<PAGE> 22
THE COMPANY
The Company is in the liquid nonalcoholic refreshment business and is the
world's largest marketer, distributor and producer of bottled and canned
beverage products of The Coca-Cola Company. The Company's bottling territories
are located in the United States, Great Britain, France, Belgium and the
Netherlands.
The Company was incorporated in Delaware in 1944 as a wholly owned
subsidiary of The Coca-Cola Company and became a public company in 1986. At
December 31, 1996, The Coca-Cola Company owned approximately 44.9% of the
Company's common stock. References in this Prospectus to the "Company" include
the Company and its subsidiaries and divisions.
The Company's domestic and international bottling territories contained
approximately 282 million people at the end of 1996. Throughout the Company's
bottling territories, sales of beverage product totaled approximately 2.7
billion equivalent cases in 1996; approximately 88% of which were beverage
products of The Coca-Cola Company. The term "equivalent case" refers to 192
ounces of finished beverage product (24 eight-ounce servings), and the bottling
territories and sales data are reported as if all companies acquired during 1996
and through February 1997 had been owned at January 1, 1996.
The Company's principal executive offices are located at 2500 Windy Ridge
Parkway, Atlanta, Georgia 30339. The telephone number is (770) 989-3000.
STRATEGY
The Company's primary operating objective is to increase long-term
operating cash flows through profitable increases in sales volume. The Company
plans to achieve its operating objective through the continued implementation
and execution of the following strategies:
- creating and executing innovative and superior marketing programs at the
local level;
- balancing volume growth with improved margins and sustainable increases
in market share;
- developing profitable business partnerships with customers;
- integrating its international and domestic acquisitions; and
- structuring compensation plans to help focus its employees on enhancing
share-owner value.
The Company's primary financial objective is to deliver a superior
investment return to share owners. The Company strives to achieve this objective
through the continued implementation and execution of the following strategies:
- allocating resources appropriately between capital expenditures,
infrastructure investment, share repurchases, acquisitions and debt
repayment;
- maintaining a capital structure which maximizes financial flexibility,
given current investment opportunities; and
- continuing to evaluate acquisition opportunities that will result in
long-term value.
RELATIONSHIP WITH THE COCA-COLA COMPANY
The Coca-Cola Company is the Company's largest share owner. The Chairman of
the Board of Directors and three other directors of the Company are executive
officers or former executive officers of The Coca-Cola Company.
The Company and The Coca-Cola Company are parties to a number of
significant transactions and agreements incident to their respective businesses
and may enter into additional material transactions and agreements in the
future.
4
<PAGE> 23
The Company conducts its business primarily under contracts with The
Coca-Cola Company. These contracts give the Company the exclusive right to
market, distribute, and produce beverage products of The Coca-Cola Company in
authorized bottles and cans in specified territories and provide The Coca-Cola
Company with the ability, in its sole discretion, to establish prices, terms of
payment, and other terms and conditions for the purchase of concentrates and
syrups from The Coca-Cola Company. Other significant transactions and agreements
include arrangements for cooperative marketing, advertising expenditures, and
purchases of sweeteners.
Since 1979, The Coca-Cola Company has assisted in the transfer of ownership
or financial restructuring of a majority of its United States bottler operations
and has assisted in similar transfers of bottlers operating outside the United
States. Certain bottlers and interests therein have been acquired by The
Coca-Cola Company, and certain of those have been sold to bottlers, including
the Company, which are believed by management of The Coca-Cola Company to be the
best suited to manage and develop these acquired operations. The Coca-Cola
Company has advised the Company that it may continue this reorganization of its
bottler system.
As a result of matters such as the foregoing, the relationship between the
Company and The Coca-Cola Company may give rise to potential conflicts of
interest.
ACQUISITIONS
On February 21, 1996, the Company acquired the Ouachita Coca-Cola Bottling
Company, Inc. (the world's first Coca-Cola bottler), having territories in
Arkansas, Louisiana and Mississippi, for a transaction value (purchase price and
issued and assumed debt) of approximately $313 million, which was paid to the
former shareholders in cash, common stock and convertible preferred stock of the
Company.
On July 26, 1996, the Company acquired the bottling and canning operations
of The Coca-Cola Company in France and Belgium for a transaction value (purchase
price and assumed debt, net of cash acquired) of approximately $915 million.
On August 12, 1996, the Company acquired Coca-Cola Bottling Company West,
Inc. and Grand Forks Coca-Cola Bottling Co. for a transaction value (purchase
price and assumed debt) of $158 million. These companies operate in a franchise
territory which includes parts of Minnesota, Montana, North Dakota, South Dakota
and Wyoming.
On February 10, 1997, the Company acquired Coca-Cola & Schweppes Beverages
Limited, the bottler for Great Britain, for a transaction value (purchase price,
assumed debt and other long-term obligations) of approximately 1.2 billion
pounds sterling, or approximately $2 billion.
The total cost of all of the Company's acquisitions since reorganization in
1986 through the date of this Prospectus is $9.2 billion including assumed and
issued debt where applicable. The Company intends to acquire only bottling
businesses offering the Company the ability to produce long-term share-owner
value.
USE OF PROCEEDS
Except as set forth in a Prospectus Supplement, the Company intends to use
the net proceeds from the sale of the Securities for general corporate purposes,
including the repayment of debt and possible business acquisitions. The Company
may also use a portion of the proceeds from the sale of any Currency Warrants to
hedge currency risks with respect to such Warrants. Pending such applications,
the net proceeds will be temporarily invested in marketable securities.
The Company expects to engage in additional financings as the need arises.
The nature and amount of the Company's equity and long-term and short-term debt
and the proportionate amount of each can be expected to vary from time to time
as a result of business requirements, market conditions and other factors.
5
<PAGE> 24
SUMMARY FINANCIAL DATA
The following table sets forth selected consolidated financial data of the
Company. The selected consolidated financial data are derived from and should be
read in conjunction with the Consolidated Financial Statements of the Company
(including the notes thereto). With respect to the fiscal years presented,
audited consolidated financial statements are included in the Company's Annual
Reports on Form 10-K for such periods.
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------------------
1996(A) 1995(A)(B) 1994 1993(C) 1992(D)
------- ---------- ------ ------- -------
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATIONS SUMMARY:
Net operating revenues................................... $ 7,921 $6,773 $6,011 $5,465 $5,127
Cost of sales............................................ 4,896 4,267 3,703 3,372 3,219
------- ------ ------ ------ ------
Gross profit............................................. 3,025 2,506 2,308 2,093 1,908
Selling, general and administrative expenses............. 2,480 2,038 1,868 1,708 1,602
------- ------ ------ ------ ------
Operating income......................................... 545 468 440 385 306
Interest expense, net.................................... 351 326 310 328 312
Other nonoperating income (deductions), net.............. -- (6) (3) (2) (6)
Gain on sale of bottling operations...................... -- 9 -- -- --
------- ------ ------ ------ ------
Income (loss) before income taxes and cumulative effect
of changes in accounting principles.................... 194 145 127 55 (12)
Income taxes:
Expense (benefit) excluding rate change................ 80 63 58 30 3
Rate change -- federal................................. -- -- -- 40 --
------- ------ ------ ------ ------
Income (loss) before cumulative effect of changes in
accounting principles.................................. 114 82 69 (15) (15)
Cumulative effect of changes in accounting principles.... -- -- -- -- (171)
------- ------ ------ ------ ------
Net income (loss)........................................ 114 82 69 (15) (186)
Preferred stock dividend requirements.................... 8 2 2 -- --
------- ------ ------ ------ ------
Net income (loss) applicable to common share owners...... $ 106 $ 80 $ 67 $ (15) $ (186)
======= ====== ====== ====== ======
OTHER OPERATING DATA:
Depreciation expense..................................... 392 $ 318 $ 282 $ 254 $ 227
Amortization expense..................................... 235 211 179 165 162
SHARE AND PER SHARE DATA:
Average common shares outstanding........................ 125 129 130 129 129
Net income (loss) per common share before cumulative
effect of changes in accounting principles............. $ 0.85 $ 0.62 $ 0.52 $(0.11) $(0.11)
Net income (loss) applicable to common share owners...... 0.85 0.62 0.52 (0.11) (1.45)
Dividends per common share............................... 0.10 0.05 0.05 0.05 0.05
Closing stock price...................................... 26.88 18.00 15.25 12.25
RATIOS(E):
Ratio of earnings to fixed charges....................... 1.53 1.41 1.38 1.16 (F)
Ratio of earnings to combined fixed charges and preferred
stock dividends........................................ 1.47 1.40 1.37 1.16 (F)
YEAR-END FINANCIAL POSITION:
Property, plant and equipment, net....................... $ 2,812 $2,158 $1,963 $1,890 $1,733
Franchise and other noncurrent assets.................... 7,103 5,924 5,965 6,046 5,651
Total assets............................................. 11,234 9,064 8,738 8,682 8,085
Long-term debt........................................... 5,305 4,201 4,187 4,391 4,131
Share-owners' equity..................................... 1,550 1,435 1,339 1,260 1,254
</TABLE>
6
<PAGE> 25
The Company acquired subsidiaries in each year presented and divested
subsidiaries in certain periods. Such transactions, except for the acquisitions
of Coca-Cola Schweppes Beverages Limited ("CCSB") in February 1997, The
Coca-Cola Company's bottling and canning operations in France and Belgium
("France/Belgium") in July 1996, and gains from the sale of certain bottling
operations, did not significantly affect the Company's operating results in any
one fiscal period. All acquisitions and divestitures have been included in or
excluded from (as appropriate) the consolidated operating results of the Company
from their respective transaction dates.
(A) In 1996, the Company acquired France/Belgium, Ouachita Coca-Cola
Bottling Company, Inc., Coca-Cola Bottling Company West, Inc., and Grand
Forks Coca-Cola Bottling Co. In February 1997, the Company acquired CCSB.
The following table summarizes unaudited pro forma financial information of
the Company as if these acquisitions were effective January 1, 1995 (in
millions except per share data):
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Net operating revenues............................. $10,307 $9,795
======= ======
Net income applicable to common share owners....... $ 79 $ 38
======= ======
Net income per common share........................ $ 0.63 $ 0.29
======= ======
</TABLE>
(B) In January 1995, the Company sold its 50% ownership interest in
The Coca-Cola Bottling Company of the Mid South for a pre-tax gain of $9
million, or approximately $0.04 per common share.
(C) A one-time charge of $40 million ($0.31 per common share) to
increase deferred income taxes resulted from a 1% increase in the corporate
marginal income tax rate in connection with the Omnibus Budget
Reconciliation Act of 1993.
(D) The adoption of FAS 106 and FAS 109 resulted in one-time charges
to income. Fiscal periods prior to 1992 were not restated for these
accounting changes.
(E) The ratio of earnings to fixed charges has been determined by
dividing (a) income before income taxes and fixed charges by (b) fixed
charges. The ratio of earnings to combined fixed charges and preferred
stock dividends has been determined by dividing (a) income before income
taxes and fixed charges by (b) the sum of fixed charges and the Company's
preferred stock dividend requirements. Fixed charges consist of interest
expense, amortization of deferred debt charges, the portion of rent expense
representative of interest costs and preferred stock dividend requirements
of subsidiaries. Preferred stock dividends have been increased to an amount
representing the pre-tax earnings that would be required to satisfy such
dividend requirements.
(F) Earnings for 1992 were insufficient to cover fixed charges and
combined fixed charges and preferred stock dividends by $12 million.
7
<PAGE> 26
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities and the
related indenture (the "Indenture") dated as of July 30, 1991, as amended by the
First Supplemental Indenture dated as of January 29, 1992 between the Company
and The Chase Manhattan Bank, formerly known as Chemical Bank (as successor by
merger to Manufacturers Hanover Trust Company), as trustee (the "Trustee"),
summarizes certain general terms and provisions of the Debt Securities and such
Indenture. The following summaries do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all terms and
provisions of the Debt Securities and the Indenture, including the definitions
therein of certain terms. A copy of the Indenture is incorporated by reference
as an exhibit to the Registration Statement. The particular terms of the Debt
Securities and any variations from such general provisions applicable to any
series of Debt Securities are described in the Prospectus Supplement with
respect to such series.
GENERAL
Debt Securities may be issued pursuant to the Indenture, without limitation
as to aggregate principal amount, in one or more series, by the Company from
time to time upon satisfaction of certain conditions precedent, including the
delivery by the Company to the Trustee of a resolution of the Board of Directors
of the Company, an authorized committee thereof, or any designees of such Board
or committee, which fixes or provides for the establishment of terms of such
Debt Securities, including: (1) the aggregate principal amount of such Debt
Securities; (2) the date on which such Debt Securities are payable; (3) the rate
or rates per annum (which may be fixed or variable) at which such Debt
Securities will bear interest, if any; (4) the dates on which such interest, if
any, will be payable; (5) the provisions for redemption of such Debt Securities,
if any, the redemption price and any remarketing arrangements relating thereto;
(6) the sinking fund requirements, if any, with respect to such Debt Securities;
(7) whether the Debt Securities are denominated or provide for payment in United
States dollars, a foreign currency or a composite currency; (8) whether the
amount of payments of principal of (and premium, if any) or interest, if any, or
any additional amounts ("Additional Amounts") in respect of such Securities may
be determined with reference to any index, formula or other method, or based on
a coin or currency other than that in which the Securities are stated to be
payable, the manner in which such amounts shall be determined and the
calculation agent, if any with respect thereto; (9) the form (registered or
bearer or both) in which Debt Securities may be issued and any restrictions
applicable to the exchange of one form for another and to the offer, sale and
delivery of Debt Securities in either form (including restrictions applicable to
the offer, sale and delivery of Securities in bearer form which result from the
requirements of the Internal Revenue Code of 1986, as amended, and the Treasury
regulations promulgated thereunder (the "Code")); (10) whether and under what
circumstances the Company will pay Additional Amounts relating to specified
taxes, assessments or other governmental charges in respect of Debt Securities
and whether the Company has the option to redeem the affected Debt Securities
rather than pay such Additional Amounts, and the terms of any such redemption;
(11) whether such Debt Securities shall be subject to defeasance and, if so, the
terms thereof; and (12) the title of the Debt Securities and the series of which
such Debt Securities shall be a part. Reference is made to the Prospectus
Supplement for the terms of the Debt Securities being offered thereby. Debt
Securities may also be issued under the Indenture upon the exercise of Debt
Warrants. See "Description of Debt Warrants."
Debt Securities may be issued from time to time with the amount of
principal or interest payable to be determined by reference to one or more
currency exchange rates, commodity prices, equity indices or other financial or
non-financial indices and on such other terms as may be described in the
applicable Prospectus Supplement.
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will be
described in the Prospectus Supplement relating thereto. "Original Issue
Discount Securities" means any Debt Securities that provide for an amount that
is less than the stated principal amount thereof (by more than a de minimis
amount) to be due and payable upon a declaration of acceleration of the Maturity
thereof upon the occurrence of an Event of Default and the continuation thereof.
8
<PAGE> 27
The Indenture provides the Company with the ability to "reopen" a previous
issue of a series of Debt Securities and issue additional Debt Securities of
such series in addition to the ability to issue Debt Securities with terms
different than those of Debt Securities previously issued.
The Debt Securities will be unsecured and will rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company. However, since
the Company is a holding company, the right of the Company, and hence the right
of creditors of the Company (including the Holders of Debt Securities), to
participate in any distribution of the assets of any subsidiary upon its
liquidation or reorganization or otherwise is necessarily subject to the prior
claims of creditors of the subsidiary, except to the extent that claims of the
Company itself as a creditor of the subsidiary may be recognized.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Debt Securities of a series will be issuable as Registered Securities,
Bearer Securities or both. Debt Securities of a series may be issuable in the
form of one or more Global Securities, as described below under "Global
Securities." Unless otherwise provided in an applicable Prospectus Supplement
with respect to a series of Debt Securities, Registered Securities denominated
in U.S. dollars will be issued only in denominations of $1,000 or any integral
multiple thereof without coupons and Bearer Securities denominated in U.S.
dollars will be issued only in denominations of $5,000 with or without coupons.
The Prospectus Supplement relating to a series of Debt Securities denominated in
a foreign or composite currency will specify the denominations thereof.
In connection with its original issuance, no Bearer Security will be mailed
or otherwise delivered to any location in the United States. A Bearer Security
may be delivered in connection with its original issuance only if the person
entitled to receive such Bearer Security furnishes written certification, in a
form specified in the applicable Prospectus Supplement, to the effect that such
Bearer Security is not being acquired by or on behalf of a United States person
(as defined in the Code) or, if a beneficial interest in such Bearer Security is
being acquired by or on behalf of a United States person, that such United
States person is a financial institution which agrees to comply with the
requirements of Section 165(j) (3) (A), (B) or (C) of the Code.
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. In addition, if Debt
Securities of any series are issuable as both Registered Securities and as
Bearer Securities and if so provided in an applicable Prospectus Supplement, at
the option of the Holder and subject to the terms of the Indenture, Bearer
Securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such series will be exchangeable for Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any Bearer Security surrendered in exchange
for a Registered Security between (i) a Regular Record Date or a Special Record
Date and (ii) the relevant date for payment of interest, shall be surrendered
without the coupon relating to such date for payment of interest. Interest will
not be payable in respect of the Registered Security issued in exchange for such
Bearer Security but will be payable only to the Holder of such coupon when due
in accordance with the terms of the Indenture.
Debt Securities may be presented for exchange as provided above, and
Registered Securities (other than a Global Security) may be presented for
registration of transfer (with the form of transfer duly executed), at the
office of the Security Registrar or at the office of any transfer agent
designated by the Company for such purpose with respect to any series of Debt
Securities referred to in an applicable Prospectus Supplement, without service
charge and upon payment of any taxes and other governmental charges as described
in the Indenture. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has initially appointed the Trustee as Security Registrar under the Indenture.
If a Prospectus Supplement refers to any transfer agents (in addition to the
Security Registrar) initially designated by the Company with respect to any
series of Debt Securities, the Company may at any time rescind the designation
of any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that if Debt Securities of a series are
issuable only as Registered Securities, the Company will be
9
<PAGE> 28
required to maintain a transfer agent in each Place of Payment for such series.
If Debt Securities of a series are issuable as Bearer Securities, the Company
will be required to maintain (in addition to the Security Registrar) a transfer
agent in a Place of Payment for such series located outside the United States.
The Company may at any time designate additional transfer agents with respect to
any series of Debt Securities.
In the event of any redemption in part, the Company shall not be required
to (i) register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before the day of the
selection of Debt Securities of that series for redemption and ending at the
close of business of the day of such selection; (ii) register the transfer of or
exchange any Registered Securities so selected for redemption in whole or in
part, except the unredeemed portion of any Registered Security being redeemed in
part; or (iii) exchange any Bearer Security so selected for redemption, except
with respect to Securities of a series, that such Bearer Security may be
exchanged for a Registered Security of that series so long as such Registered
Security shall be immediately surrendered for redemption with written
instruction for payment consistent with the provisions of the Indenture.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal (and premium, if any) and interest, if any, on Registered
Securities (other than a Global Security) will be made at the office of such
Paying Agent or Paying Agents as the Company may designate from time to time.
However, at the option of the Company, payment of any interest may be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Security Register, or by wire transfer to an account maintained by
the person entitled thereto as specified in the Security Register. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of any
installment of interest on Registered Securities will be made to the person in
whose name such Registered Security is registered at the close of business on
the Regular Record Date for such interest payment.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal (and premium, if any) and interest, if any, on Bearer Securities
will be payable, subject to any applicable laws and regulations, at the offices
of such Paying Agents outside the United States as the Company may designate
from time to time. However, at the option of the Company, payment of any
interest may be made by check mailed to any address outside the United States or
by transfer to an account maintained by the payee outside the United States.
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
interest on Bearer Securities on any Interest Payment Date will be made only
against surrender of the coupon relating to such Interest Payment Date. No
payment with respect to any Bearer Security will be made at any office or agency
of the Company in the United States, by check mailed to any address in the
United States, or by transfer to an account maintained in the United States.
Payments will not be made in respect of Bearer Securities or coupons
appertaining thereto pursuant to presentation or any other demand for payment to
the Company or its designated Paying Agents within the United States.
Notwithstanding the foregoing, payment of principal of (and premium, if any) and
interest, if any, on Bearer Securities denominated and payable in U.S. dollars
will be made at the office of the Company's Paying Agent in the United States
if, and only if, payment of the full amount thereof in U.S. dollars at all
offices or agencies outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions.
Unless otherwise indicated in an applicable Prospectus Supplement, the
principal office of the Trustee in The City of New York will be designated as
the Company's Paying Agent for payments with respect to Debt Securities which
are issuable solely as Registered Securities. Any Paying Agents outside the
United States and any other Paying Agents in the United States initially
designated by the Company for the Debt Securities will be named in the related
Prospectus Supplement. The Company may at any time designate additional Paying
Agents or rescind the designation of any Paying Agents or approve a change in
the office through which any Paying Agent acts, except that if Debt Securities
of a series are issuable only as Registered Securities, the Company will be
required to maintain a Paying Agent in each Place of Payment for such series.
The Company will be required to maintain a Paying Agent with respect to any
Bearer Securities of a series in a Place of Payment located outside the United
States where Debt Securities of such series and any coupons appertaining thereto
may be presented and surrendered for payment; provided that if the Debt
Securities of
10
<PAGE> 29
such series are listed on The Stock Exchange of the United Kingdom and the
Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange
located outside of the United States and such stock exchange shall so require,
the Company will maintain a Paying Agent in London, Luxembourg or any other
required city located outside the United States as long as the Debt Securities
of such series are listed on such exchange.
All monies paid by the Company to a Paying Agent for the payment of
principal of (and premium, if any) and interest, if any, on any Debt Security
which remain unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company, and
the Holder of such Debt Security or any coupon will thereafter look only to the
Company for payment thereof.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depository identified in an applicable Prospectus Supplement. Global
Securities may be issued in either registered or bearer form and in either
temporary or permanent form. Unless and until it is exchanged for Debt
Securities in definitive form, a temporary Global Security may not be
transferred except as a whole by the depository for such Global Security to a
nominee of such depository, by a nominee of such depository to such depository
or another nominee of such depository, or by such depository or any such nominee
to a successor of such depository or a nominee of such successor.
The specific terms of the depository arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will apply to
any depository arrangements.
Upon the issuance of a Global Security, the depository for such Global
Security or its nominee will credit the accounts of persons held with it with
the respective principal amounts of the Debt Securities represented by such
Global Security. Such amounts shall be designated by the underwriters or agents
with respect to such Debt Securities or by the Company if such Debt Securities
are offered and sold directly by the Company. Ownership of beneficial interests
in a Global Security will be limited to persons that have amounts with the
depository for such Global Security or its nominee ("participants") or persons
that may hold interests through participants. Ownership of beneficial interests
in such Global Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the depository (with
respect to participants' interests) for such Global Security or by participants
or persons that hold interests through participants (with respect to beneficial
owners' interests).
CERTAIN COVENANTS IN THE INDENTURE
Restrictions on Liens. The Company covenants in the Indenture that it will
not, nor will it permit any Restricted Subsidiary (as hereinafter defined) to,
create, incur, issue, assume, guarantee or suffer to exist any Secured Debt (as
hereinafter defined) without in any such case effectively providing,
concurrently with the creation, incurrence, issuance, assumption or guaranty of
any such Secured Debt, that the Debt Securities (together with, if the Company
shall so determine, any other indebtedness of or guaranteed by the Company or
such Restricted Subsidiary ranking equally with the Debt Securities and then
existing or thereafter created) shall be secured equally and ratably with or
prior to such Secured Debt so long as such Secured Debt shall be secured. The
foregoing restrictions shall not apply to (1) Mortgages (as hereinafter defined)
on property, shares of stock or indebtedness of any corporation existing at the
time such corporation becomes a Restricted Subsidiary; (2) Mortgages on property
or shares of stock existing at the time of acquisition of such property or stock
by the Company or a Restricted Subsidiary or existing as of June 28, 1991; (3)
Mortgages to secure the payment of all or any part of the price of acquisition,
construction or improvement of such property or stock by the Company or a
Restricted Subsidiary, or to secure any Secured Debt incurred by the Company or
a Restricted Subsidiary, prior to, at the time of, or within 90 days after, the
later of the acquisition or completion of construction (including any
improvements on an existing property), which Secured Debt is incurred for the
purpose of financing all or any part of the purchase price thereof or
construction of improvements thereon; provided, however, that, in the case of
any such acquisition, construction or improvement, the Mortgage shall
11
<PAGE> 30
not apply to any property theretofore owned by the Company or a Restricted
Subsidiary, other than, in the case of any such construction or improvement, any
theretofore substantially unimproved real property on which the property or
improvement so constructed is located; (4) Mortgages securing Secured Debt of a
Restricted Subsidiary owing to the Company or to another Restricted Subsidiary;
(5) Mortgages on property of a corporation existing at the time such corporation
is merged into or consolidated with the Company or a Restricted Subsidiary or at
the time of a sale, lease or other disposition of the properties of a
corporation or firm as an entirety or substantially as an entirety to the
Company or a Restricted Subsidiary; (6) Mortgages on property of the Company or
a Restricted Subsidiary in favor of the United States of America or any state
thereof, or any department, agency or instrumentality or political subdivision
of the United States of America or any state thereof, or in favor of any other
country or any political subdivision thereof, or any department, agency or
instrumentality of such country or political subdivision, to secure partial
progress, advance or other payments pursuant to any contract or statute or to
secure any indebtedness incurred for the purpose of financing all or any part of
the purchase price or the cost of construction of the property subject to such
Mortgages; or (7) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any Mortgage
referred to in the foregoing clauses (1) through (6), inclusive; provided,
however, that the principal amount of Secured Debt secured thereby shall not
exceed the principal amount of Secured Debt so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement shall be limited to all or a part of the property which secured the
Mortgage so extended, renewed or replaced (plus improvements and construction on
such property).
Notwithstanding the foregoing provisions, the Company and any one or more
Restricted Subsidiaries may, without securing the Debt Securities, create,
incur, issue, assume or guarantee Secured Debt secured by a Mortgage which would
otherwise be subject to the foregoing restrictions in an aggregate amount which,
together with all other Secured Debt of the Company and its Restricted
Subsidiaries which (if originally created, incurred, issued, assumed or
guaranteed at such time) would otherwise be subject to the foregoing
restrictions (not including Secured Debt permitted to be secured under clauses
(1) through (7) above), does not at the time exceed 10% of the share-owners'
equity of the Company and its consolidated Subsidiaries (as hereinafter defined)
as shown on the consolidated financial statements of the Company as of the end
of the fiscal year immediately preceding the date of determination.
Restrictions on Sale and Leaseback Transactions. The Company covenants in
the Indenture that it will not, nor will it permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction (as hereinafter defined) unless:
(1) the Company or such Restricted Subsidiary would be entitled to create,
incur, issue, assume or guarantee indebtedness secured by a Mortgage upon such
property at least equal in amount to the Attributable Debt (as hereinafter
defined) in respect of such arrangement without equally and ratably securing the
Debt Securities; provided, however, that from and after the date on which such
arrangement becomes effective, the Attributable Debt in respect of such
arrangement shall be deemed, for all purposes under the "Restrictions on Liens"
covenant above, to be Secured Debt subject to the provisions of such covenant;
or (2) since June 28, 1991 and within a period commencing twelve months prior to
the consummation of such Sale and Leaseback Transaction and ending twelve months
after the consummation of such Sale and Leaseback Transaction, the Company or
Restricted Subsidiary, as the case may be, has expended or will expend for the
Principal Property (as hereinafter defined) an amount equal to (A) the net
proceeds of such Sale and Leaseback Transaction, and the Company elects to
designate such amount as a credit against such Sale and Leaseback Transaction,
or (B) a part of the net proceeds of such Sale and Leaseback Transaction and the
Company elects to designate such amount as a credit against such Sale and
Leaseback Transaction and applies an amount equal to the remainder of the net
proceeds as provided in clause (3) hereof; or (3) such Sale and Leaseback
Transaction does not come within the exceptions provided by clause (1) above and
the Company does not make the election permitted by clause (2) above or makes
such election only as to a part of such net proceeds, in either of which events
the Company shall apply an amount in cash equal to the Attributable Debt in
respect of such arrangement (less any amount elected under clause (2) hereof) to
the retirement, within 90 days of the effective date of any such arrangement, of
indebtedness for borrowed money of the Company or any Restricted Subsidiary
(other than indebtedness for borrowed money of the Company which is subordinated
to the Debt Securities) which by its terms matures at or is extendible or
renewable at the sole option of the obligor without requiring the consent of the
obligee to a date
12
<PAGE> 31
more than twelve months after the date of the creation of such indebtedness for
borrowed money (it being understood that such retirement may be made by
prepayment of such indebtedness for borrowed money, if permitted by the terms
thereof, as well as by payment at maturity and that at the option of the Company
and pursuant to the terms of the Indenture, such indebtedness may include the
Debt Securities).
Restrictions on Consolidation, Merger or Sale. Under the terms of the
Indenture, the Company may not consolidate with or merge with or into, or
transfer all or substantially all of its assets to, any person unless (i) either
the Company will be the resulting or surviving entity or such person is a
corporation organized and existing under the laws of the United States, a state
thereof or the District of Columbia, (ii) such person expressly assumes, by
supplemental indenture satisfactory to the Trustee, all the obligations of the
Company under the Debt Securities and the Indenture and (iii) immediately before
and immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company as a result of such
transaction as having been incurred by the Company at the time of such
transaction, no Default or Event of Default shall have occurred or be
continuing.
Certain Definitions. The term "Attributable Debt" in respect of a Sale and
Leaseback Transaction means the present value (discounted at the weighted
average interest rate borne by all Debt Securities Outstanding at the time of
such Sale and Leaseback Transaction discounted semi-annually) of the obligation
of a lessee for net rental payments during the remaining term of any lease
(including any period for which such lease has been extended).
The term "Mortgage" or "Mortgages" means any mortgage, pledge, lien,
security interest or other encumbrances upon any Principal Property or on any
shares of stock or indebtedness of any Restricted Subsidiary (whether such
Principal Property, shares of stock or indebtedness are now owned or hereafter
acquired) .
The term "Principal Property" means each bottling plant or facility of the
Company or a Restricted Subsidiary located within the United States of America
(other than its territories and possessions) or Puerto Rico, except any such
bottling plant or facility which the Board of Directors of the Company by
resolution reasonably determines not to be of material importance to the total
business conducted by the Company and its Restricted Subsidiaries.
The term "Restricted Subsidiary" means any Subsidiary (i) substantially all
of the property of which is located, or substantially all of the business of
which is carried on, within the fifty states of the United States of America,
the District of Columbia or Puerto Rico and (ii) which owns or leases any
Principal Property.
The term "Sale and Leaseback Transaction" means any arrangement with any
person providing for the leasing by the Company or any Restricted Subsidiary of
any Principal Property whether such Principal Property is now owned or hereafter
acquired (except for temporary leases for a term, including renewals at the
option of the lessee, of not more than three years and except for leases between
the Company and a Restricted Subsidiary or between Restricted Subsidiaries),
which property has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such person with the intention of taking back a lease
of such property.
The term "Secured Debt" means notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed secured by any Mortgage.
The term "Subsidiary" means any corporation of which stock having by its
terms ordinary voting power to elect at least a majority of the board of
directors of such corporation (irrespective of whether or not at the time stock
of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned by the Company or by the Company and one or more
Subsidiaries or by one or more Subsidiaries.
EVENTS OF DEFAULT
Under the Indenture, the following will be Events of Default with respect
to Debt Securities of a particular series: (a) default in the payment of,
interest on or Additional Amounts payable in respect of any
13
<PAGE> 32
Debt Security of that series when due, continued for 30 days; (b) default in the
payment of any principal or premium, if any, on any Debt Security of that series
when due; (c) default in the making of any sinking fund payment, when due, in
respect of any Debt Security of that series; (d) default in the performance of
any other covenant of the Company contained in the Indenture for the benefit of
such series or in the Debt Securities of such series, continued for 60 days
after written notice as provided in the Indenture; (e) the acceleration of any
other indebtedness of the Company in excess of $15,000,000 due to default; (f)
certain events of bankruptcy, insolvency or reorganization; and (g) any other
Event of Default provided with respect to Debt Securities of that series. The
Trustee or the Holders of 25% in principal amount of the Outstanding Debt
Securities of that series may declare the principal amount (or such lesser
amount as may be provided for in the Debt Securities of that series) of all
Outstanding Debt Securities of that series and the interest accrued thereon and
Additional Amounts payable in respect thereof, if any, to be due and payable
immediately if an Event of Default (other than one in (f) above) with respect to
Debt Securities of such series shall occur and be continuing at the time of
declaration. If an Event of Default as specified in (f) above occurs, all unpaid
principal and accrued interest (or such lesser amount as may be provided for in
the Debt Securities of that series) shall ipso facto become immediately due and
payable without any other declaration or act on the part of the Trustee or any
Holder. It is anticipated that the terms of each series of Original Issue
Discount Securities will provide that, upon declaration of acceleration of the
Maturity of any such series of Original Issue Discount Securities, the Accreted
Amount (as hereinafter defined) of such Original Issue Discount Securities shall
be due and payable. "Accreted Amount" shall mean an amount in respect of each
Original Issue Discount Security of the affected series equal to the sum of (a)
the issue price of such Original Issue Discount Security as determined in
accordance with Section 1273 of the Code, (b) the aggregate of the portions of
the original issue discount which shall theretofore have accrued pursuant to
Section 1272 of the Code (without regard to Section 1272(a) (7) of the Code)
from the date of issue of such Original Issue Discount Security (i) for each six
month or shorter period ending on the Interest Payment Date prior to the date of
declaration of acceleration, and (ii) for the shorter period, if any, from the
end of the immediately preceding six-month period, as the case may be, to the
date of declaration of acceleration, and (c) accrued interest to the date such
Accreted Amount is paid (without duplication of any amount set forth in (b)
above); minus all amounts theretofore paid in respect of such Original Issue
Discount Security, which amounts are considered as part of the "stated
redemption price at maturity" of such Original Issue Discount Security within
the meaning of Section 1273(a)(2) of the Code or any successor provision
(whether such amounts paid were denominated principal or interest).
At any time after a declaration of acceleration has been made with respect
to Debt Securities of any series but before a judgment or decree for payment of
money due has been obtained by the Trustee, the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series may rescind
any declaration of acceleration and its consequences, if all payments due (other
than those due as a result of acceleration) have been made and all Events of
Default have been remedied or waived. Any Event of Default with respect to Debt
Securities of any series may be waived by the Holders of a majority in principal
amount of all Outstanding Debt Securities of that series, except in a case of
failure to pay principal or premium, if any, or interest or Additional Amounts,
if any, on any Debt Security of that series for which payment had not been
subsequently made or in respect of a covenant or provision which cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security of such series affected.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of default with respect to a particular series of Debt Securities,
give the Holders of the Debt Securities of such series notice of such default
known to it (the term default to mean the events specified above without grace
periods); provided that, except in the case of default in the payment of
principal of, premium (if any) on, interest on or any Additional Amount payable
with respect to any Debt Securities of any series or in the making of any
sinking fund payment payable with respect to any Debt Securities of any series,
the Trustee may withhold the notice if and so long as a committee of its trust
officers in good faith determines that withholding the notice is in the best
interests of the Holders of Debt Securities of that series and any related
series.
The Holders of a majority in principal amount of the Outstanding Debt
Securities of a series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising
14
<PAGE> 33
any trust or power conferred on the Trustee with respect to Debt Securities of
such series, provided that such direction shall not be in conflict with any law
or the Indenture. Before proceeding to exercise any right or power under the
Indenture at the direction of such Holders, the Trustee will be entitled to
receive from such Holders reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in complying with any
such direction.
The Company will be required to furnish to the Trustee annually a statement
as to the fulfillment by the Company of all of its obligations under the
Indenture.
MODIFICATION AND WAIVER
With certain exceptions, modification or amendment of the Indenture or the
rights of Holders of the Debt Securities may be effected by the Company and the
Trustee with the consent of the Holders of 66 2/3% in principal amount of the
Outstanding Debt Securities of each series affected thereby, provided that no
such modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of
any installment of principal of, or interest or Additional Amounts on, any Debt
Security or any premium payable on the Redemption Price; (b) reduce the
principal amount of, or the interest or Additional Amounts payable on, any Debt
Security or reduce the amount of principal which could be declared due and
payable on, any Debt Security or reduce the amount of principal which could be
declared due and payable prior to the Stated Maturity; (c) change the coin or
currency of any payment of principal, any premium, interest or Additional
Amounts on any Debt Security; (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security; (e) reduce
the percentage in principal amount of the Outstanding Debt Securities of any
series, the consent of whose Holders is required to approve any supplemental
indenture, to waive compliance with certain provisions of the Indenture or
certain defaults thereunder, or to reduce quorum or voting requirements
applicable to meetings of Holders; or (f) modify the foregoing requirements in
(a) through (e) above, requiring the consent of each Holder of each Outstanding
Debt Security affected thereby, or the percentages of such Holders required to
waive past defaults, or the percentage of such Holders which may rescind an
acceleration, except to increase any such percentage, and except to provide that
other provisions of the Indenture cannot be modified or amended without the
consent of the Holder of each outstanding Debt Security affected thereby. Except
with respect to certain fundamental provisions, the Holders of at least a
majority in principal amount of Outstanding Debt Securities of any series may,
with respect to such series, waive past defaults under the Indenture and waive
compliance by the Company with certain provisions of the Indenture.
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series if Debt Securities of that series are issuable as
Bearer Securities. A meeting may be called at any time by the Trustee, and also,
upon request, by the Company or the Holders of at least 10% in principal amount
of the Outstanding Debt Securities of such series, in any such case upon notice.
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the Indenture will be
binding on all Holders of Debt Securities of that series and the related
coupons. With certain exceptions, the quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the Outstanding Debt Securities
of a series.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture generally provides that the Company may terminate its
obligations under the Indenture with respect to a particular series of Debt
Securities if all the Debt Securities of such series previously authenticated
and delivered (other than lost, destroyed or stolen Debt Securities of such
series that have been replaced or paid) have been delivered to the Trustee for
cancellation and the Company has paid all sums payable by it thereunder or if
(i) the Debt Securities of a particular series have matured or will mature
within one year or all of them are to be called for redemption within one year
under arrangements satisfactory to the Trustee for giving the notice of
redemption and (ii) the Company irrevocably deposits with the Trustee money
sufficient to pay principal of and interest on such Debt Securities that are due
or will become due upon redemption or maturity, as the case may be, and to pay
all other sums payable by it thereunder. In such case, Holders of such Debt
Securities must look to the deposited money for payment.
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<PAGE> 34
CONCERNING THE TRUSTEE
The Chase Manhattan Bank, formerly known as Chemical Bank (as successor by
merger to Manufacturers Hanover Trust Company), New York, New York, is the
Trustee under the Indenture. The Company maintains banking relationships in the
ordinary course of business with The Chase Manhattan Bank.
DESCRIPTION OF DEBT WARRANTS
The Company may issue, together with Debt Securities or Currency Warrants
or separately, Debt Warrants for the purchase of Debt Securities. The Debt
Warrants are to be issued under Debt Warrant Agreements (each a "Debt Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as Debt Warrant Agent (the "Debt Warrant Agent"), all as shall be set forth in
the Prospectus Supplement relating to Debt Warrants being offered thereby. A
copy of the form of Debt Warrant Agreement, including the form of Warrant
Certificates representing the Debt Warrants (the "Debt Warrant Certificates"),
reflecting the alternative provisions to be included in the Debt Warrant
Agreements that will be entered into with respect to particular offerings of
Debt Warrants, is incorporated by reference as an exhibit to the Registration
Statement. The following summaries of certain provisions of the Debt Warrant
Agreement and the Debt Warrant Certificates do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of the Debt Warrant Agreement and the Debt Warrant Certificates,
respectively, including the definitions therein of certain terms.
GENERAL
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Debt Warrant Agreement relating to such Debt
Warrants and the Debt Warrant Certificates representing such Debt Warrants,
including the following: (1) the designation, aggregate principal amount and
terms of the Debt Securities purchasable upon exercise of such Debt Warrants and
the procedures and conditions relating to the exercise of such Debt Warrants;
(2) the designation and terms of any related Debt Securities with which such
Debt Warrants are issued and the number of such Debt Warrants issued with each
such Debt Security; (3) the date, if any, on and after which such Debt Warrants
and the related Debt Securities will be separately transferable; (4) the
principal amount of Debt Securities purchasable upon exercise of each Debt
Warrant and the price at which such principal amount of Debt Securities may be
purchased upon such exercise; (5) the date on which the right to exercise such
Debt Warrants shall commence and the date on which such right shall expire (the
"Expiration Date"); (6) a discussion of material federal income tax
considerations, if any; and (7) whether the Debt Warrants represented by the
Debt Warrant Certificates will be issued in registered or bearer form, and, if
registered, where they may be transferred and registered.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Debt Warrant Agent or any other office
indicated in the Prospectus Supplement. Prior to the exercise of their Debt
Warrants, Holders of Debt Warrants will not have any of the rights of Holders of
the Debt Securities purchasable upon such exercises and will not be entitled to
payments of principal of (and premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise.
EXERCISE OF DEBT WARRANTS
Each Debt Warrant will entitle the Holder to purchase for cash such
principal amount of Debt Securities at such exercise price as shall in each case
be set forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Debt Warrants offered thereby. Debt Warrants may be exercised at
any time up to the close of business on the Expiration Date set forth in the
Prospectus Supplement relating to the Debt Warrants offered thereby. After the
close of business on the Expiration Date, unexercised Debt Warrants will become
void.
Debt Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Debt Warrants offered thereby. Upon receipt of payment and the
Debt Warrant Certificate properly completed and duly
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<PAGE> 35
executed at the corporate trust office of the Debt Warrant Agent or any other
office indicated in the Prospectus Supplement, the Company will, as soon as
practicable, forward the Debt Securities purchasable upon such exercise. If less
than all of the Debt Warrants represented by such Debt Warrant Certificate are
exercised, a new Debt Warrant Certificate will be issued for the remaining
amount of Debt Warrants.
DESCRIPTION OF CURRENCY WARRANTS
The Company may issue, together with Debt Securities or Debt Warrants or
separately, Currency Warrants (i) in the form of Currency Put Warrants entitling
the Holders thereof to receive from the Company the Cash Settlement Value in
U.S. dollars of the right to sell a specified amount of a specified foreign
currency or currency units for a specified amount of U.S. dollars and/or (ii) in
the form of Currency Call Warrants entitling the Holders thereof to receive from
the Company the Cash Settlement Value in U.S. dollars of the right to purchase a
specified amount of a specified foreign currency or units of two or more
currencies for a specified amount of U.S. dollars. The spot exchange rate of the
applicable Base Currency, upon exercise, as compared to the U.S. dollar, will
determine whether the Currency Warrants have a Cash Settlement Value on any
given day prior to their expiration.
The Currency Warrants are to be issued under a Currency Warrant Agreement
to be entered into between the Company and a bank or trust company, as Currency
Warrant Agent (the "Currency Warrant Agent"), all as shall be set forth in the
applicable Prospectus Supplement. A copy of the form of Currency Warrant
Agreement, including the forms of global Warrant Certificates representing the
Currency Put Warrants and Currency Call Warrants (the "Currency Warrant
Certificates"), reflecting the provisions to be included in the Currency Warrant
Agreement that will be entered into with respect to particular offerings of
Currency Warrants, is incorporated by reference as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Currency Warrant Agreement and the Currency Warrant Certificates do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Currency Warrant Agreement and the
Currency Warrant Certificates, respectively, including the definitions therein
of certain terms.
GENERAL
The applicable Prospectus Supplement will describe the terms of Currency
Warrants offered thereby, the Currency Warrant Agreement relating to such
Currency Warrants and the Currency Warrant Certificates representing such
Currency Warrants, including the following: (1) whether such Currency Warrants
will be Currency Put Warrants, Currency Call Warrants, or both; (2) the formula
for determining the Cash Settlement Value, if any, of each Currency Warrant; (3)
the procedures and conditions relating to the exercise of such Currency
Warrants; (4) the circumstances which will cause the Currency Warrants to be
deemed to be automatically exercised; (5) any minimum number of Currency
Warrants which must be exercised at any one time, other than upon automatic
exercise; (6) the date on which the right to exercise such Currency Warrants
will commence and the date on which such right will expire (the "Expiration
Date"); and (7) a discussion of material federal income tax considerations, if
any.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Except as may otherwise be provided in an applicable Prospectus Supplement,
the Currency Warrants will be issued in book-entry form represented by a global
Currency Warrant Certificate registered in the name of a depository or its
nominee. Holders will not be entitled to receive definitive certificates
representing Currency Warrants. A Holder's ownership of a Currency Warrant will
be recorded on or through the records of the brokerage firm or other entity that
maintains such Holder's account. In turn, the total number of Currency Warrants
held by an individual brokerage firm for its clients will be maintained on the
records of the depository in the name of such brokerage firm or its agent.
Transfer of ownership of any Currency Warrant will be effected only through the
selling Holder's brokerage firm.
The Cash Settlement Value will be paid by the Currency Warrant Agent to the
depository. The depository will be responsible for crediting the amount of such
payments to the accounts of participants or
17
<PAGE> 36
indirect participants in accordance with its standard procedures. Each
participant or indirect participant will be responsible for disbursing such
payments to the Holders that it represents and to each brokerage firm for which
it acts as agent. Each such brokerage firm will be responsible for disbursing
funds to the Holders that it represents.
EXERCISE OF CURRENCY WARRANTS
Except as may otherwise be provided in an applicable Prospectus Supplement,
each Currency Warrant will entitle the Holder to receive the Cash Settlement
Value of such Currency Warrant on the applicable Exercise Date, in each case as
such terms will be defined in the applicable Prospectus Supplement. If not
exercised prior to 3:00 P.M., New York City time, on the fifth New York Business
Day preceding the Expiration Date, Currency Warrants will be deemed
automatically exercised on the Expiration Date.
LISTING
Except as may otherwise be provided in an applicable Prospectus Supplement,
each issue of Currency Warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale of
any such Currency Warrants. In the event that the Currency Warrants are delisted
from, or permanently suspended from trading on, such exchange, the Expiration
Date for such Currency Warrants will be the date such delisting or trading
suspension becomes effective and Currency Warrants not previously exercised will
be deemed automatically exercised on such Expiration Date. The applicable
Currency Warrant Agreement will contain a covenant of the Company not to seek
delisting of the Currency Warrants, or suspension of their trading, on such
exchange.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of the following ways: (i)
through underwriters or dealers, (ii) directly to a limited number of
institutional purchasers or to a single institutional purchaser, (iii) through
agents and (iv) a combination of any of the foregoing. Any such underwriter,
dealer or agent may be deemed to be an underwriter within the meaning of the
Securities Act of 1933. The Prospectus Supplement with respect to the Securities
of a particular series sets forth the terms of the offering of such Securities,
including the name or names of any underwriters or agents, the public offering
or purchase price and the proceeds to the Company from such sale, any discounts
and commissions to be allowed or paid to the underwriters or agents, all other
items constituting underwriting compensation, the discounts and commissions to
be allowed or paid to dealers, if any, and the securities exchanges, if any, on
which the Securities will be listed. Under certain circumstances, the Company
may repurchase Securities and reoffer them to the public as set forth above. The
Company may also arrange for repurchases and resales of such Securities by
dealers.
If so indicated in the Prospectus Supplement, the Company will authorize
the underwriters to solicit offers by certain institutions to purchase Debt
Securities from the Company pursuant to Delayed Delivery Contracts providing for
payment and delivery on the date stated in the Prospectus Supplement. Each such
contract will be for an amount not less than the amount specified in such
Prospectus Supplement, and unless the Company otherwise agrees, the aggregate
principal amount of Debt Securities sold pursuant to such contracts shall not be
more than the respective amounts stated in the Prospectus Supplement.
Institutions with whom 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
shall in all cases be subject to the approval of the Company. Delayed Delivery
Contracts will not be subject to any conditions except that the purchase by an
institution of the Debt Securities covered thereby shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject.
Under the agreements that may be entered into with the Company, the
underwriters, dealers and agents may be entitled to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act of 1933, or to contribution with respect to payments which the
underwriters, dealers or
18
<PAGE> 37
agents may be required to make in respect thereof. Underwriters, dealers and
agents may engage in transactions with, or perform services for, the Company in
the ordinary course of business.
Each underwriter, dealer and agent participating in the distribution of any
Debt Securities that are issuable as Bearer Securities will agree that it will
not offer, sell or deliver, directly or indirectly, Bearer Securities in the
United States or to United States persons (other than qualifying financial
institutions) in connection with the original issuance of such Debt Securities.
LEGAL MATTERS
The legality of the Securities has been passed upon for the Company by
Lowry F. Kline, Senior Vice President and General Counsel of the Company, who as
to matters of New York law has relied upon the opinion of Cravath, Swaine &
Moore, New York, New York. As of February 19, 1997, Mr. Kline owned 179,652
shares of the Company's common stock, 140,000 of which are restricted and
subject to vesting conditions, and options to purchase 71,833 shares of the
Company's common stock.
EXPERTS
The consolidated financial statements and schedule of Coca-Cola Enterprises
Inc. incorporated by reference in Coca-Cola Enterprises Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1996 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
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<PAGE> 38
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THE PROSPECTUS, THIS PROSPECTUS SUPPLEMENT OR ANY
PRICING SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE PROSPECTUS, THIS
PROSPECTUS SUPPLEMENT AND ANY PRICING SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES OFFERED BY THE PROSPECTUS, THIS PROSPECTUS SUPPLEMENT AND ANY PRICING
SUPPLEMENT OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THE
PROSPECTUS, THIS PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT NOR ANY SALE
MADE THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THE
PROSPECTUS, THIS PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT, OR THAT THE
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SINCE SUCH DATE.
-------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT PAGE
Description of Notes................. S-2
Certain Federal Income Tax
Consequences....................... S-12
Plan of Distribution................. S-17
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Risk Factors Relating to Currencies
and Currency Warrants.............. 3
The Company.......................... 4
Use of Proceeds...................... 5
Summary Financial Data............... 6
Description of Debt Securities....... 8
Description of Debt Warrants......... 16
Description of Currency Warrants..... 17
Plan of Distribution................. 18
Legal Matters........................ 19
Experts.............................. 19
</TABLE>
$3,170,575,000
(COCA-COLA ENTERPRISES INC. LOGO)
MEDIUM-TERM NOTES
DUE FROM AND
EXCEEDING NINE
MONTHS FROM DATE
OF ISSUE
SALOMON BROTHERS INC
LEHMAN BROTHERS
PROSPECTUS SUPPLEMENT
DATED MARCH 13, 1997
