<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-3/A
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES UNDER THE
TRUST INDENTURE ACT OF 1939
UNITED PARCEL SERVICE OF AMERICA, INC.
--------------------------------------
(Name of Company)
55 GLENLAKE PARKWAY, N.E.
Atlanta, Georgia 30328
-----------------------
(Address of Principal Executive Offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
TITLE OF CLASS AMOUNT
-------------- ------
8 3/8 % Debentures due 2030 $700,000,000
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: December 18, 1997.
NAME AND ADDRESS OF AGENT FOR SERVICE: Catherine Harrison, Esq., 55 Glenlake
Parkway, NE, Atlanta, Georgia 30328.
The Company hereby amends this application for qualification on such date
or dates as may be necessary to delay its effectiveness until (i) the 20th day
after the filing of a further amendment which specifically states that it shall
supersede this amendment, or (ii) such date as the Securities and Exchange
Commission, acting pursuant to Section 307(c) of the Act, may determine upon the
written request of the Company.
<PAGE>
GENERAL
-------
1. GENERAL INFORMATION
-------------------
(A) FORM OF ORGANIZATION: Corporation.
(B) STATE OR OTHER SOVEREIGN POWER UNDER THE LAWS OF WHICH ORGANIZED:
Delaware.
2. SECURITIES ACT EXEMPTION APPLICABLE.
-----------------------------------
United Parcel Service of America, Inc., a Delaware corporation (the
"Company"), is relying upon the exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), provided by
Section 3(a)(9) thereunder, in connection with the Company's exchange offer as
described herein (the "Exchange Offer"). The Exchange Offer is being made by
the Company pursuant to its Offering Circular dated December 18, 1997 ("Offering
Circular"), and the related Letter of Transmittal and Notice of Guaranteed
Delivery of even date therewith, and consists of an offer to exchange the
Company's $700,000,000 8 3/8% Debentures due 2030 (the "New 2030 Debentures")
for the Company's outstanding $700,000,000 8 3/8% Debentures due 2020 (the "Old
2020 Debentures").
There have not been any sales of securities of the same class as the New
2030 Debentures or the Old 2020 Debentures by the Company, nor are there any
such other sales planned, by or through an underwriter at or about the time of
the Exchange Offer transaction.
The Company retained Deutsche Morgan Grenfell ("DMG") to advise the Company
as to the structure, process and financial matters related to the Exchange
Offer. DMG's services to the Company are limited solely to such advisory
services, and DMG will not, directly or indirectly, solicit the exchange of Old
2020 Debentures for New 2030 Debentures under the Exchange Offer or otherwise
make recommendations with respect to acceptance or rejection of the Exchange
Offer. In exchange for such advisory services, DMG will be paid a flat fee
which is not dependent upon the outcome of the transaction. DMG will not be
paid any commission or similar variable type of remuneration.
The Company also has retained D.F. King & Co., Inc. as the "Information
Agent" and Citibank, N.A. as the "Exchange Agent" in connection with the
Exchange Offer. The Information Agent and Exchange Agent will provide to
holders of Old 2020 Debentures only information otherwise contained in the
Offering Circular and general information regarding the mechanics of the
exchange process. The Exchange Agent will provide the actual acceptance and
exchange services with respect to the exchange of Old 2020 Debentures and New
2030 Debentures. Neither the Information Agent nor the Exchange Agent will
solicit exchanges in connection with the Exchange Offer and will not make
recommendations as to the acceptance or rejection of the Exchange Offer. Both
the Information Agent and Exchange Agent will be paid reasonable fees directly
by the Company for their services.
<PAGE>
There are no cash payments made or to be made by any holder of the
outstanding Old 2020 Debentures in connection with the Exchange Offer.
AFFILIATIONS
------------
3. AFFILIATES. Furnish a list or diagram of all affiliates of the Company and
----------
indicate the respective percentages of voting securities or other bases of
control.
WHOLLY-OWNED SUBSIDIARIES
- -------------------------
United Parcel Service Co.
United Parcel Service Deutschland Inc.
United Parcel Service General Services Co.
United Parcel Service, Inc.
United Parcel Service, Inc.
United Parcel Service, Inc. (Virginia)
United Parcel Service Oasis Supply Corporation
UPS Internet Services, Inc.
UPS Procurement Services, Inc.
UPS Professional Services, Inc.
UPS Customhouse Brokerage, Inc.
UPS International General Services Co.
UPS International, Inc.
UPS International Forwarding, Inc.
UPS of Ireland, Inc.
UPS of Argentina, Inc.
UPS of Brazil, Inc.
UPS of Portugal, Inc.
UPS of Norway, Inc.
United Parcel Service Espana Ltd.
United Parcel Service Italia, S.R.L.
UPS of China, Inc.
UPS Logistics Group, Inc.
UPS Truck Leasing, Inc.
UPS Worldwide Logistics, Inc.
Worldwide Dedicated Services, Inc.
Diversified Trimodal, Inc.
Roadnet Technologies, Inc.
SonicAir, Inc.
UPS Worldwide Forwarding, Inc.
UPICO Corporation.
UPS Aviation Services, Inc.
Merchants Parcel Delivery
Trailer Conditions, Inc.
II Morrow, Inc.
Red Arrow Bonded Messenger Corporation
UPS Air Leasing, Inc.
Avenair Corporation
Nevair Corporation
UPS Telecommunications, Inc.
UPS Properties, Inc.
E1 Paso Distribution Center, Inc. (One)
E1 Paso Distribution Center, Inc. (Two)
Tri-State, Distribution, Inc. (One)
Tri-State, Distribution, Inc. (Two)
<PAGE>
Tri-State, Distribution, Inc. (Three)
Tri-State, Distribution, Inc. (Four)
Tri-State, Distribution, Inc. (Five)
Vista Distribution Center, Inc. (One)
Vista Distribution Center. (Two)
Vista Distribution Center, Inc. (Three)
Vista Distribution Center, Inc. (Four)
Vista Distribution Center, Inc. (Five)
Upinsco, Inc.
Velleb, Inc.
Adi Realty Company
Alko Corporation
Bardale Company
Basplas Corporation
Brastock Corporation
Brookind Corporation
Buckroe Corporation
Burdence Corporation
Chasreal, Inc.
Cleve Company
Cova Corporation
Dakkel Corporation
Dalho Corporation
Darico, Inc.
Daven Corporation
Deerfield Corporation
Denado Corporation
Dullesport Corporation
Edison Corporation
Elsil Corporation
Evind Corporation
Fardak Corporation
Galanta Company
Kylou, Inc.
Labar Corporation
Lakefair Corporation
Mascester Company, Inc.
Maereal Company, Inc.
Mexalb Corporation
Minneagen Real Estate Company
Missjack Company
Montbill Corporation
Moroc Corporation
Newbany Corporation
Nubee, Inc.
Oshaon Corporation
Parkprop, Inc.
Penallen Corporation
Ralcar Corporation
Rockapar Corporation
Royoak, Incorporated
Sallad Corporation
Saluta Corporation
Saskan Corporation
Kacika Corporation
Socol Corporation
Solacal Company
Lacalos Corporation
Sophil Company
South Seventh Corporation
Stadiana, Inc.
Swanpor Corporation.
Temphis Corporation
Valacal Company
Verbal Corporation
Verlas Corporation
Willmanch Corporation
Wyoas Corporation
Wyld, Inc.
<PAGE>
INTERNATIONAL SUBSIDIARIES
- --------------------------
United Parcel Service Pty. Ltd.
UPS Pty. Ltd.
United Parcel Service Speditionsgesellschaft m.b.H.
UPS Transport GmbH
United Parcel Service (Bahrain) WLL
United Parcel Service Belgium N.V
United Parcel Service (Bermuda) Ltd
UPS DO Brasil & Cia
2855-8278 Quebec Inc.
724352 Ontario Inc.
United Parcel Service Canada Ltd.
United Parcel Service Cayman Islands Limited
UPS De San Jose, S.A.
UPS Denmark A/S
United Parcel Services Finland OY
United Parcel Service France S.N.C
Prost-Transports S.A. Speditionsgesellachaft gmbH
United Parcel Service Deutschland Inc.
UPS Air Cargo Service GmbH.
UPS Grundstuecksverwaltungs GmbH
UPS Transport GmbH
UPS Transport GmbH II
UPS Worldwide Logistics GmbH
UPS Parcel Delivery Service Limited
United Parcel Service CSTC Ireland Limited
United Parcel Service of Ireland Limited
United Parcel Service Italia, S.R.L.
United Parcel Service Co., Japan Branch
UPS Japan Limited
United Parcel Service Jersey Limited
United Parcel Service (M)Sdn. Bhd
United Parcel Service (Transport) Sdn. Bhd
United Parcel Service De Mexico S.A. De C.V
Prost-Transports Nederland B.V
United Parcel Service Nederland B.V
UPS Norge A/S
UPS of Norway, Inc., Oslo Branch
UPS of Portugal, Inc., Lisbon Branch
United Parcel Service Co., Singapore Branch
United Parcel Service Singapore PTE Lted
United Parcel Service Co., Korean Branch
Sociedad Iversora Sanrelman, S.A
United Parcel Service Espana Ltd. Y Compania, S.R.C
UPS Spain, S.L
United Parcel Service Sweden AB
United Parcel Service (Switzerland)
UPS International, Inc., Taiwan Branch
UPS Parcel Delivery Service Limited
Atexco (1991) Limited
Atlasair Limited
Carryfast Limited
IML Air Services Group Limited
United Parcel Service of America
UPS (UK) Limited
UPS Limited
UPS of America Limited
<PAGE>
MANAGEMENT AND CONTROL
----------------------
4. DIRECTORS AND EXECUTIVE OFFICERS. List the names and complete mailing
---------------------------------
addresses of all directors and executive officers of the applicant and all
persons chosen to become directors or executive officers. Indicate all offices
with the applicant held or to be held by each person named.
<TABLE>
<CAPTION>
NAME ADDRESS OFFICE
- ---------------------- ------------------ ------------------------------------
<S> <C> <C>
John W. Alden 55 Glenlake Pkwy. Vice Chairman, Senior Vice
Atlanta, GA 30328 President and Director
Robert J. Clanin 55 Glenlake Pkwy. Senior Vice President, Treasurer,
Atlanta, GA 30328 Chief Financial Officer and Director
James P. Kelly 55 Glenlake Pkwy. Chairman of the Board, Chief
Atlanta, GA 30328 Executive Officer and Director
Kenneth W. Lacy 55 Glenlake Pkwy. Senior Vice President
Atlanta, GA 30328
Joseph R. Moderow 55 Glenlake Pkwy. Senior Vice President, Secretary,
Atlanta, GA 30328 General Counsel and Director
Kent C. Nelson 55 Glenlake Pkwy. Director, Former Chairman of the
Atlanta, GA 30328 Board and Former Chief Executive
Officer
Joseph M. Pyne 55 Glenlake Pkwy. Senior Vice President
Atlanta, GA 30328
Michael L. Eskew 55 Glenlake Pkwy. Senior Vice President
Atlanta, GA 30328
Edward L. Schroeder 55 Glenlake Pkwy. Senior Vice President
Atlanta, GA 30328
Lea N. Soupata 55 Glenlake Pkwy. Senior Vice President
Atlanta, GA 30328
Calvin E. Tyler, Jr. 55 Glenlake Pkwy. Senior Vice President and Director
Atlanta, GA 30328
Charles L. Schaffer 55 Glenlake Pkwy. Senior Vice President and Director
Atlanta, GA 30328
Thomas H. Weidemeyer 55 Glenlake Pkwy. Senior Vice President
Atlanta, GA 30328
William H. Brown 55 Glenlake Pkwy. Director
Atlanta, GA 30328
Carl Kayser 55 Glenlake Pkwy. Director
Atlanta, GA 30328
Gary E. MacDougal 55 Glenlake Pkwy. Director
Atlanta, GA 30328
Victor A. Pelson 55 Glenlake Pkwy. Director
Atlanta, GA 30328
John W. Rogers 55 Glenlake Pkwy. Director
Atlanta, GA 30328
Robert M. Teeter 55 Glenlake Pkwy. Director
Atlanta, GA 30328
</TABLE>
<PAGE>
5. PRINCIPAL OWNERS OF VOTING SECURITIES. Furnish the following information as
-------------------------------------
to each person owning 10 percent or more of the voting securities of the
applicant, as of November 30, 1997.
No person owns 10 percent or more of voting securities of the Company as of
such date.
UNDERWRITERS
------------
6. UNDERWRITERS. Give the name and complete mailing address of (a) each person
------------
who, within three years prior to the date of filing the application, acted as an
underwriter of any securities of the obligor which were outstanding on the date
of filing the application, and (b) each proposed principal underwriter of the
securities proposed to be offered. As to each person specified in (a), give the
title of each class of securities underwritten.
There are no underwriters of the securities proposed to be offered in the
Exchange Offer. Following are the underwriters identified in Section 6(a)
hereof:
A. The following were the underwriters in the Company's issuance in
January 1996 of $200 million of 5.50% Eurobond Notes due January 1999:
Merrill Lynch International Limited
Citibank International plc
Goldman Sachs International
Paribas Capital Markets
Barclays de Zoete Wedd Limited
DKB International
HSBC Markets
Morgan Stanley & Co. Incorporated
CS First Boston
Lehman Brothers
SBC Warburg
A Division of Swiss Bank Corporation
Caisse des Depots et Consignations
Dresdner Bank Aktiengesellschaft
Heritage Finance & Trust Co.
Paine Webber International (UK) Ltd.
Deutsche Morgan Grenfell
J.P. Morgan Securities Ltd.
Banca del Gottardo
CBI-TDB Union Bancaire Privee
Darier, Hentsch & Cie
IBJ International plc
UBS Limited
The mailing address for the above underwriters is: 25 Ropemaker Street, London
EC2Y 9LY.
B. The following were the underwriters in the Company's issuance in
April 1996 of 200 million of 3.25% Swiss Franc Notes due October 1999:
Merrill Lynch Capital Markets AG
Credit Suisse
Union Bank of Switzerland
Cantonalbanks of Switzerland
Groupement des Banquiers Prives Genevois
Swiss Bank Corporation
Citibank (Switzerland)
Swiss Volksbank
Bank Julius Bar & Co. Ltd
Bank Leu Ltd
LGT Bank in Liechtenstein Aktiengesellschaft
<PAGE>
Bank J. Vontobel & Co. AG
Banque Nationale de Paris (Suisse) SA
Banque Paribas (Suisse) S.A.
Deutsche Bank (Schweiz) AG
Lehman Brothers Bank (Switzerland)
Salomon Brothers International Limited
Union Bancaire Privee
Verwaltungs-und Privat-Bank Aktiengesellschaft
Bank Sarasin & CIE.
Banque Bruxelles Lambert (Switzerland) S.A.
Dai-Ichi Kangyo Bank (Schweiz) AG
Dresdner Bank (Schweiz) AG
Liechtensteinische Landesbank Aktiengesellschaft
The Industrial Bank of Japan (Switzerland) Limited
ABN Amro Bank (Schweiz)
Banca del Gottardo
Bank Cial (Schweiz)
Bank von Ernst & CIE AG
Lloyds Bank plc
Societe Generale Bank & Trust
Bdl Banco di Lugano
Coop Bank
Finter Bank Zurich
Fuji Bank (Schweiz) AG
Rud, Blass & CIE AG
Banca del Sempione
Bank Adamas AG
Bank Linth
Handelsfinanz-CCF Bank
Luzerner Landbank AG
New Japan Bank (Schweiz) AG
Sparkasse Schwyz
The mailing address for the above underwriters is: 5, Stauffacherstrasse, 8004
Zurich, Switzerland.
C. The following were the underwriters in the Company's issuance in February
1997 of 100 million of 6.875% Pound Sterling Notes due February 2000:
Merrill Lynch International
Banca del Gottardo
Citibank International plc
Darier, Hentsch & Cie, Geneva
Hambros Bank Limited
HSBC Markets
Paribas Capital Markets
SBC Warburg
Barclays de Zoete Wedd Limited
Credit Suisse First Boston
Dresdner Kleinwort Benson
HFT (GUERNSEY) LTD
Lehman Brothers
Salomon Brothers International Limited
UBS Limited
Union Bancaire Privee
The mailing address for the above underwriters is: 25 Ropemaker Street, London
EC2Y 9LY.
D. The following were the underwriters in the Company's issuance in December,
1989 of $500 million of 8 3/8% Debentures due 2020:
Merrill Lynch Capital Markets
The First Boston Corporation
Salomon Brothers Inc.
The mailing address for the above underwriters is: North Tower, World Financial
Center, New York, New York 10281-1209.
<PAGE>
E. The following were the underwriters in the Company's issuance in
April 1997 of 6.625% EuroNotes due April 2001:
Credit Suisse First Boston (Europe) Limited
Banca del Gottardo
Banque Bruxelles Lambert S.A./Bank Brussels Lambert
Banque Nationale de Paris London Branch
Citibank International plc
Deutsche Bank AG London
Dresdner Bank Aktiengesellschaft
Goldman Sachs International
Lehman Brothers International (Europe)
Merrill Lynch International
Salomon Brothers International Limited
Swiss Bank Corporation
UBS Limited
The mailing address for the above underwriters is: One Cabot Square, London
E14 4QJ.
F. The following were the underwriters in the Company's issuance in July 1997
of 6.25% EuroNotes due July 2000:
<TABLE>
<CAPTION>
<S> <C>
Credit Suisse First Boston (Europe) Limited Deutsche Bank AG London
Tokyo-Mitsubishi International plc Dresdner Bank Aktiengesellschaft
Credit Suisse First Boston (Europe) Limited Darier, Hentsch & Cie
Swiss Bank Corporation Goldman Sachs International
UBS Limited Heritage Finance & Trust Co.
ABN AMRO Bank N.V. J.P. Morgan Securities Ltd.
Banca del Gottardo Lehman Brothers International (Europe)
Banque Bruxelles Lambert S.A. Salomon Brothers International Limited
Banque Nationale de Paris London Branch Merrill Lynch International
Banque Paribas CIBC Wood Gundy plc
Citibank International plc Commerzbank Aktiengesellschaft
</TABLE>
The mailing address for the above underwriters is: 25 Ropemaker Street, London
EC2Y 9LY.
CAPITAL SECURITIES
------------------
7. CAPITALIZATION. The following table sets the consolidated capitalization
--------------
of the Company as of November 30, 1997.
<PAGE>
Title of Class Amount Authorized Amount Outstanding
- ------------------ ------------------ ------------------
Common Stock 900,000,000 shares 570,000
$.10 par value
Preferred Stock, 200,000,000 shares none
no par value
The Company's Common Stock is entitled to one vote per share in the election
of directors and other matters, except that, generally, any shareowner, or
shareowners acting as a group, who beneficially own more than 10% of the
Company's voting stock are entitled to only one one-hundreth of a vote with
respect to each vote in excess of 10% of the voting power of the then-
outstanding shares of voting stock. The Common Stock does not have preemptive
or other right to subscribe to additional shares. The Preferred Stock does not
have voting rights.
<TABLE>
<CAPTION>
ACTUAL
---------------
(000'S OMITTED)
<S> <C>
LONG-TERM DEBT
8 3/8% debentures, due April 2020............................................................. $ 700,000
Commercial Paper.............................................................................. 592,786
5.50% Eurobond notes, due January 1999........................................................ 200,852
Industrial development bonds, Philadelphia Airport facilities, due December 2015.............. 100,000
Capital lease obligations, due 2007--2009..................................................... 558,743
3.25% 200 million Swiss Franc notes, due October 1999......................................... 166,000
6.875% 100 million Pound Sterling notes, due February 2000.................................... 165,503
6.625% EuroNotes, due April 2001.............................................................. 200,000
6.25% EuroNotes, due July 2000................................................................ 298,537
Installment notes, mortgages and bonds........................................................ 57,994
----------
Less current maturities..................................................................... 40,039
Less commercial paper to be repaid.......................................................... 70,000
----------
Total Long-Term Debt..................................................................... 2,930,376
----------
SHAREOWNERS' EQUITY
Preferred stock, no par value,
authorized 200,000,000 shares, none issued.................................................. ---
Common Stock, par value $.10 per share,
authorized 900,000,000 shares, outstanding 570,000,000 shares............................... 57,000
Additional paid-in capital.................................................................... 95,406
Retained earnings............................................................................. 6,130,145
Cumulative foreign currency adjustments....................................................... (67,640)
----------
Total Shareowners' Equity................................................................ 6,214,911
----------
$9,145,287
==========
</TABLE>
<PAGE>
INDENTURE SECURITIES
--------------------
8. ANALYSIS OF INDENTURE PROVISIONS. Insert at this point the analysis of
--------------------------------
indenture provisions required under Section 305(a)(2) of the Trust Indenture Act
of 1939, as amended.
For purposes of this Section 8, the "Indenture" shall refer to the
Indenture, dated as of December 18, 1997, by and between United Parcel Service
of America, Inc. and Citibank, N.A., as Trustee (the "Trustee"). Other
capitalized but otherwise undefined terms shall have the meanings ascribed
thereto in the Indenture or the Offering Circular.
(A) EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to New 2030
Debentures as being any one of the following events: (a) default in the payment
of any interest on the New 2030 Debentures when due, and the continuance of such
default for a period of 30 days; (b) default in the payment of principal of or
any premium on the New 2030 Debentures at the date on which such principal
becomes due and payable as provided in the Security or in the Indenture, whether
at the Stated Maturity or by declaration of acceleration, call for redemption or
otherwise; (c) default in the deposit of any sinking fund payment, when and as
due on the New 2030 Debentures; (d) default in the performance or breach of any
covenant or warranty a default in performance or breach of which is specifically
dealt with in the Indenture) and the continuance of such default or breach for a
period of 60 days after written notice as provided in the Indenture; or (e)
certain events involving bankruptcy, insolvency or reorganization.
The Indenture provides that if any Event of Default specified therein
shall occur and be continuing with respect to the New 2030 Debentures, other
than an Event of Default involving bankruptcy, insolvency or reorganization,
either the Trustee or the Holders of 25% in principal amount of the outstanding
New 2030 Debentures may declare the principal of the New 2030 Debentures to be
due and payable. If an Event of Default described in clause (e) above with
respect to the New 2030 Debentures at the time outstanding shall occur, the
principal amount of all of the New 2030 Debentures will automatically, and
without any action by the Trustee or any Holder, become immediately due and
payable. The Holders of a majority in aggregate principal amount of the New
2030 Debentures may, on behalf of all Holders of New 2030 Debentures, waive any
past default under the Indenture with respect to the New 2030 Debentures, except
a default (a) in the payment of principal of, or any premium or interest on, any
Security, and (b) in respect of a covenant or provision of the Indenture which
cannot be modified or amended without the consent of the Holder of each
outstanding Security.
No Holder of a Security will have any right to institute any proceeding
with respect to the Indenture, or for the appointment of a receiver or a
trustee, or for any other remedy thereunder, unless (i) such Holder has
previously given to the Trustee written notice of a continuing Event of Default
with respect to the New 2030 Debentures, (ii) the Holders of at least 25% in
aggregate principal amount of the Outstanding New 2030 Debentures has made
written request to the
<PAGE>
Trustee to institute such proceeding as Trustee (iii) the Holder or Holders have
offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request, (iv) the Trustee has
failed to institute such proceeding, and has not received from the Holders of a
majority in aggregate principal amount of the outstanding New 2030 Debentures a
direction inconsistent with such request, within 60 days after such notice,
request and offer. However, such limitations do not apply to a suit instituted
by a Holder of a Security for the enforcement of payment of the principal of or
any premium or interest on such Security on or after the applicable due date
specified in such Security.
(B) AUTHENTICATION AND DELIVERY
The New 2030 Debentures shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or one
of its Vice Presidents, under the Company's corporate seal reproduced thereon
and attested by the Secretary or one of the Assistant Secretaries. Upon proper
delivery of New 2030 Debentures to the Trustee for authentication, the Trustee
shall authenticate and deliver such securities. The Indenture does not contain
provisions regarding the application of the proceeds from issuance of the New
2030 Debentures.
(C) RELEASE OF PROPERTY SUBJECT TO LIEN
The Company's obligations under the New 2030 Debentures are not secured by
any liens or security interests on any assets of the Company. Accordingly, the
Indenture does not contain any provisions with respect to the release or the
release and substitution of any property subject to such a lien.
(D) SATISFACTION AND DISCHARGE
The Indenture shall cease to be of further effect, after certain
actions are taken, when (1) either: (i) all the New 2030 Debentures have been
delivered to the Trustee for cancellation, or (ii) all New 2030 Debentures have
(or will within one year) become due and payable or are to be redeemed within
one year, and the Company has deposited in trust funds sufficient to pay off and
discharge such outstanding New 2030 Debentures; (2) the Company has paid all
other sums required to be paid under the Indenture; and (3) the Company has
delivered an appropriate opinion of counsel.
(E) EVIDENCE OF COMPLIANCE WITH CONDITIONS AND COVENANTS
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year, a Certificate stating whether or not the Company has
fulfilled all its obligations under the Indenture throughout the year, and if a
default has occurred, providing details as to the circumstances of such
default(s). If one or more Events of Default occurs under the Indenture, the
Company shall also deliver to the Trustee a Certificate specifying such event or
other action within five Business Days of its occurrence.
<PAGE>
9. OTHER OBLIGORS. Give the name and complete mailing address of any person,
--------------
other than the applicant, who is an obligor upon the indenture securities.
No other person is an obligor with respect to the New 2030 Debentures.
CONTENTS OF APPLICATION FOR QUALIFICATION
-----------------------------------------
This application for qualification comprises:
(a) Pages numbered one to fourteen, consecutively;
(b) The statement of eligibility and qualification of the Trustee under
the Indenture to be qualified (on Form T-1);
(c) The following exhibits, in addition to those filed as a part of the
statement of eligibility and qualification of the trustee:
(i) Exhibit T3A -- The Company's Restated Certificate of
-----------
Incorporation (incorporated by reference to Exhibit 4(iv) to Form S-8
Registration Statement (Registration No. 33-19622);
(ii) Exhibit T3B -- The Company's Bylaws, as amended (incorporated by
-----------
reference to Current Report on Form 8-K, filed December 21, 1995;
(iii) Exhibit T3C -- Form of Indenture, dated as of December ___,
-----------
1997, by and between the Company and Citibank, N.A., as Trustee;
(iv) Exhibit T3D -- Not applicable;
-----------
*(v) Exhibit T3E.1 -- Offering Circular, dated as of December ___,
-------------
1997;
*(vi) Exhibit T3E.2 -- Letter of Transmittal, dated as of December
-------------
___, 1997;
(vii) Exhibit T3E.3 -- Form of Notice of Guaranteed Delivery, dated as
-------------
of December ___, 1997;
(viii) Exhibit T3F -- Cross-Reference Sheet;
-----------
(ix) Exhibit 99 -- Form T-1 of Citibank, N.A.
----------
* Filed Herewith
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Company, United Parcel Service of America, Inc., a corporation
organized and existing under the laws of the State of Delaware, has duly caused
Amendment No. 1 to this application to be signed on its behalf by the
undersigned, thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the city of Atlanta, and State of Georgia, on the 23rd day of
December, 1997.
(SEAL) UNITED PARCEL SERVICE OF AMERICA, INC.
By: /s/ Ned J. Winsor
------------------------------------
Name: Ned J. Winsor
----------------------------------
Title: Assistant Treasurer - Corporate
-------------------------------
Finance
-------
Attest: /s/ Catherine Harrison
-----------------------------
Name: Catherine Harrison
-------------------------------
Title:
------------------------------
<PAGE>
OFFERING CIRCULAR
- -----------------
UNITED PARCEL SERVICE OF AMERICA, INC.
OFFER TO EXCHANGE
DEBENTURES DUE 2030
FOR ANY AND ALL OF ITS OUTSTANDING
8 3/8% DEBENTURES DUE 2020
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON THURSDAY, JANUARY 22, 1998, UNLESS EXTENDED (THE
"EXPIRATION DATE").
United Parcel Service of America, Inc. (the "Company"), a Delaware
corporation, hereby offers, upon the terms and subject to the conditions set
forth in this Offering Circular (the "Offering Circular") and the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange an aggregate principal amount of up to $700,000,000 of its Debentures
Due 2030 (the "New 2030 Debentures") for a like principal amount of its issued
and outstanding 8 3/8% Debentures Due 2020 (the "Old 2020 Debentures") from
the registered holders (individually, a "Holder" and collectively, the
"Holders") thereof. The terms of the New 2030 Debentures are discussed in
"Comparison of Old 2020 Debentures and New 2030 Debentures" and "Description
of New 2030 Debentures". The New 2030 Debentures will evidence the same class
of debt as the Old 2020 Debentures and will be issued pursuant to, and
entitled to the benefits of, an Indenture (the "New Indenture"), dated as of
December 18, 1997, between the Company and Citibank, N.A. (the "New Trustee").
The Old 2020 Debentures were issued pursuant to, and are entitled to the
benefits of, an Indenture (the "Old Indenture"), dated as of December 1, 1989,
between the Company and The Chase Manhattan Bank (as successor to Chemical
Bank).
The Company will accept for exchange any and all Old 2020 Debentures validly
tendered and not withdrawn prior to the Expiration Date. Old 2020 Debentures
may be tendered only in denominations of $1,000. See "The Exchange Offer--
Procedures for Tendering Old 2020 Debentures". The Exchange Offer is subject
to certain customary conditions. See "The Exchange Offer--Conditions to the
Exchange Offer".
The New 2030 Debentures will constitute, and the Old 2020 Debentures
constitute, general unsecured obligations of the Company and the Old 2020
Debentures rank, and the New 2030 Debentures will rank, pari passu, with all
existing and future unsecured and unsubordinated senior indebtedness of the
Company.
(cover page continued on next page)
----------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED IN EVALUATING THE EXCHANGE OFFER.
----------------
THE OFFER OF THE SECURITIES CONTEMPLATED IN THE EXCHANGE OFFER IS MADE
PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SECTION 5 OF
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), PROVIDED BY
SECTION 3(A)(9) THEREOF AND, ACCORDINGLY, THE OFFER OF SUCH SECURITIES HAS
NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Offering Circular is December 18, 1997.
<PAGE>
(Continued from cover page)
The New 2030 Debentures will have the same interest rate as the Old 2020
Debentures until April 1, 2020, and, thereafter, the interest rate will be
calculated as provided herein. For the Old 2020 Debentures, a price (the
"Reference Price of the Old 2020 Debentures") will be determined using a
specified fixed spread pricing formula. Such Reference Price of the Old 2020
Debentures will be based on a yield (the "Reference Yield of the Old 2020
Debentures") to the maturity date of the Old 2020 Debentures equal to (i) the
yield (the "Benchmark Treasury Yield") on the 6 3/8% U.S. Treasury Note due
August 15, 2027 (the "Benchmark Treasury Security") plus (ii) 52 basis points
(the "2020 Fixed Spread"). For the New 2030 Debentures, a per annum interest
rate (the "Extension Coupon") will be determined for the period from April 1,
2020 to the maturity date, April 1, 2030. This Extension Coupon (expressed as
a percentage with two decimal places) will be such that the price of the New
2030 Debentures (the "Reference Price of the New 2030 Debentures") will be at
least $10.00 or greater than the Reference Price of the Old 2020 Debentures
per $1,000 principal amount thereof. Such Reference Price of the New 2030
Debentures will be based on a yield (the "Reference Yield of the New 2030
Debentures") to the maturity date of the New 2030 Debentures equal to (i) the
Benchmark Treasury Yield plus (ii) 60 basis points (the "2030 Fixed Spread").
For each $1,000 principal amount of Old 2020 Debentures exchanged, the Holder
thereof will receive $1,000 principal amount of New 2030 Debentures. The
Extension Coupon and the reference prices will be determined as of 2:00 p.m.,
New York City time, on the second business day prior to the Expiration Date
(the "Price Determination Date").
The purpose of the Exchange Offer is to take advantage of currently
available interest rates by exchanging a portion of the Company's long-term
debt portfolio upon terms which the Company believes are more beneficial to
it. The Company intends to accomplish this objective by extending the overall
maturity of a portion of its long-term debt portfolio.
Based on an interpretation by the staff of the Division of Corporation
Finance of the Securities and Exchange Commission (the "Commission"), the
Company believes that the New 2030 Debentures issued pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred by any
Holder thereof without compliance with the registration requirements of the
Securities Act.
The Company has not entered into any arrangement or understanding with any
person to distribute the New 2030 Debentures to be received in the Exchange
Offer and, to the best of the Company's information and belief, each person
participating in the Exchange Offer is acquiring the New 2030 Debentures in
the ordinary course of business and has no arrangement or understanding with
any person to participate in the distribution of the New 2030 Debentures.
The Company has made no arrangements for and has no understanding with any
dealer, salesman or other person regarding the solicitation of tenders
hereunder, and no person has been authorized by the Company to give any
information or to make any representations in connection with the Exchange
Offer other than those contained or incorporated by reference in this Offering
Circular and, if given or made, such other information or representations must
not be relied upon as having been authorized. Neither the delivery of this
Offering Circular nor the exchange of New 2030 Debentures for Old 2020
Debentures shall, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer.
The Exchange Agent and The Depository Trust Company ("DTC") have confirmed
that the Exchange Offer is eligible for the DTC Automated Tender Offer Program
("ATOP"). Accordingly, DTC participants may electronically transmit their
acceptance of the Exchange Offer by causing DTC to transfer Old 2020
Debentures to the Exchange Agent in accordance with DTC's ATOP procedures for
such a transfer. DTC will then send an Agent's Message (as defined herein) to
the Exchange Agent.
----------------
2
<PAGE>
NONE OF THE COMPANY, THE BOARD OF DIRECTORS OF THE COMPANY, THE INFORMATION
AGENT OR THE EXCHANGE AGENT MAKES ANY RECOMMENDATION TO HOLDERS OF THE OLD
2020 DEBENTURES AS TO WHETHER TO EXCHANGE OR REFRAIN FROM EXCHANGING THEIR OLD
2020 DEBENTURES. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF OLD 2020 DEBENTURES MUST MAKE THEIR OWN DECISION
WHETHER TO EXCHANGE OLD 2020 DEBENTURES PURSUANT TO THE EXCHANGE OFFER AND, IF
SO, THE AGGREGATE PRINCIPAL AMOUNT OF OLD 2020 DEBENTURES TO EXCHANGE.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT TENDERS
FOR EXCHANGE FROM, HOLDERS OF OLD 2020 DEBENTURES IN ANY
JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT
BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
3
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy 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, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549; as well as at the Regional Offices
of the Commission at 7 World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. 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. In addition, the Commission also maintains a
site on the World Wide Web at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission. The Company's common stock is not
listed on a national securities exchange or traded in the organized over-the-
counter markets.
The Company has instructed the Financial Advisor, the Exchange Agent and the
Information Agent not to solicit exchanges in connection with the Exchange
Offer or to make any recommendation with respect to acceptance or rejection of
the Exchange Offer. Solicitations will be made solely by employees of the
Company. The Financial Advisor, the Exchange Agent and the Information Agent
will answer any questions from Holders of the Old 2020 Debentures with respect
to the Exchange Offer solely by reference to the terms of this Offering
Circular and Holders may contact the Financial Advisor, the Exchange Agent and
the Information Agent at the addresses and telephone numbers listed below.
Holders of the Old 2020 Debentures who have any questions regarding the
mechanics of the Exchange Offer should contact either the Exchange Agent or
the Information Agent. In addition, all questions with respect to the Exchange
Offer may be directed to the Company (Ned J. Winsor, telephone number (404)
828-7199).
Financial Advisor Information Agent
DEUTSCHE MORGAN GRENFELL D.F. KING & CO., INC.
31 West 52nd Street 77 Water Street
New York, New York 10019 New York, New York 10005
(212) 469-7081 (Call Collect) (800) 859-8515
Exchange Agent
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
By UPS or Other
By Mail: Overnight Courier Delivery: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data Distribution, Inc. c/o Citicorp Data Distribution, Inc. Corporate Trust Window
P.O. Box 7072 404 Sette Drive 111 Wall Street, 5th Floor
Paramus, New Jersey 07653 Paramus, New Jersey 07652 New York, New York 10043
</TABLE>
Facsimile for Eligible Institutions:
(201) 262-3240
Facsimile Confirmation Only:
(800) 422-2077
For Information:
(800) 422-2077
4
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
(Commission File No. 0-4714) pursuant to the Exchange Act and are incorporated
herein by reference and made a part hereof: (a) the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 and (b) the Company's Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 1997, June 30,
1997 and September 30, 1997. In addition, the Company has filed a Form T-3,
dated December 18, 1997, pursuant to the Trust Indenture Act of 1939, which
Form T-3 includes a Form T-1 and the form of the New Indenture.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Offering Circular and
prior to the Expiration Date are deemed to be incorporated by reference herein
and shall be a part hereof from their respective filing dates.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Offering Circular to the extent that a statement
contained herein or therein, or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified and superseded shall
not be deemed, except as so modified or superseded, to constitute part of this
Offering Circular.
The Company will provide, without charge, to each person to whom a copy of
this Offering Circular is delivered, upon written or oral request, a copy of
any and all of the documents incorporated by reference in this Offering
Circular, other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into the documents that this Offering
Circular incorporates. Requests for copies of such documents, including the
Form T-3, should be directed to Ned J. Winsor, Manager-Corporate Finance,
United Parcel Service of America, Inc., 55 Glenlake Parkway, N.E., Atlanta,
Georgia 30328, telephone number (404) 828-6000. To ensure timely delivery of
the documents, any such request should be made by January 9, 1998.
5
<PAGE>
OFFERING CIRCULAR SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere, or incorporated by reference, in this Offering
Circular. See "Risk Factors" for a discussion of certain factors that should be
considered in connection with the Exchange Offer and the New 2030 Debentures
offered hereby.
THE COMPANY
The Company, through its subsidiaries, provides specialized transportation
and logistics services, primarily through the pickup and delivery of packages
and documents. Service is offered throughout the United States and in over 200
other countries and territories around the globe. In terms of both revenue and
volume, the Company is the largest package distribution company in the world,
with revenues of over $22 billion in 1996 generated by the delivery of more
than three billion packages and documents. The Company provides a daily pickup
service for over 1.4 million customers. The Company was originally organized in
the State of Washington in 1907 and was reincorporated in the State of Delaware
in 1930.
THE EXCHANGE OFFER
THE EXCHANGE OFFER: Pursuant to the Exchange Offer, the Company is
offering to any Holder to exchange, for any and
all of its Old 2020 Debentures an equal principal
amount of newly issued New 2030 Debentures.
The New 2030 Debentures will have the same
interest rate as the Old 2020 Debentures until
April 1, 2020, and, thereafter, the interest rate
will be calculated as provided herein. For the
Old 2020 Debentures, a Reference Price of the Old
2020 Debentures will be determined using a
specified fixed spread pricing formula. Such
Reference Price of the Old 2020 Debentures will
be based on the Reference Yield of the Old 2020
Debentures to the maturity date of the Old 2020
Debentures equal to (i) the Benchmark Treasury
Yield plus (ii) the 2020 Fixed Spread. For the
New 2030 Debentures, an Extension Coupon will be
determined for the period April 1, 2020 to the
maturity date, April 1, 2030. The Extension
Coupon (expressed as a percentage with two
decimal places) will be such that the Reference
Price of the New 2030 Debentures will be at least
$10.00 or greater than the Reference Price of the
Old 2020 Debentures per $1,000 principal amount
of the Old 2020 Debentures. Such Reference Price
of the New 2030 Debentures will be based on the
Reference Yield of the New 2030 Debentures to the
maturity date of the New 2030 Debentures equal to
(i) the Benchmark Treasury Yield plus (ii) the
2030 Fixed Spread. For each $1,000 principal
amount of Old 2020 Debentures exchanged in the
Exchange Offer, an exchanging Holder will receive
$1,000 principal amount of New 2030 Debentures.
The Extension Coupon and the reference prices
will be determined based on the Benchmark
Treasury Yield as of 2:00 p.m., New York City
time, on the Price Determination Date.
The New 2030 Debentures will be unsecured and
unsubordinated senior obligations of the Company
and will rank pari passu with all existing and
future unsecured and unsubordinated senior
6
<PAGE>
indebtedness of the Company and its subsidiaries.
The terms and conditions of the New 2030
Debentures will be similar to those that
currently apply to the Old 2020 Debentures.
Changes from the Old 2020 Debentures and the Old
Indenture, including an optional "make-whole"
redemption provision not found in the Old 2020
Debentures, are set forth below in the section
"Comparison of Old 2020 Debentures and New 2030
Debentures". See also "Description of New 2030
Debentures".
CALCULATIONS: The reference prices, reference yields, the
Benchmark Treasury Yield and the Extension Coupon
will be determined as set forth in the section
"The Exchange Offer--Calculations; Information"
and in Schedules A, B, C and D attached hereto.
INFORMATION: As soon as practicable after the Price
Determination Date, but in any event before 9:00
a.m., New York City time, on the following
business day, the Company will publicly announce
by press release to the Dow Jones News Service:
the Benchmark Treasury Yield, the Reference Yield
of the Old 2020 Debentures, the Reference Price
of the Old 2020 Debentures, the Reference Yield
of the New 2030 Debentures, the Extension Coupon
and the Reference Price of the New 2030
Debentures.
During the term of the Exchange Offer, Holders of
the Old 2020 Debentures can obtain current
information regarding the Benchmark Treasury
Yield, reference yields, reference prices and
other information regarding the terms of the
Exchange Offer from the Financial Advisor at
(212) 469-7081 (call collect). In addition, the
Company intends to publish information about the
Exchange Offer, including the information
described in the preceding paragraph when
available, on MCM "CorporateWatch" Service on
Telerate page 41933.
OLD 2020 DEBENTURES
OUTSTANDING: As of the date hereof, $700,000,000 aggregate
principal amount of Old 2020 Debentures are
outstanding.
CONDITIONS TO THE EXCHANGE
OFFER: Consummation of the Exchange Offer is conditioned
upon certain customary conditions described
herein. The Company may, in its sole discretion,
waive any condition with respect to the Exchange
Offer and accept for exchange any Old 2020
Debentures tendered. See "The Exchange Offer--
Conditions to the Exchange Offer".
EXPIRATION AND AMENDMENTS: The Exchange Offer will expire at 5:00 p.m., New
York City time, on Thursday, January 22, 1998 or
at such later time and date to which the Exchange
Offer may be extended by the Company in
accordance with the procedures described herein.
See "The Exchange Offer--Expiration Date;
Extensions; Termination; Amendments".
7
<PAGE>
CERTAIN U.S. FEDERAL INCOME
TAX CONSEQUENCES: In the opinion of counsel to the Company, the
exchange of Old 2020 Debentures pursuant to the
Exchange Offer will constitute a recapitalization
for U.S. federal income tax purposes, and a
Holder of Old 2020 Debentures that tenders
pursuant to the Exchange Offer generally will
recognize no gain or loss upon the exchange of
Old 2020 Debentures for New 2030 Debentures. See
"Certain U.S. Federal Income Tax Consequences".
CERTAIN CONSEQUENCES OF THE
EXCHANGE OFFER: In deciding whether to participate in the
Exchange Offer, each Holder should consider
carefully, in addition to the other information
contained in this Offering Circular, the
information set forth under the captions
"Description of New 2030 Debentures" and "Risk
Factors".
TENDER OF OLD 2020
DEBENTURES: To tender Old 2020 Debentures, Holders must
deliver their Old 2020 Debentures together with a
properly completed and duly executed Letter of
Transmittal to the Exchange Agent or the
procedures for book-entry transfer must be used.
If Old 2020 Debentures are held by a broker,
dealer, commercial bank, trust company or other
nominee (individually, a "Custodian" and
collectively, the "Custodians"), the beneficial
owner thereof must instruct such Custodian to
tender such Old 2020 Debentures on their behalf.
All tenders must be made on or prior to the
Expiration Date. See "The Exchange Offer--
Procedures for Tendering Old 2020 Debentures".
New 2030 Debentures will be delivered only in
book-entry form through DTC. Accordingly, Holders
who anticipate tendering and whose Old 2020
Debentures are not held through DTC are urged to
contact promptly a Custodian that has the
capability to hold securities through DTC, to
arrange for receipt of any New 2030 Debentures to
be delivered pursuant to the Exchange Offer and
to obtain the information necessary to provide
the required DTC participant and account
information in the relevant Letter of
Transmittal. See "The Exchange Offer--Proper
Execution and Delivery of Letter of Transmittal".
GUARANTEED DELIVERY: Holders of Old 2020 Debentures who wish to tender
their Old 2020 Debentures and who cannot deliver
their Old 2020 Debentures or the Letter of
Transmittal to the Exchange Agent, Citibank,
N.A., prior to the Expiration Date, or if the
procedures for book-entry transfer cannot be
completed on a timely basis, must tender their
Old 2020 Debentures according to the guaranteed
delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures".
ACCEPTANCE OF OLD 2020
DEBENTURES AND DELIVERY OF
NEW 2030 DEBENTURES: Subject to satisfaction or waiver of the
conditions to the Exchange Offer, the Company
will exchange (and thereby purchase) any and all
Old 2020 Debentures that are properly tendered
and not withdrawn prior to the Expiration Date.
New 2030 Debentures will be delivered only in
book-entry form through DTC. New 2030 Debentures
will be delivered on the fifth business day
following the Expiration Date (the "Exchange
Date"). See "The Exchange Offer
8
<PAGE>
--Acceptance of Old 2020 Debentures Tendered for
Exchange; Delivery of New 2030 Debentures".
WITHDRAWAL RIGHTS: Tenders of Old 2020 Debentures may be withdrawn
at any time prior to the Expiration Date.
Withdrawal of tendered Old 2020 Debentures will
be deemed a rejection of the Exchange Offer. See
"The Exchange Offer--Withdrawal Rights".
ABSENCE OF DISSENTERS'
RIGHTS: Holders of Old 2020 Debentures do not have any
appraisal or dissenters' rights under the
Delaware General Corporation Law or the Old
Indenture. See "The Exchange Offer--Absence of
Dissenters' Rights".
EXCHANGE AGENT: Citibank, N.A.
c/o Citicorp Data Distribution, Inc.
P.O. Box 7072
Paramus, New Jersey 07653
(800) 422-2077
INFORMATION AGENT: D.F. King & Co., Inc. 77 Water Street New York,
New York 10005 (800) 859-8515
9
<PAGE>
THE NEW 2030 DEBENTURES
ISSUER: The Company.
INDENTURE: The New 2030 Debentures will be issued under the
New Indenture.
INTEREST: Interest will accrue on the New 2030 Debentures
from the last interest payment date on the Old
2020 Debentures. Interest will be paid each April
1 and October 1, commencing April 1, 1998.
RATING: As of the date hereof, the Company's debt
securities, including the Old 2020 Debentures,
are rated Aaa by Moody's Investors Service, Inc.
("Moody's") and AAA by Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies
("S&P"). The Company expects that the New 2030
Debentures will receive ratings equivalent to
those assigned from time to time to the Old 2020
Debentures. A security rating is not a
recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at
any time by the assigning rating agency.
RANKING: The New 2030 Debentures will be unsecured
unsubordinated senior obligations of the Company
and will rank pari passu with all existing and
future unsecured and unsubordinated indebtedness
of the Company.
FORM: The New 2030 Debentures will be available only in
book-entry form through DTC.
OPTIONAL REDEMPTION: The New 2030 Debentures may be redeemed at any
time and from time to time prior to maturity, at
the option of the Company, subject to a "make-
whole" provision.
COVENANTS: The New Indenture contains restrictions on
secured indebtedness and sale and leaseback
transactions.
USE OF PROCEEDS: The New 2030 Debentures will be issued only in
exchange for the Old 2020 Debentures. The Company
will not receive any cash proceeds from the
issuance of the New 2030 Debentures.
10
<PAGE>
COMPARISON OF OLD 2020 DEBENTURES AND NEW 2030 DEBENTURES
The following is a brief comparison of the principal features of the Old 2020
Debentures and the New 2030 Debentures. The following descriptions are brief
summaries, do not purport to be complete and are qualified in their entirety by
reference, with respect to the Old 2020 Debentures, to the Old 2020 Debentures
and the Old Indenture and, with respect to the New 2030 Debentures, to the New
2030 Debentures and the New Indenture. For further information regarding the
New 2030 Debentures and for definitions of capitalized terms used with respect
to the New 2030 Debentures but not otherwise defined herein, see "Description
of New 2030 Debentures."
<TABLE>
<CAPTION>
OLD 2020 DEBENTURES NEW 2030 DEBENTURES
------------------------------ ------------------------------
<S> <C> <C>
OBLIGOR: The Company. The Company.
TRUSTEE: The Chase Manhattan Bank Citibank, N.A.
(f/k/a Chemical Bank).
AGGREGATE PRINCIPAL AMOUNT: Up to $700,000,000. Up to $700,000,000.
MATURITY: April 1, 2020 ("2020"). April 1, 2030 ("2030").
INTEREST RATE TO 2020: 8 3/8% per annum. 8 3/8% per annum.
INTEREST RATE FROM
2020 TO 2030: N.A. As provided herein.
INTEREST PAYMENT DATES: April 1 and October 1. April 1 and October 1.
RATING: As of the date hereof, the Old As of the date hereof, the
2020 Debentures are rated Aaa Company's debt securities are
by Moody's and AAA by S&P. rated Aaa by Moody's and AAA
by S&P. The Company expects
that the New 2030 Debentures
will receive ratings
equivalent to those assigned
from time to time to the Old
2020 Debentures.
RANKING: The Old 2020 Debentures are The New 2030 Debentures will
unsecured and unsubordinated be unsecured and
general obligations of the unsubordinated general
Company, and rank pari passu obligations of the Company and
with all existing and future will rank pari passu with all
unsecured and unsubordinated existing and future unsecured
indebtedness of the Company. and unsubordinated
indebtedness of the Company.
OPTIONAL REDEMPTION: The Old 2020 Debentures are The New 2030 Debentures will
not subject to redemption be redeemable at any time and
prior to maturity. from time to time prior to
maturity, at the option of the
Company, subject to a "make-
whole" provision.
SINKING FUND: None. None.
SECURITY: None. None.
CHANGE OF CON- The Company is not required to The Company will not be
TROL: repurchase the Old 2020 required to repurchase the New
Debentures upon a change of 2030 Debentures upon a change
control of the Company. of control of the Company.
</TABLE>
11
<PAGE>
<TABLE>
OLD 2020 DEBENTURES NEW 2030 DEBENTURES
------------------------------ ------------------------------
<S> <C> <C>
CERTAIN
COVENANTS The Old 2020 Debentures The New 2030 Debentures will
restrict, among other things, restrict, among other things,
the ability of the Company and the ability of the Company and
certain subsidiaries to (i) certain subsidiaries to (i)
incur certain secured incur certain secured
indebtedness, and (ii) engage indebtedness, and (ii) engage
in sale and lease-back in sale and lease-back
transactions. Compliance with transactions. Compliance with
such covenants may be waived such covenants may be waived
by a majority vote of by a majority vote of
outstanding securities. outstanding securities.
CONSOLIDATION,
MERGER AND ASSET
SALES: The Company may not The Company may not
consolidate, merge or sell all consolidate, merge or sell all
or substantially all of its or substantially all of its
assets, unless (i) the Company assets, unless (i) the Company
shall continue to be the shall continue to be the
obligor or the successor obligor or the successor
corporation assumes the corporation assumes the
Company's obligations under Company's obligations under
the Old 2020 Debentures, (ii) the New 2030 Debentures, (ii)
immediately thereafter no immediately thereafter no
event of default with respect event of default with respect
to the Old 2020 Debentures to the New 2030 Debentures
shall have occurred and be shall have occurred and be
continuing and (iii) certain continuing and (iii) certain
other conditions are other conditions are
satisfied. satisfied.
EVENTS OF
DEFAULT Failure to pay principal when Failure to pay principal when
due; failure to pay interest due; failure to pay interest
for 30 days; failure to for 30 days; failure to
perform, or breach of, any perform, or breach of, any
other covenant or warranty other covenant or warranty
continued for 90 days continued for 90 days
following notice; and certain following notice; and certain
bankruptcy and insolvency bankruptcy and insolvency
events. events.
</TABLE>
12
<PAGE>
RISK FACTORS
In deciding whether to participate in the Exchange Offer, each Holder should
consider carefully, in addition to the other information contained in the
Offering Circular, the factors listed below.
CERTAIN CONSIDERATIONS FOR TENDERING AND NON-TENDERING HOLDERS
To the extent that Old 2020 Debentures are tendered and purchased in the
Exchange Offer and the number of Old 2020 Debentures is decreased, the trading
market for the Old 2020 Debentures could become more limited. A debt security
with a smaller outstanding principal amount available for trading (a "smaller
float") may command a lower price than would a comparable debt security with a
larger float. Therefore, the market price for the Old 2020 Debentures not
tendered or not purchased may be adversely affected to the extent that the
principal amount of Old 2020 Debentures tendered reduces the float. Depending
upon, among other things, the amount of Old 2020 Debentures outstanding after
the Exchange Offer, the trading market for the Old 2020 Debentures may be more
limited which may, therefore, adversely affect the liquidity and market price
of the Old 2020 Debentures. Similarly, depending upon, among other things, the
amount of New 2030 Debentures outstanding after the Exchange Offer, the
trading market for the New 2030 Debentures may be limited which may,
therefore, adversely affect the liquidity and market price of the New 2030
Debentures.
The trading market for the Old 2020 Debentures not tendered and purchased
pursuant to the Exchange Offer and the New 2030 Debentures issued by the
Company pursuant to the Exchange Offer will, in each case, depend upon, among
other things, the principal amount outstanding after the consummation of the
Exchange Offer, the number of debentureholders and the interest in maintaining
a market in the securities on the part of securities firms.
TERMS OF THE NEW 2030 DEBENTURES
The New 2030 Debentures will be issued under the New Indenture. The New
Indenture will contain covenants and other terms similar to those that
currently apply to the Old 2020 Debentures. However, the New 2030 Debentures,
unlike the Old 2020 Debentures, may be redeemed at any time and from time to
time prior to maturity at the option of the Company subject to a "make-whole"
provision. See "Comparison of Old 2020 Debentures and New 2030 Debentures" and
"Description of New 2030 Debentures".
13
<PAGE>
BUSINESS OF THE COMPANY
The Company, through its subsidiaries, provides specialized transportation
and logistics services, primarily through the pickup and delivery of packages
and documents. Service is offered throughout the United States and over 200
other countries and territories around the globe. In terms of both revenue and
volume, the Company is the largest package distribution company in the world,
with revenues of over $22 billion in 1996 generated by the delivery of more
than three billion packages and documents. The Company provides a daily pickup
service for over 1.4 million customers.
With minor exceptions, the Company's Common Stock, $.10 par value per share
(the "Common Stock"), is owned by or held for the benefit of its active
employees and their families, former employees and their estates or heirs,
charitable foundations established by the Company's founders and their family
members or by other charitable organizations that acquired stock by donations
from shareowners or from the Company itself. The Company's Common Stock is not
listed on a national securities exchange or traded in the organized over-the-
counter markets.
The Company was originally organized in the State of Washington in 1907 and
was reincorporated in the State of Delaware in 1930.
14
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended December 31, 1996 are derived from audited financial statements
of the Company. The selected financial data for the nine months ended
September 30, 1997 and 1996 are derived from unaudited financial statements.
In the opinion of management, the unaudited financial statements include all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position as of September 30, 1997 and 1996, and
the results of operations for the nine months ended September 30, 1997 and
1996.
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
---------------- -------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED INCOME
STATEMENT DATA
Revenue................. $16,320 $16,428 $22,368 $21,045 $19,576 $17,782 $16,519
Operating expenses...... (15,262) (14,867) (20,339) (19,251) (18,020) (16,324) (15,241)
Interest income......... 47 28 39 26 13 20 22
Interest expense........ (135) (64) (95) (77) (29) (34) (42)
Miscellaneous, net...... (16) (25) (63) (35) 35 (12) 11
Income taxes............ (396) (600) (764) (665) (632) (622) (504)
------- ------- ------- ------- ------- ------- -------
Income before cumulative
effect of a change in
accounting principle... 558 900 1,146 1,043 943 810 765
Cumulative effect of a
change in the method of
accounting for
postretirement benefits
other than pensions.... -- -- -- -- -- -- (249)
------- ------- ------- ------- ------- ------- -------
Net income.......... $ 558 $ 900 $ 1,146 $ 1,043 $ 943 $ 810 $ 516
======= ======= ======= ======= ======= ======= =======
Percent of revenue
after cumulative
effect of a change in
accounting principle. 3.4% 5.5% 5.1% 5.0% 4.8% 4.6% 3.1%
======= ======= ======= ======= ======= ======= =======
Per share amounts:
Income before
cumulative effect of
a change in
accounting principle. $ 0.98 $ 1.58 $ 2.01 $ 1.83 $ 1.63 $ 1.40 $ 1.29
======= ======= ======= ======= ======= ======= =======
Cumulative effect of a
change in the method
of accounting for
postretirement
benefits other than
pensions............. -- -- -- -- -- -- (0.42)
------- ------- ------- ------- ------- ------- -------
Net income per
share.............. $ 0.98 $ 1.58 $ 2.01 $ 1.83 $ 1.63 $ 1.40 $ 0.87
======= ======= ======= ======= ======= ======= =======
Dividends per share. $ 0.35 $ 0.33 $ 0.68 $ 0.64 $ 0.55 $ 0.50 $ 0.50
======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------- -------------------------------------
1997 1996 1995 1994 1993 1992
------------- ------- ------- ------- ------ ------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET
DATA
Working capital......... $ 1,458 $ 1,097 $ 261 $ 120 $ 4 $ 62
======= ======= ======= ======= ====== ======
Long-term debt.......... $ 2,885 $ 2,573 $ 1,729 $ 1,127 $ 852 $ 862
======= ======= ======= ======= ====== ======
Total assets............ $16,783 $14,954 $12,645 $11,182 $9,574 $9,038
======= ======= ======= ======= ====== ======
</TABLE>
15
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of September 30, 1997. Except as noted below, since September 30,
1997, there has been no material change in the consolidated capitalization and
indebtedness of the Company.
<TABLE>
<CAPTION>
ACTUAL
----------
(IN
MILLIONS)
<S> <C>
LONG-TERM DEBT
8 3/8% Debentures, due April 2020.................................. $ 700,000
Commercial Paper................................................... 1,423,608
5.50% Eurobond notes, due January 1999............................. 200,979
Industrial development bonds, Philadelphia Airport facilities, due
December 2015..................................................... 100,000
Capital lease obligations, due 2007-2009........................... 500,871
3.25% 200 million Swiss Franc notes, due October 1999.............. 166,000
6.875% 100 million Pound Sterling notes, due February 2000......... 165,503
6.625% EuroNotes, due April 2001................................... 200,000
6.25% EuroNotes, due July 2000..................................... 298,537
Installment notes, mortgages and bonds............................. 63,413
----------
Less current maturities.......................................... 33,563
Less commercial paper to be repaid............................... 900,000
----------
Total Long-Term Debt........................................... 2,885,348
----------
SHAREOWNERS' EQUITY
Preferred Stock, no par value,
authorized 200,000,000 shares, none issued........................ --
Common Stock, par value $.10 per share,
authorized 900,000,000 shares, outstanding 570,000,000............ 57,000
Additional paid-in capital......................................... 95,420
Retained earnings.................................................. 6,091,765
Cumulative foreign currency adjustments............................ (61,651)
----------
Total Shareowners' Equity...................................... 6,182,534
----------
Total Long-term Debt and Shareowners' Equity................... $9,067,882
==========
</TABLE>
In July 1997, the Company's European Medium-Term Note Program was amended to
increase the borrowing capacity from $500 million to $1 billion. Currently,
$500 million is outstanding under this Program.
During the second quarter, the Company increased its commercial paper
borrowing limits from $1.5 billion to $2.0 billion. As of September 30, 1997,
the Company had a $1.424 billion commercial paper balance outstanding. Since
the Company does not have the intent to refinance the full commercial paper
balance outstanding at September 30, 1997, $900 million has been reclassified
as a short-term liability. At September 30, 1997, the Company had bank
revolving credit facilities available of $4.5 billion. These facilities were
reduced to $2.5 billion on October 30, 1997.
16
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The purpose of the Exchange Offer is to take advantage of currently
available interest rates by exchanging a portion of the Company's long-term
debt portfolio upon terms which the Company believes are more beneficial to
it. The Company intends to accomplish this objective by extending the overall
maturity of a portion of its long-term debt portfolio.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Offering
Circular and the accompanying Letter of Transmittal, the Company is making the
Exchange Offer, pursuant to which it is offering to exchange $1,000 principal
amount of the Company's New 2030 Debentures for each $1,000 principal amount
of the Company's Old 2020 Debentures.
The New 2030 Debentures will have the same interest rate as the Old 2020
Debentures until April 1, 2020, and, thereafter, the interest rate will be
calculated as provided herein. For the Old 2020 Debentures, a Reference Price
of the Old 2020 Debentures will be determined using a specified fixed spread
pricing formula. Such Reference Price of the Old 2020 Debentures will be based
on the Reference Yield of the Old 2020 Debentures to the maturity date of the
Old 2020 Debentures equal to (i) the Benchmark Treasury Yield plus (ii) the
2020 Fixed Spread. For the New 2030 Debentures, an Extension Coupon will be
determined for the period April 1, 2020 to the maturity date, April 1, 2030.
The Extension Coupon (expressed as a percentage with two decimal places) will
be such that the Reference Price of the New 2030 Debentures will be at least
$10.00 or greater than the Reference Price of the Old 2020 Debentures per
$1,000 principal amount of the Old 2020 Debentures. Such Reference Price of
the New 2030 Debentures will be based on the Reference Yield of the New 2030
Debentures to the maturity date of the New 2030 Debentures equal to (i) the
Benchmark Treasury Yield plus (ii) the 2030 Fixed Spread. For each $1,000
principal amount of Old 2020 Debentures exchanged in the Exchange Offer, an
exchanging Holder will receive $1,000 principal amount of New 2030 Debentures.
The Extension Coupon and Reference Prices will be determined based on the
Benchmark Treasury Yield as of 2:00 p.m., New York City time, on the Price
Determination Date.
SUMMARY OF TERMS: The following is a summary of certain defined terms used
in describing the Exchange Offer.
BENCHMARK TREASURY SECURITY: means the 6 3/8% U.S. Treasury Note due August
15, 2027.
BENCHMARK TREASURY YIELD: means, on the Price Determination Date, the yield
on the Benchmark Treasury Security (expressed as a percentage with two decimal
points).
EXPIRATION DATE: means 5:00 p.m., New York City time, on Thursday, January
22, 1998, unless the Exchange Offer is extended.
EXCHANGE DATE: means the date five business days following the Expiration
Date on which New 2030 Debentures will be delivered pursuant to the Exchange
Offer. The Exchange Date is Thursday, January 29, 1998, unless the Expiration
Date is extended.
EXTENSION COUPON: means, for the New 2030 Debentures, the per annum interest
rate (expressed as a percentage with two decimal places) paid on such New 2030
Debentures from the period April 1, 2020 to the maturity date, April 1, 2030.
The Extension Coupon will be set such that for any Benchmark Treasury Yield,
on the Price Determination Date, the differential in reference prices between
the New 2030 Debentures and the Old 2020 Debentures will be at least $10.00 or
greater per $1,000 principal amount of the Old 2020 Debentures.
PRICE DETERMINATION DATE: means 2:00 p.m., New York City time, on the second
business day prior to the Expiration Date.
REFERENCE PRICE OF THE OLD 2020 DEBENTURES: means the price per $1,000
principal amount of the Old 2020 Debentures, determined in accordance with
standard market practice as described in Schedule A. Such price will be based
on the Reference Yield of the Old 2020 Debentures to the maturity date of
April 1, 2020.
17
<PAGE>
REFERENCE YIELD OF THE OLD 2020 DEBENTURES: means, on the Price
Determination Date, the sum of the Benchmark Treasury Yield and the 2020 Fixed
Spread.
REFERENCE PRICE OF THE NEW 2030 DEBENTURES: means the price per $1,000
principal amount of the New 2030 Debentures, determined in accordance with
standard market practice as described in Schedule C. Such price will be based
on the Reference Yield of the New 2030 Debentures to the maturity date of
April 1, 2020 and on the Extension Coupon.
REFERENCE YIELD OF THE NEW 2030 DEBENTURES: means, at the Price
Determination Date, the sum of the Benchmark Treasury Yield and the 2030 Fixed
Spread.
2020 FIXED SPREAD: means 0.52% (fifty-two basis points).
2030 FIXED SPREAD: means 0.60% (sixty basis points).
ILLUSTRATIVE EXAMPLE AND FORMULAS. The following is a table that applies
(i) the formulas to be used to determine the reference prices for the Old 2020
Debentures and New 2030 Debentures and (ii) the applicable fixed spread
pursuant to which a reference price for the Old 2020 and New 2030 Debentures
will be determined for any given Benchmark Treasury Yield and Extension Coupon
assuming an Exchange Date of January 29, 1998 (which will be the Exchange Date
unless the Exchange Offer is extended). Set forth in Schedule A and Schedule C
hereto is the methodology used to determine the reference prices in the
following table. Schedule B and Schedule D provide illustrative examples of
the calculation of such reference prices.
The following table sets forth the (i) Reference Yield of the Old 2020
Debentures, (ii) Reference Price of the Old 2020 Debentures, (iii) Reference
Yield of the New 2030 Debentures, (iv) Extension Coupon, (v) Reference Price
of the New 2030 Debentures and (vi) the price differential between the
Reference Price of the New 2030 Debentures and the Reference Price of the Old
2020 Debentures (the "Price Differential") if the Benchmark Treasury Yield on
the Price Determination Date is between 5.50% and 6.50%.
<TABLE>
<CAPTION>
REFERENCE REFERENCE REFERENCE REFERENCE
BENCHMARK YIELD OF THE PRICE OF THE YIELD OF THE PRICE OF THE
TREASURY OLD 2020 OLD 2020 NEW 2030 EXTENSION NEW 2030 PRICE
YIELD DEBENTURES DEBENTURES DEBENTURES COUPON DEBENTURES DIFFERENTIAL
- --------- ------------ ------------ ------------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
5.50% 6.02% $1,286.04 6.10% 7.21% $1,296.08 $10.05
5.51% 6.03% $1,284.57 6.11% 7.22% $1,294.58 $10.01
5.52% 6.04% $1,283.11 6.12% 7.24% $1,293.28 $10.17
5.53% 6.05% $1,281.65 6.13% 7.25% $1,291.78 $10.13
5.54% 6.06% $1,280.20 6.14% 7.26% $1,290.29 $10.09
5.55% 6.07% $1,278.74 6.15% 7.27% $1,288.80 $10.06
5.56% 6.08% $1,277.29 6.16% 7.28% $1,287.31 $10.02
5.57% 6.09% $1,275.84 6.17% 7.30% $1,286.02 $10.17
5.58% 6.10% $1,274.40 6.18% 7.31% $1,284.53 $10.14
5.59% 6.11% $1,272.95 6.19% 7.32% $1,283.05 $10.10
5.60% 6.12% $1,271.51 6.20% 7.33% $1,281.57 $10.06
5.61% 6.13% $1,270.07 6.21% 7.34% $1,280.10 $10.02
5.62% 6.14% $1,268.64 6.22% 7.36% $1,278.81 $10.18
5.63% 6.15% $1,267.20 6.23% 7.37% $1,277.34 $10.14
5.64% 6.16% $1,265.77 6.24% 7.38% $1,275.87 $10.10
5.65% 6.17% $1,264.34 6.25% 7.39% $1,274.40 $10.07
5.66% 6.18% $1,262.91 6.26% 7.40% $1,272.94 $10.03
5.67% 6.19% $1,261.49 6.27% 7.42% $1,271.66 $10.18
5.68% 6.20% $1,260.06 6.28% 7.43% $1,270.20 $10.14
5.69% 6.21% $1,258.64 6.29% 7.44% $1,268.75 $10.10
5.70% 6.22% $1,257.23 6.30% 7.45% $1,267.29 $10.07
5.71% 6.23% $1,255.81 6.31% 7.46% $1,265.84 $10.03
5.72% 6.24% $1,254.40 6.32% 7.48% $1,264.57 $10.18
5.73% 6.25% $1,252.99 6.33% 7.49% $1,263.13 $10.14
5.74% 6.26% $1,251.58 6.34% 7.50% $1,261.68 $10.10
5.75% 6.27% $1,250.17 6.35% 7.51% $1,260.24 $10.07
5.76% 6.28% $1,248.77 6.36% 7.52% $1,258.80 $10.03
5.77% 6.29% $1,247.37 6.37% 7.54% $1,257.54 $10.18
5.78% 6.30% $1,245.97 6.38% 7.55% $1,256.11 $10.14
5.79% 6.31% $1,244.57 6.39% 7.56% $1,254.67 $10.10
5.80% 6.32% $1,243.18 6.40% 7.57% $1,253.24 $10.06
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
REFERENCE REFERENCE REFERENCE REFERENCE
BENCHMARK YIELD OF THE PRICE OF THE YIELD OF THE PRICE OF THE
TREASURY OLD 2020 OLD 2020 NEW 2030 EXTENSION NEW 2030 PRICE
YIELD DEBENTURES DEBENTURES DEBENTURES COUPON DEBENTURES DIFFERENTIAL
- --------- ------------ ------------ ------------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
5.81% 6.33% $1,241.78 6.41% 7.58% $1,251.81 $10.03
5.82% 6.34% $1,240.39 6.42% 7.60% $1,250.56 $10.17
5.83% 6.35% $1,239.01 6.43% 7.61% $1,249.14 $10.13
5.84% 6.36% $1,237.62 6.44% 7.62% $1,247.72 $10.10
5.85% 6.37% $1,236.24 6.45% 7.63% $1,246.30 $10.06
5.86% 6.38% $1,234.86 6.46% 7.64% $1,244.88 $10.02
5.87% 6.39% $1,233.48 6.47% 7.66% $1,243.64 $10.16
5.88% 6.40% $1,232.10 6.48% 7.67% $1,242.23 $10.13
5.89% 6.41% $1,230.73 6.49% 7.68% $1,240.82 $10.09
5.90% 6.42% $1,229.36 6.50% 7.69% $1,239.41 $10.05
5.91% 6.43% $1,227.99 6.51% 7.70% $1,238.00 $10.02
5.92% 6.44% $1,226.62 6.52% 7.72% $1,236.78 $10.16
5.93% 6.45% $1,225.25 6.53% 7.73% $1,235.37 $10.12
5.94% 6.46% $1,223.89 6.54% 7.74% $1,233.98 $10.08
5.95% 6.47% $1,222.53 6.55% 7.75% $1,232.58 $10.05
5.96% 6.48% $1,221.17 6.56% 7.76% $1,231.18 $10.01
5.97% 6.49% $1,219.82 6.57% 7.78% $1,229.96 $10.15
5.98% 6.50% $1,218.46 6.58% 7.79% $1,228.57 $10.11
5.99% 6.51% $1,217.11 6.59% 7.80% $1,227.19 $10.07
6.00% 6.52% $1,215.76 6.60% 7.81% $1,225.80 $10.04
6.01% 6.53% $1,214.42 6.61% 7.82% $1,224.42 $10.00
6.02% 6.54% $1,213.07 6.62% 7.84% $1,223.21 $10.14
6.03% 6.55% $1,211.73 6.63% 7.85% $1,221.83 $10.10
6.04% 6.56% $1,210.39 6.64% 7.86% $1,220.45 $10.06
6.05% 6.57% $1,209.05 6.65% 7.87% $1,219.08 $10.03
6.06% 6.58% $1,207.72 6.66% 7.89% $1,217.87 $10.16
6.07% 6.59% $1,206.38 6.67% 7.90% $1,216.50 $10.12
6.08% 6.60% $1,205.05 6.68% 7.91% $1,215.14 $10.09
6.09% 6.61% $1,203.72 6.69% 7.92% $1,213.77 $10.05
6.10% 6.62% $1,202.39 6.70% 7.93% $1,212.41 $10.01
6.11% 6.63% $1,201.07 6.71% 7.95% $1,211.21 $10.14
6.12% 6.64% $1,199.75 6.72% 7.96% $1,209.85 $10.11
6.13% 6.65% $1,198.43 6.73% 7.97% $1,208.50 $10.07
6.14% 6.66% $1,197.11 6.74% 7.98% $1,207.14 $10.04
6.15% 6.67% $1,195.79 6.75% 7.99% $1,205.79 $10.00
6.16% 6.68% $1,194.48 6.76% 8.01% $1,204.60 $10.13
6.17% 6.69% $1,193.16 6.77% 8.02% $1,203.26 $10.09
6.18% 6.70% $1,191.85 6.78% 8.03% $1,201.91 $10.06
6.19% 6.71% $1,190.55 6.79% 8.04% $1,200.57 $10.02
6.20% 6.72% $1,189.24 6.80% 8.06% $1,199.39 $10.15
6.21% 6.73% $1,187.94 6.81% 8.07% $1,198.05 $10.11
6.22% 6.74% $1,186.64 6.82% 8.08% $1,196.71 $10.07
6.23% 6.75% $1,185.34 6.83% 8.09% $1,195.38 $10.04
6.24% 6.76% $1,184.04 6.84% 8.11% $1,194.20 $10.16
6.25% 6.77% $1,182.75 6.85% 8.12% $1,192.87 $10.13
6.26% 6.78% $1,181.45 6.86% 8.13% $1,191.54 $10.09
6.27% 6.79% $1,180.16 6.87% 8.14% $1,190.22 $10.05
6.28% 6.80% $1,178.87 6.88% 8.15% $1,188.89 $10.02
6.29% 6.81% $1,177.59 6.89% 8.17% $1,187.73 $10.14
6.30% 6.82% $1,176.30 6.90% 8.18% $1,186.41 $10.11
6.31% 6.83% $1,175.02 6.91% 8.19% $1,185.09 $10.07
6.32% 6.84% $1,173.74 6.92% 8.20% $1,183.77 $10.03
6.33% 6.85% $1,172.46 6.93% 8.21% $1,182.46 $10.00
6.34% 6.86% $1,171.19 6.94% 8.23% $1,181.31 $10.12
6.35% 6.87% $1,169.91 6.95% 8.24% $1,180.00 $10.08
6.36% 6.88% $1,168.64 6.96% 8.25% $1,178.69 $10.05
6.37% 6.89% $1,167.37 6.97% 8.26% $1,177.38 $10.01
6.38% 6.90% $1,166.10 6.98% 8.28% $1,176.24 $10.13
6.39% 6.91% $1,164.84 6.99% 8.29% $1,174.93 $10.10
6.40% 6.92% $1,163.57 7.00% 8.30% $1,173.63 $10.06
6.41% 6.93% $1,162.31 7.01% 8.31% $1,172.34 $10.02
6.42% 6.94% $1,161.05 7.02% 8.33% $1,171.20 $10.14
6.43% 6.95% $1,159.80 7.03% 8.34% $1,169.90 $10.11
6.44% 6.96% $1,158.54 7.04% 8.35% $1,168.61 $10.07
6.45% 6.97% $1,157.29 7.05% 8.36% $1,167.32 $10.03
6.46% 6.98% $1,156.04 7.06% 8.37% $1,166.04 $10.00
6.47% 6.99% $1,154.79 7.07% 8.39% $1,164.90 $10.12
6.48% 6.00% $1,153.54 7.08% 8.40% $1,163.62 $10.08
6.49% 7.01% $1,152.30 7.09% 8.41% $1,162.34 $10.04
6.50% 7.02% $1,151.05 7.10% 8.42% $1,161.06 $10.01
</TABLE>
19
<PAGE>
CALCULATIONS; INFORMATION
The Reference Price of the Old 2020 Debentures will be determined in the
manner described in Schedule A by calculating, per $1,000 principal amount of
such Old 2020 Debentures, the present value, using the Reference Yield of the
Old 2020 Debentures, of (i) the principal amount payable on the maturity date
of the Old 2020 Debentures plus (ii) all remaining payments of interest up to
and including the maturity date of the Old 2020 Debentures. The Reference
Price of the Old 2020 Debentures will be rounded to the nearest cent per
$1,000 principal amount of Old 2020 Debentures. The methodology to be used in
calculating the Reference Price of the Old 2020 Debentures is set forth in
Schedule A hereto. An example of the application of such methodology is
provided for the Old 2020 Debentures in Schedule B hereto. The Reference Yield
of the Old 2020 Debentures will be determined by calculating the sum of the
Benchmark Treasury Yield and the 2020 Fixed Spread. The price calculation will
be made using the Benchmark Treasury Yield as of the Price Determination Date.
The Price Determination Date will be the settlement date for the calculation
of the Reference Price of the Old 2020 Debentures.
For the New 2030 Debentures, a per annum interest rate, i.e., the Extension
Coupon, will be determined for the period from April 1, 2020 to the maturity
date of the New 2030 Debentures, April 1, 2030. The Extension Coupon,
expressed as a percentage with two decimal places, will be such that the
Reference Price of the New 2030 Debentures will be at least $10.00 or greater
than the Reference Price of the Old 2020 Debentures per $1,000 principal
amount of the Old 2020 Debentures. The Reference Price of the New 2030
Debentures will be determined in the manner described in Schedule C hereto by
calculating, per $1,000 principal amount of New 2030 Debentures, the present
value, using the Reference Yield of the New 2030 Debentures, of (i) the
principal amount payable on the maturity date of the New 2030 Debentures plus
(ii) all remaining payments of interest up to and including the maturity date
of the New 2030 Debentures. The Reference Price of the New 2030 Debentures
will be rounded to the nearest cent per $1,000 principal amount of New 2030
Debentures. The methodology to be used in calculating the Reference Price of
the New 2030 Debentures is set forth in Schedule C hereto. An example of the
application of such methodology is provided for the New 2030 Debentures in
Schedule D hereto. The Reference Yield of the New 2030 Debentures will be
determined by calculating the sum of the Benchmark Treasury Yield and the 2030
Fixed Spread. The price calculation will be made using the Benchmark Treasury
Yield as of the Price Determination Date. The Price Determination Date will be
the settlement date for the calculation of the Reference Price of the New 2030
Debentures.
The Benchmark Treasury Yield will be calculated by the Financial Advisor in
accordance with standard market practice based on the bid side price for such
Benchmark Treasury Security as of the Price Determination Date, as such bid
side price is displayed on the Cantor Fitzgerald Quotation Service for U.S.
Government Securities (the "Cantor Fitzgerald Quotation Service") on Telerate
page 500. If any relevant price is not available on a timely basis on the
Cantor Fitzgerald Quotation Service or is manifestly erroneous, the relevant
price information may be obtained from such other quotation service as the
Company and the Financial Advisor shall select in their reasonable discretion,
the identity of which shall be disclosed by the Company and the Financial
Advisor to exchanging Holders. Although the Benchmark Treasury Yield will be
determined based solely on the sources described above, information regarding
the price of the Benchmark Treasury Security also may be found in The Wall
Street Journal.
As soon as practicable after the Price Determination Date, but in any event
before 9:00 a.m., New York City time, on the following business day, the
Company will publicly announce by press release to the Dow Jones News Service:
the Benchmark Treasury Yield, the Reference Yield of the Old 2020 Debentures,
the Reference Price of the Old 2020 Debentures, the Reference Yield of the New
2030 Debentures, the Extension Coupon and the Reference Price of the New 2030
Debentures.
During the term of the Exchange Offer, Holders of the Old 2020 Debentures
can obtain current information regarding the Benchmark Treasury Yield,
reference yields, reference prices and other information regarding the terms
of the Exchange Offer from the Financial Advisor at (212) 469-7081 (call
collect). In addition, the Company intends to publish information about the
Exchange Offer, including the information described in the preceding paragraph
when available, on the MCM "CorporateWatch" Service on Telerate page 41933.
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In the event any dispute arises with respect to any Benchmark Treasury
Yield, reference yields, reference prices, the Extension Coupon or any
quotation or calculation with respect to the Exchange Offer, the Company's
determination shall be conclusive and binding absent manifest error.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer will expire at 5:00 p.m., New York City time, on
Thursday, January 22, 1998, unless extended by the Company as provided herein.
The Company expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) extend or terminate the Exchange Offer and not accept
for exchange any tendered Old 2020 Debentures if (a) any of the conditions
specified in "--Conditions to the Exchange Offer" are not satisfied or waived,
or (b) otherwise (ii) waive any condition to the Exchange Offer and accept all
Old 2020 Debentures tendered pursuant to the Exchange Offer, (iii) extend the
Exchange Offer and retain all the Old 2020 Debentures tendered pursuant to the
Exchange Offer until the expiration of the Exchange Offer, subject, however,
to the withdrawal rights of Holders as provided in, "--Withdrawal Rights",
(iv) amend the terms of the Exchange Offer and (v) modify the form of the
consideration to be paid pursuant to the Exchange Offer.
Any extension, termination or amendment will be followed as promptly as
practicable by a public announcement and notification to the Exchange Agent.
In the case of any extension, a public announcement will be issued prior to
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date of the Exchange Offer. Without limiting the manner
in which the Company may choose to make any public announcement, the Company
shall have no obligation to publish, advertise or otherwise communicate any
such public announcement other than by release to the Dow Jones News Service
or otherwise as required by law. In the event of any extension of the Exchange
Offer, all Old 2020 Debentures tendered pursuant to the Exchange Offer and not
subsequently withdrawn, will remain subject to, and Holders will continue to
have withdrawal rights until the expiration of, the Exchange Offer.
EFFECT OF TENDER
A tendering Holder of Old 2020 Debentures that are exchanged in the Exchange
Offer will not be obligated to pay transfer taxes or any fees or commissions
with respect to the acquisition of their Old 2020 Debentures by the Company
pursuant to the Exchange Offer. See "--Transfer Taxes". However, if the
beneficial owner tenders through a Custodian, such beneficial owner may be
required to pay fees or commissions to such institution.
ABSENCE OF DISSENTERS' RIGHTS
Holders of Old 2020 Debentures do not have any appraisal or dissenters'
rights under the Delaware General Corporation Law or the Old Indenture, in
connection with the Exchange Offer.
ACCEPTANCE OF OLD 2020 DEBENTURES TENDERED FOR EXCHANGE; DELIVERY OF NEW 2030
DEBENTURES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange Old 2020 Debentures by accepting such Old 2020
Debentures for exchange and in consideration therefor will issue a like
principal amount of New 2030 Debentures. New 2030 Debentures will be delivered
on the Exchange Date. The Exchange Agent will act as agent for the tendering
Holders for the purpose of receiving Old 2020 Debentures and delivering New
2030 Debentures to such Holders. In all cases, Old 2020 Debentures will be
accepted for exchange pursuant to the Exchange Offer only after timely receipt
by the Exchange Agent of certificates representing Old 2020 Debentures (or
confirmation of a book-entry transfer), a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof or satisfaction
of DTC's ATOP procedures) and any other documents required thereby.
New 2030 Debentures will be delivered only in book-entry form through DTC
and only to the DTC account of the tendering Holder or the tendering Holder's
Custodian. Accordingly, a Holder who tenders Old 2020
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Debentures must specify on the Letter of Transmittal the DTC participant to
which New 2030 Debentures should be delivered and all necessary account
information to effect such delivery. Failure to provide such information will
render such Holder's tender defective and the Company will have the right,
which it may waive, to reject such tender. The Company and the Exchange Agent
shall not incur any liability for delivering New 2030 Debentures in accordance
with any instructions provided by a tendering Holder.
The Company will be deemed to have accepted for exchange (and thereby to
have purchased) tendered Old 2020 Debentures as, if and when the Company gives
oral or written notice to the Exchange Agent of the Company's acceptance of
such Old 2020 Debentures for exchange. Old 2020 Debentures accepted for
exchange by the Company will be canceled.
If Old 2020 Debentures in a principal amount in excess of the principal
amount indicated as being tendered on the Letter of Transmittal are submitted,
an Old 2020 Debenture in principal amount equal to the excess principal amount
over the amount indicated as tendered in the Letter of Transmittal will be
issued to the tendering Holder, at the Company's expense, in the same form in
which such security was tendered, as promptly as practicable following the
expiration or termination of the Exchange Offer. If any tendered Old 2020
Debentures are not accepted for exchange because of an invalid tender, the
occurrence of certain other events set forth herein or otherwise, such Old
2020 Debentures will be returned, at the Company's expense, to the tendering
holder thereof, as promptly as practicable following the expiration or
termination of the Exchange Offer.
PROCEDURES FOR TENDERING OLD 2020 DEBENTURES
Minimum Denominations A Holder may tender less than all Old 2020 Debentures
held by such Holder. However, Old 2020 Debentures may be tendered only in
denominations of $1,000 or an integral multiple thereof.
Tender of Old 2020 Debentures Held in Physical Form. To tender Old 2020
Debentures held in physical form, a Holder must (i) complete (including the
required information regarding delivery of New 2030 Debentures through DTC)
and sign the Letter of Transmittal in accordance with the instructions set
forth therein and (ii) deliver the properly completed and executed Letter of
Transmittal, together with any other documents required by the Letter of
Transmittal, and the Old 2020 Debentures in physical form to the Exchange
Agent at the address set forth on page 4 hereof prior to the Expiration Date.
Tender of Old 2020 Debentures Held Through a Custodian. To tender Old 2020
Debentures held by a Custodian, the beneficial owner of the Old 2020
Debentures must contact the Custodian and direct the Custodian to tender such
Old 2020 Debentures in accordance with the procedures set forth herein and in
the Letter of Transmittal.
The Exchange Agent and DTC have confirmed that the Exchange Offer is
eligible for ATOP. Accordingly, DTC participants may electronically transmit
their acceptance of the Exchange Offer by causing DTC to transfer Old 2020
Debentures to the Exchange Agent in accordance with DTC's ATOP procedures for
such a transfer. DTC will then send an Agent's Message to the Exchange Agent.
The term "Agent's Message" means a message transmitted by DTC, received by
the Exchange Agent and forming part of a Book-Entry Confirmation (as defined
herein), which states that DTC has received an express acknowledgment from the
DTC participant tendering Old 2020 Debentures which are the subject of such
Book-Entry Confirmation, that such DTC participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that the Company may
enforce such agreement against such DTC participant. In the case of an Agent's
Message relating to a guaranteed delivery, the term means a message
transmitted by DTC and received by the Exchange Agent, which states that DTC
has received an express acknowledgment from the DTC participant tendering Old
2020 Debentures that such DTC participant has received and agrees to be bound
by the Notice of Guaranteed Delivery (as described below). Holders desiring to
tender Old 2020 Debentures on the Expiration Date should note that such
Holders must allow sufficient time for completion of the ATOP procedures
during the normal business hours of DTC on that date.
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If the Custodian holds such Old 2020 Debentures in physical form, the
Custodian must follow the procedure set forth above under "--Procedures for
Tendering Old 2020 Debentures--Tender of Old 2020 Debentures Held In Physical
Form".
If the Custodian holds such Old 2020 Debentures in book-entry form through
DTC (the "Book-Entry Transfer Facility"), to tender such Old 2020 Debentures
the Custodian must (i) effect a book-entry transfer (a "Book-Entry
Confirmation") of all Old 2020 Debentures to be tendered to the Exchange
Agent's account at such Book-Entry Transfer Facility prior to the Expiration
Date or (ii) complete (including the required information regarding delivery
of New 2030 Debentures through DTC) and sign the Letter of Transmittal in
accordance with the instructions set forth therein and deliver the properly
completed and executed Letter of Transmittal, together with any other
documents required by the Letter of Transmittal, to the Exchange Agent at the
address set forth on page 4 hereof prior to the Expiration Date.
Book-Entry Delivery Procedures. The Exchange Agent will establish promptly
an account with respect to the Old 2020 Debentures at the Book-Entry Transfer
Facility for purposes of the Exchange Offer. Any financial institution that is
a participant in the Book-Entry Transfer Facility may make a book-entry
delivery of Old 2020 Debentures by causing the Book-Entry Transfer Facility to
transfer Old 2020 Debentures to the Exchange Agent's account. DELIVERY OF A
LETTER OF TRANSMITTAL TO A BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE
VALID DELIVERY TO THE EXCHANGE AGENT.
Any Holder whose Old 2020 Debentures have been mutilated, lost, stolen or
destroyed will be responsible for obtaining replacement securities or for
arranging for indemnification with The Chase Manhattan Bank, as Trustee for
the Old 2020 Debentures. Holders may contact the Information Agent for
assistance with such matters.
IN ORDER FOR A TENDERING HOLDER TO BE ASSURED OF PARTICIPATING IN AN
EXCHANGE OFFER, SUCH HOLDER MUST TENDER OLD 2020 DEBENTURES IN ACCORDANCE WITH
THE PROCEDURES SET FORTH HEREIN AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE
EXPIRATION DATE. THE METHOD OF DELIVERY OF OLD 2020 DEBENTURES AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE HOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED AND ENOUGH TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
LETTERS OF TRANSMITTAL AND OLD 2020 DEBENTURES MUST BE SENT ONLY TO THE
EXCHANGE AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR OLD 2020 DEBENTURES TO
THE COMPANY, THE TRUSTEE, THE INFORMATION AGENT OR THE FINANCIAL ADVISOR.
GUARANTEED DELIVERY PROCEDURES
If a Holder of Old 2020 Debentures wishes to tender such Old 2020 Debentures
and time will not permit such Holder's Old 2020 Debentures or other required
documents to reach the Exchange Agent prior to the Expiration Date, or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if (i) the tender is made through an Eligible
Institution (as such term is defined in the Letter of Transmittal), (ii) on or
prior to 5:00 p.m., New York City time, on the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Company (by facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old 2020 Debentures and the amount of
Old 2020 Debentures tendered, stating that the tender is being made thereby
and guaranteeing that within three New York Stock Exchange ("NYSE") trading
days after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old 2020 Debentures, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, together with
a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) with any required signature guarantees and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the
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certificates for all physically tendered Old 2020 Debentures, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, together with
a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) with any required signature guarantees, and any
other documents required by the Letter of Transmittal are deposited by the
Eligible Institution within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
PROPER EXECUTION AND DELIVERY OF LETTER OF TRANSMITTAL
In general, all signatures on a Letter of Transmittal or a notice of
withdrawal must be guaranteed by an Eligible Institution; however, such
signatures need not be guaranteed if (a) the Letter of Transmittal is signed
by the Holder of the Old 2020 Debenture tendered thereby or by a participant
in a Book-Entry Transfer Facility whose name appears on a security position
listing as the Holder of the Old 2020 Debenture tendered thereby and such
Holder has not completed the portion entitled "Special Delivery Instructions"
on the Letter of Transmittal, or (b) such Old 2020 Debenture tendered is for
the account of an Eligible Institution.
If the Letter of Transmittal is signed by the Holder of the Old 2020
Debenture tendered thereby or a participant in a Book-Entry Transfer Facility
whose name appears on a security position listing with respect to the Old 2020
Debenture tendered thereby, the signature must correspond with the name as
written on the face of the Old 2020 Debenture or on the security position
listing, respectively, without any change whatsoever. If any of the Old 2020
Debentures tendered thereby are held by two or more holders, all such Holders
must sign the Letter of Transmittal. If any of the Old 2020 Debentures
tendered thereby are registered in different names on different Old 2020
Debentures, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations.
If the Letter of Transmittal is signed by a person other than the Holder of
the Old 2020 Debenture tendered thereby or a participant in a Book-Entry
Transfer Facility whose name appears on a security position listing with
respect to the Old 2020 Debenture tendered thereby, the Old 2020 Debenture
must be endorsed or accompanied by appropriate instruments of transfer, in
either case, signed exactly as the name of the Holder appears on the face of
the Old 2020 Debenture or on the security position listing with respect
thereto. If the Letter of Transmittal or any Old 2020 Debenture, proxy or
instrument of transfer is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, such person must so indicate when
signing, and proper evidence satisfactory to the Exchange Agent of the
authority of such person so to act must be submitted.
New 2030 Debentures will be delivered only in book-entry form through DTC
and only to the DTC account of the Holder or the Holder's Custodian. If Old
2020 Debentures not tendered or not exchanged are to be delivered to a person
other than the Holder of the Old 2020 Debentures tendered, or to an address
other than that of the Holder of the Old 2020 Debentures tendered, such Holder
should indicate in the portion of the Letter of Transmittal entitled "Special
Delivery Instructions" the person and/or address to which such Old 2020
Debentures are to be delivered. If Old 2020 Debentures not tendered or not
exchanged are to be issued to a person other than the Holder of the Old 2020
Debentures tendered, the employer identification or social security number of
the person to whom issuance is to be made must be indicated on the Letter of
Transmittal. If Old 2020 Debentures not tendered or not exchanged are to be
issued to a person other than the Holder of the Old 2020 Debentures tendered,
the Old 2020 Debentures must be endorsed or accompanied by appropriate
instruments of transfer, signed exactly as the name of the Holder appears on
the face of the Old 2020 Debentures or the security position listing with
respect thereto, with the signature on the certificates or instruments of
transfer guaranteed by an Eligible Institution. If no such instructions are
given, any Old 2020 Debentures not tendered or exchanged will be delivered to
the Holder of the Old 2020 Debentures tendered.
Because New 2030 Debentures will be delivered only in book-entry form
through DTC, a Holder who tenders Old 2020 Debentures must specify on the
Letter of Transmittal the DTC participant to which New 2030 Debentures should
be delivered and all necessary account information to effect such delivery.
Such DTC
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participant must be either the Holder or a Custodian for the Holder. Failure
to provide such information will render such Holder's tender defective and the
Company will have the right, which it may waive, to reject such tender.
Holders who anticipate tendering other than through DTC are urged to contact
promptly a Custodian (that has the capability to hold securities through DTC)
to arrange for receipt of any New 2030 Debenture to be delivered pursuant to
the Exchange Offer and to obtain the information necessary to complete the
account information table in the Letter of Transmittal.
No alternative, conditional, irregular or contingent tenders will be
accepted. By executing the Letter of Transmittal, the Holder of Old 2020
Debentures waives any right to receive any notice of the acceptance for
exchange of such Holder's Old 2020 Debentures, except as otherwise provided
herein.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old 2020 Debentures will be determined by
the Company, whose determination shall be conclusive and binding. The Company
reserves the absolute right to reject any or all tenders that are not in
proper form or the acceptance of which may be, in the opinion of counsel for
the Company, unlawful. The Company also reserves the absolute right to waive
any condition of the Exchange Offer as set forth under "--Conditions to the
Exchange Offer" and any irregularities or conditions of tender as to
particular Old 2020 Debentures. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letters of
Transmittal) shall be conclusive and binding.
Unless waived, any irregularities in connection with tenders must be cured
within such time as the Company may determine. The Company, the Exchange Agent
and the Information Agent shall not be under any duty to give notification of
defects in such tenders and shall not incur liability for any failure to give
such notification. Tenders of Old 2020 Debentures will not be deemed to have
been made until such irregularities have been cured or waived. Any Old 2020
Debentures received by the Exchange Agent that are not properly tendered and
as to which the irregularities have not been cured or waived will be returned
by the Exchange Agent to the Holder, unless otherwise provided in the Letter
of Transmittal, as soon as practicable following the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer or any extension of
the Exchange Offer, the Company will not be required to issue New 2030
Debentures and may terminate the Exchange Offer by oral or written notice to
the Exchange Agent, or, at its option, modify or otherwise amend the Exchange
Offer with respect to such Old 2020 Debentures, if any of the following
conditions has not been satisfied, on or prior to the Expiration Date:
(a) there shall not have been any action taken or threatened, or any
statute, rule, regulation, judgment, order, stay, decree or injunction
promulgated, enacted, entered, enforced or deemed applicable to the
Exchange Offer or the exchange of Old 2020 Debentures pursuant to the
Exchange Offer (the "Exchange"), by or before any court or governmental
regulatory or administrative agency or authority or tribunal, domestic or
foreign, which (i) challenges the making of the Exchange Offer or the
Exchange, or might, directly or indirectly, prohibit, prevent, restrict or
delay consummation of the Exchange Offer or the Exchange, or might
otherwise adversely affect in any material manner the Exchange Offer or the
Exchange or (ii) in the sole judgment of the Company, could materially
adversely affect the business, condition, (financial or otherwise), income,
operations, properties, assets, liabilities or prospects of the Company and
its subsidiaries, taken as a whole, or materially impair the contemplated
benefits of the Exchange Offer or the Exchange to the Company or might be
material to Holders of Old 2020 Debentures in deciding whether to accept
such Exchange Offer;
(b) there shall not have occurred or be likely to occur any event
affecting the business or financial affairs of the Company that, in the
sole judgment of the Company, would or might prohibit, prevent, restrict or
delay consummation of the Exchange Offer or the Exchange or that will, or
is reasonably likely to,
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materially impair the contemplated benefits of the Exchange Offer or the
Exchange to the Company or might be material to Holders of Old 2020
Debentures in deciding whether to accept such Exchange Offer;
(c) there shall not have occurred (i) any general suspension of or
limitation on trading in securities on the NYSE or in the over-the-counter
market (whether or not mandatory), (ii) any material adverse change in the
price of the Old 2020 Debentures, (iii) a material impairment in the
general trading market for debt securities, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks by federal or
state authorities in the United States (whether or not mandatory), (v) a
commencement or escalation of a war, armed hostilities or other national or
international crisis directly or indirectly relating to the United States,
(vi) any limitation (whether or not mandatory) by any governmental
authority on, or other event having a reasonable likelihood of affecting,
the extension of credit by banks or other lending institutions in the
United States, or (vii) any material adverse change in United States
securities or financial markets generally, or in the case of any of the
foregoing existing at the time of the commencement of the Exchange Offer, a
material acceleration or worsening thereof; and
(d) the Old Trustee or the New Trustee shall not have objected in any
respect to, or taken any action that could in the sole judgment of the
Company adversely affect the consummation of, the Exchange Offer or the
Exchange nor shall the Old Trustee or the New Trustee have taken any action
that challenges the validity or effectiveness of the procedures used by the
Company or in making the Exchange Offer or the Exchange.
If any of the foregoing conditions are not satisfied, the Company may (i)
terminate the Exchange Offer and return such Old 2020 Debentures to the
Holders who tendered them, (ii) extend the Exchange Offer and retain all
tendered Old 2020 Debentures until the expiration of the Exchange Offer, as
extended, subject, however, to the withdrawal rights of Holders, see "--
Withdrawal Rights" and "--Expiration Date; Extensions; Termination;
Amendments", or (iii) waive any of the conditions with respect to such
Exchange Offer and accept all Old 2020 Debentures tendered therein.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company, in whole or in part, in its sole discretion. Any
determination made by the Company concerning an event, development or
circumstance described or referred to above shall be conclusive and binding.
WITHDRAWAL RIGHTS
Tendered Old 2020 Debentures may be withdrawn by the Holder prior to the
Expiration Date.
A Holder of Old 2020 Debentures who tendered Old 2020 Debentures in physical
form may withdraw the Old 2020 Debentures tendered by providing a written
notice of withdrawal (or facsimile thereof) to the Exchange Agent, at its
address set forth on page 4 hereof, prior to the Expiration Date, which notice
must contain: (i) the name of the person who tendered the Old 2020 Debentures;
(ii) a description of the Old 2020 Debentures to be withdrawn; (iii) the
certificate number or numbers shown on the particular certificate or
certificates evidencing such Old 2020 Debentures; (iv) the aggregate principal
amount represented by such Old 2020 Debentures; (v) the signature of the
Holder of such Old 2020 Debentures executed in the same manner as the original
signature on the Letter of Transmittal (including a signature guarantee, if
such original signature was guaranteed); and (vi) if such Old 2020 Debentures
are owned by a new beneficial owner, evidence satisfactory to the Company that
the person withdrawing the tender has succeeded to the beneficial ownership of
the Old 2020 Debentures.
If a beneficial owner of Old 2020 Debentures tendered through a Custodian
wishes to withdraw the Old 2020 Debentures tendered, such beneficial owner
must contact the Custodian and direct the Custodian to withdraw such Old 2020
Debentures in accordance with the following procedures. In order to withdraw
such Old 2020 Debentures the Custodian must provide a written notice of
withdrawal (or facsimile thereof) to the Exchange Agent, at its address set
forth on page 4, prior to the Expiration Date, which notice must contain: (i)
the name of the person who tendered the Old 2020 Debentures; (ii) a
description of the Old 2020 Debentures to
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be withdrawn; (iii) the certificate number or numbers shown on the particular
certificate or certificates evidencing such Old 2020 Debentures (if Old 2020
Debentures were tendered in physical form); (iv) the aggregate principal
amount represented by such Old 2020 Debentures; and (v) if such Old 2020
Debentures are owned by a new beneficial owner, evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of the Old 2020 Debentures. If the Old 2020 Debentures were tendered
by book-entry transfer, the Custodian also must debit the Exchange Agent's
account at the Book-Entry Transfer Facility through which the tender was made
of all Old 2020 Debentures to be withdrawn.
A PURPORTED NOTICE OF WITHDRAWAL WHICH LACKS ANY OF THE REQUIRED INFORMATION
WILL NOT BE AN EFFECTIVE WITHDRAWAL OF A TENDER PREVIOUSLY MADE. TENDERS MAY
NOT BE WITHDRAWN AFTER THE EXPIRATION DATE.
Holders who have tendered in the Exchange Offer will continue to have
withdrawal rights following any extension of the Expiration Date. Any
permitted withdrawals of tenders of Old 2020 Debentures may not be rescinded,
and any Old 2020 Debentures so withdrawn will thereafter be deemed not validly
tendered for purposes of the Exchange Offer and the Holder thereof will be
deemed to have rejected the Exchange Offer. However, withdrawn Old 2020
Debentures may be re-tendered prior to the Expiration Date by following the
procedures for tendering described above.
All questions as to the validity (including time of receipt) of notices of
withdrawal will be determined by the Company, whose determination will be
conclusive and binding. None of the Company, the Exchange Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
FUTURE OFFERS
The Company reserves the right, in its sole discretion, to purchase or make
offers for any Old 2020 Debentures that remain outstanding subsequent to the
completion of the Exchange Offer. The terms of any such purchase or offer
could differ from the terms of the Exchange Offer.
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the transfer
and sale of Old 2020 Debentures pursuant to the Exchange Offer. If, however,
substitute Old 2020 Debentures for amounts not tendered or not exchanged are
to be delivered to, or are to be registered in the name of, any person other
than the Holder of Old 2020 Debentures tendered, or if tendered Old 2020
Debentures are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the transfer or sale of Old 2020 Debentures to the Company
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the Holder or any other persons) shall be payable by the Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the appropriate Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such Holder and/or withheld from any
payments due with respect to the Old 2020 Debentures tendered by such Holder.
FINANCIAL ADVISOR
The Company has engaged Deutsche Morgan Grenfell Inc. to act as Financial
Advisor in connection with the Exchange Offer. Any Holder who has questions
concerning the terms of the Exchange Offer or who would like current
information regarding the Benchmark Treasury Yield, the reference yields, the
reference prices or the Extension Coupon may contact the Financial Advisor at
(212) 469-7081 (call collect) or at the address set forth on page 4 of this
Offering Circular.
The Company has agreed to pay the Financial Advisor a fee for its services
and to reimburse the Financial Advisor for its reasonable out-of-pocket
expenses, including reasonable fees and expenses of legal counsel, and the
Company has agreed to indemnify the Financial Advisor against certain
liabilities, including certain liabilities
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under the federal securities laws, in connection with the Exchange Offer. In
the past, the Financial Advisor has provided other investment banking and
financial advisory services to the Company.
EXCHANGE AGENT
Citibank, N.A. has been appointed Exchange Agent for the Exchange Offer. The
Company will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith. Letters of Transmittal and all correspondence in
connection with the Exchange Offer must be sent or delivered to the Exchange
Agent at the address set forth on page 4 of this Offering Circular.
INFORMATION AGENT
D. F. King & Co., Inc. has been appointed Information Agent for the Exchange
Offer. The Company will pay the Information Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith.
Any questions concerning the tender procedures or requests for assistance or
additional copies of this Offering Circular or the Letters of Transmittal may
be directed to the Information Agent at the address and telephone number set
forth on page 4 of this Offering Circular. Holders of Old 2020 Debentures may
also contact the Financial Advisor or their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Exchange Offer.
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DESCRIPTION OF NEW 2030 DEBENTURES
The following summaries of certain provisions of the New 2030 Debentures and
the New Indenture do not purport to be complete and are subject, and are
qualified in their entirety by reference, to all the provisions of the New
2030 Debentures and the New Indenture, including the definitions therein of
certain terms.
GENERAL
The New 2030 Debentures are to be issued under the New Indenture. The New
2030 Debentures are general unsecured and unsubordinated obligations of the
Company, will rank senior in right of payment to any subordinated indebtedness
of the Company and rank pari passu with all existing and future unsecured and
unsubordinated senior indebtedness of the Company. The New 2030 Debentures
will be issued only in fully registered form, without coupons, in
denominations of $1,000 and integral multiples thereof.
The New 2030 Debentures mature on April 1, 2030 and will bear interest at
the rate described herein, payable semi-annually on April 1 and October 1 of
each year, commencing April 1, 1998, to the Persons in whose names such New
2030 Debentures are registered at the close of business on the March 15 or the
September 15 immediately preceding such interest payment date. Interest is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
OPTIONAL REDEMPTION
The New 2030 Debentures will be redeemable in whole or in part, at the
option of the Company at any time, at a redemption price equal to the greater
of (i) 100% of their principal amount or (ii) the sum of the present values of
the remaining scheduled payments of principal and interest thereon discounted
to the date of redemption on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Yield plus five basis
points, plus in the case of each clause (i) and (ii), accrued interest to the
date of redemption.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable
to the remaining term of the Debentures to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of the New 2030 Debentures. "Independent Investment Banker"
means an independent investment banking institution of international standing
appointed by the Company.
"Comparable Treasury Price" means with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such business day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Independent Investment Banker obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
Quotations. "Reference Treasury Dealer Quotations" means with respect to each
Reference Treasury Dealer and any redemption date, the average as determined
by the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage
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of its principal amount) quoted in writing to the Independent Investment
Banker by such Reference Treasury Dealer at 5:00 p.m. on the third business
day preceding such redemption date.
"Reference Treasury Dealer" means a primary U.S. Government securities
dealer in The City of New York selected by the Independent Investment Banker
after consultation with the Company.
"Reference Treasury Dealer Quotations" means with respect to each Reference
Treasury Dealer and any redemption date, the average as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Independent Investment Banker by such
Reference Treasury Dealer at 5:00 p.m. on the third business day preceding
such redemption date.
Holders of the New 2030 Debentures to be redeemed will receive notice
thereof by first-class mail at least 30 and not more than 60 days prior to the
date fixed for redemption.
FORM, EXCHANGE AND TRANSFER
The New 2030 Debentures will be issuable only in registered form, without
coupons and only in denominations of $1,000 and integral multiples thereof.
Subject to the terms of the New Indenture and the limitations applicable to
Global Securities, New 2030 Debentures may be presented for exchange as
provided above or for registration of transfer (duly endorsed or with the form
of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer
or exchange of New 2030 Debentures, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. Such transfer or exchange will be effected upon the
Security Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the Person making the request. The
Company has appointed the Trustee as Security Registrar. (Section 3.05) The
Company may at any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the office through
which any transfer agent acts, except that the Company will be required to
maintain a transfer agent in each Place of Payment for the New 2030
Debentures. (Section 10.02)
If the New 2030 Debentures are to be redeemed in part, the Company will not
be required to (i) issue, register the transfer of or exchange any New 2030
Debenture during a period beginning at the opening of business 15 days before
the day of mailing of a notice of redemption of any such New 2030 Debenture
that may be selected for redemption and ending at the close of business on the
day of such mailing or (ii) register the transfer of or exchange any New 2030
Debenture so selected for redemption, in whole or in part, except the
unredeemed portion of any New 2030 Debenture being redeemed in part. (Section
3.05)
GLOBAL SECURITIES
Some or all of the New 2030 Debentures may be represented, in whole or in
part, by one or more Global Securities that have an aggregate principal amount
equal to that of the New 2030 Debentures represented thereby. Each Global
Security will be registered in the name of a Depositary or a nominee thereof,
will be deposited with such Depositary or nominee or a custodian thereof and
will bear a legend regarding the restrictions on exchanges and registration of
transfer thereof referred to below and any such other matters as may be
provided for pursuant to the New Indenture.
Notwithstanding any provision of the New Indenture or any New 2030 Debenture
described herein, no Global Security may be exchanged in whole or in part for
New 2030 Debentures registered, and no transfer of a Global Security in whole
or in part may be registered, in the name of any Person other than the
Depositary for such Global Security or any nominee of such Depositary unless
(i) the Depositary has notified the Company that
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it is unwilling or unable to continue as Depositary for such Global Security
or has ceased to be qualified to act as such as required by the New Indenture,
(ii) there shall have occurred and be continuing an Event of Default with
respect to the New 2030 Debentures represented by such Global Security or
(iii) there shall exist such circumstances, if any, in addition to or in lieu
of those described above as may be described in the applicable Prospectus
Supplement. All securities issued in exchange for a Global Security or any
portion thereof will be registered in such names as the Depositary may direct.
(Sections 2.04 and 3.05)
As long as the Depositary, or its nominee, is the Holder of a Global
Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the New 2030
Debentures represented thereby for all purposes under the New 2030 Debentures
and the New Indenture. Except in the limited circumstances referred to above,
owners of beneficial interests in a Global Security will not be entitled to
have such Global Security or any New 2030 Debentures represented thereby
registered in their names, will not receive or be entitled to receive physical
delivery of certificated New 2030 Debentures in exchange therefor and will not
be considered to be the owners or Holders of such Global Security or any New
2030 Debentures represented thereby for any purpose under the New 2030
Debentures or the New Indenture. All payments of principal of and any premium
and interest on a Global Security will be made to the Depositary or its
nominee, as the case may be, as the Holder thereof. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("Participants") and to persons that may hold beneficial interests through
Participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of New 2030 Debentures represented by the
Global Security to the accounts of its Participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depositary (with respect to interests of Persons held by such Participants
on their behalf). Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the Depositary from time to time. None of the
Company, the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's or any
Participant's records relating to such beneficial interests.
PAYMENT AND PAYING AGENTS
Payment of interest on a New 2030 Debenture on any Interest Payment Date
will be made to the Person in whose name such New 2030 Debenture (or one or
more predecessor New 2030 Debentures) is registered at the close of business
on the Regular Record Date for such interest. (Section 3.07)
Principal of and any premium and interest on the New 2030 Debentures will be
payable at the office of such Paying Agent or Paying Agents as the Company may
designate for such purpose from time to time, except that at the option of the
Company payment of any interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security Register.
Unless otherwise indicated in the applicable Prospectus Supplement, the
corporate trust office of the Trustee in The City of New York will be
designated as the Company's sole Paying Agent for payments with respect to New
2030 Debentures. The Company may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent or approve a change in
the office through which any Paying Agent acts, except that the Company will
be required to maintain a Paying Agent in each Place of Payment for the New
2030 Debentures. (Section 10.02)
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any New 2030 Debenture which remain
unclaimed at the end of two years after such principal, premium or interest
has become due and payable will be repaid to the Company, and the Holder of
such New 2030 Debenture thereafter may look only to the Company for payment
thereof. (Section 10.03)
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CERTAIN COVENANTS OF THE COMPANY
Limitation on Secured Indebtedness. The Company will not create, assume,
incur or guarantee, and will not permit any Restricted Subsidiary to create,
assume, incur or guarantee, any Secured Indebtedness without making provision
whereby all the New 2030 Debentures shall be secured equally and ratably with
(or prior to) such Secured Indebtedness (together with, if the Company shall
so determine, any other Indebtedness of the Company or such Restricted
Subsidiary then existing or thereafter created which is not subordinate to the
New 2030 Debentures) so long as such Secured Indebtedness shall be outstanding
unless such Secured Indebtedness, when added to (a) the aggregate amount of
all Secured Indebtedness then outstanding (not including in this computation
Secured Indebtedness if the New 2030 Debentures are secured equally and
ratably with (or prior to) such Secured Indebtedness and further not including
in this computation any Secured Indebtedness which is concurrently being
retired) and (b) the aggregate amount of all Attributable Debt then
outstanding pursuant to Sale and Leaseback Transactions entered into by the
Company after December 18, 1997, or entered into by a Restricted Subsidiary
after December 18, 1997 or, if later, the date on which it became a Restricted
Subsidiary (not including in this computation any Attributable Debt which is
concurrently being retired), would not exceed 10% of Consolidated Net Tangible
Assets. (Section 10.06)
Limitation on Sale and Leaseback Transactions. The Company will not, and
will not permit any Restricted Subsidiary to, enter into any Sale and
Leaseback Transaction unless (a) the sum of (i) the Attributable Debt to be
outstanding pursuant to such Sale and Leaseback Transaction, (ii) all
Attributable Debt then outstanding pursuant to all other Sale and Leaseback
Transactions entered into by the Company after December 18, 1997, or entered
into by a Restricted Subsidiary after December 18, 1997 or, if later, the date
on which it became a Restricted Subsidiary, and (iii) the aggregate of all
Secured Indebtedness then outstanding (not including in this computation
Secured Indebtedness if the New 2030 Debentures are secured equally and
ratably with (or prior to) such Secured Indebtedness) would not exceed 10% of
Consolidated Net Tangible Assets or (b) an amount equal to the greater of (i)
the net proceeds to the Company or the Restricted Subsidiary of the sale of
the Principal Property sold and leased back pursuant to such Sale and
Leaseback Transaction and (ii) the amount of Attributable Debt to be
outstanding pursuant to such Sale and Leaseback Transaction is applied to the
retirement of Funded Debt of the Company or any Restricted Subsidiaries (other
than Funded Debt which is subordinate to the New 2030 Debentures or which is
owning to the Company or any Restricted Subsidiaries) within 180 days after
the consummation of such Sale and Leaseback Transaction. (Section 10.07)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company shall not consolidate with or merge with or in to any other
Person or convey, transfer or lease all or substantially all of its properties
and assets substantially as an entirety to any Person unless:
(i) either (a) the Company shall be the continuing corporation or (b) the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance, transfer, or
lease, the properties and assets of the Company substantially as an entirety
shall be a corporation, partnership or trust, shall be organized and validly
existing under the laws of the United States of America, any State thereof or
the District of Columbia and shall expressly assume in form satisfactory to
the Trustee, the due and punctual payment of the principal of and any premium
and interest on all the New 2030 Debentures and the performance of every
covenant herein on the part of the Company to be performed or observed;
(ii) immediately after giving effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Company or any Subsidiary in
connection with or as a result of such transaction as having been incurred at
the time of such transaction), no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing; and
(iii) the Company or such Person has delivered to the Trustee an Officers'
Certificate and an opinion of counsel (as to which opinion, counsel may rely
on the Officer's Certificate as to factual matters), each stating that such
consolidation, merger, conveyance, transfer or lease comply with this covenant
and that all conditions precedent herein provided for, or relating to, such
transaction have been complied with.
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Upon any such consolidation or merger or any conveyance, transfer or lease
of the properties and assets of the Company substantially as an entirety, the
successor Person formed by such consolidation, or into which the Company is
merged or the successor Person to which such conveyance, transfer or lease is
made, shall succeed to, and be substituted for, and may exercise every right
and power of the Company under the New 2030 Debentures and the New Indenture
with the same effect as if such successor had been named as the Company
therein; and thereafter, except in the case of a lease, the Company shall be
discharged from all obligations and covenants under the New Indenture and the
New 2030 Debentures. (Sections 8.01 and 8.02)
DEFINITIONS OF CERTAIN TERMS
"Attributable Debt" means, as of the date of its determination, the present
value (discounted semiannually at an interest rate of 7.0% per annum) of the
obligation of a lessee for rental payments pursuant to any Sale and Leaseback
Transaction (reduced by the amount of the rental obligations of any sublessee
of all or part of the same property) during the remaining term of such Sale
and Leaseback Transaction (including any period for which the lease relating
thereto has been extended), such rental payments not to include amounts
payable by the lessee for maintenance and repairs, insurance, taxes,
assessments and similar charges and for contingent rents (such as those based
on sales). In the case of any Sale and Leaseback Transaction in which the
lease is terminable by the lessee upon the payment of a penalty, such rental
payments shall be considered for purposes of this definition to be the lesser
of (a) the rental payments to be paid under such Sale and Leaseback
Transaction until the first date (after the date of such determination) upon
which it may be so terminated plus the then applicable penalty upon such
termination and (b) the rental payments required to be paid during the
remaining term of such Sale and Leaseback Transaction (assuming such
termination provision is not exercised).
"Board of Directors" means either the board of directors of the Company or
committee of that board duly authorized to act for it in respect hereof.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) real
or personal property that is required to be classified and accounted for as a
capital lease obligation under generally accepted accounting principles, and,
for the purposes hereof, the amount of such obligation at any date shall be
the capitalized amount thereof at such date, determined in accordance with
such principles.
"Consolidated Net Tangible Assets" means at any date, the total assets
appearing on the most recently prepared consolidated balance sheet of the
Company and the Subsidiaries as at the end of a fiscal quarter of the Company,
prepared in accordance with generally accepted accounting principles, less (a)
all current liabilities as shown on such balance sheet and (b) Intangible
Assets.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as
Depositary for such Securities.
"Funded Debt" means any indebtedness maturing by its terms more than one
year from the date of the issuance thereof, including any indebtedness
renewable or extendible at the option of the obligor to a date later than one
year from the date of the original issuance thereof.
"Global Security" means the Security issued by the Company which represents
all or part of the New 2030 Debentures.
"Indebtedness" means (a) any liability of any Person (1) for borrowed money,
or under any reimbursement obligation relating to a letter of credit, or (2)
evidenced by a bond, note, debenture or similar instrument
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(including a purchase money obligation) given in connection with the
acquisition of any business, properties or assets of any kind or with services
incurred in connection with capital expenditures (other than a trade payable
or a current liability arising in the ordinary course of business), or (3) for
the payment of money relating to a Capitalized Lease Obligation, or (4) for
Interest Rate Protection Obligations; (b) any liability of others described in
the preceding clause (a) that the Person has guaranteed or that is otherwise
its legal liability; and (c) any amendment, supplement, modification,
deferral, renewal, extension or refunding of any liability of the types
referred to in clauses (a) and (b) above.
"Intangible Assets" means the value (net of any applicable reserves), as
shown on or reflected in such balance sheet, of: (i) all trade names,
trademarks, licenses, patents, copyrights and goodwill; (ii) organizational
and development costs; (iii) deferred charges (other than prepaid items such
as insurance, taxes, interest, commissions, rents and similar items and
tangible assets being amortized); and (iv) unamortized debt discount and
expense, less unamortized premium.
"Interest Rate Protection Obligations" of any Person means the obligations
of such Person pursuant to any arrangement with any other Person whereby,
directly or indirectly, such Person is entitled to receive from time to time
periodic payments calculated by applying a fixed rate of interest on a stated
notional amount in exchange for periodic payments made by such Person
calculated by applying a floating rate of interest on the same notional
amount.
"Liens" means any mortgage, lien, pledge, security interest, charge or
encumbrance.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any other entity.
"Place of Payment" means, when used with respect to any Security, the place
or places where the principal of and any premium and interest on that Security
are payable.
"Principal Property" means any land, land improvements, buildings and
associated factory, distribution, laboratory and office equipment (excluding
any products marketed by the Company or any Subsidiary) constituting a
distribution facility, operating facility, manufacturing facility, development
facility, warehouse facility, service facility or office facility (including
any portion thereof), which facility (a) is owned by or leased to the Company
or any Restricted Subsidiary, (b) is located within the United States and (c)
has an acquisition cost plus capitalized improvements in excess of 0.50% of
Consolidated Net Tangible Assets as of the date of such determination, other
than (i) any such facility, or portion thereof, which has been financed by
obligations issued by or on behalf of a State, a Territory or a possession of
the United States, or any political subdivision of any of the foregoing, or
the District of Columbia, the interest on which is excludable from gross
income of the holders thereof (other than a "substantial user" of such
facility or a "related Person" as those terms are used in section 103 of the
Internal Revenue Code of 1986, as amended (the "Code")) pursuant to the
provisions of section 103 of the Code (or any similar provision hereafter
enacted) as in effect at the time of issuance of such obligations, (ii) any
such facility that the Board of Directors may by Board Resolution declare is
not of material importance to the Company and the Restricted Subsidiaries
taken as a whole and (iii) any such facility, or portion thereof, owned or
leased jointly or in common with one or more Persons other than the Company
and any Subsidiary and in which the interest of the Company and all
Subsidiaries does not exceed 50%.
"Restricted Securities" means any shares of the capital stock or
Indebtedness of any Restricted Subsidiary.
"Restricted Subsidiary" means (a) any Subsidiary (i) which has substantially
all its property within the United States of America, (ii) which owns or is a
lessee of any Principal Property, and (iii) in which the investment of the
Company and all other Subsidiaries exceeds 0.50% of Consolidated Net Tangible
Assets as of
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the date of such determination; provided, however, that the term "Restricted
Subsidiary" shall not include (A) any Subsidiary (x) primarily engaged in the
business of purchasing, holding, collecting, servicing or otherwise dealing in
and with installment sales contracts, leases, trust receipts, mortgages,
commercial paper or other financing instruments, and any collateral or
agreements relating thereto, including in the business, individually or
through partnerships, of financing (whether through long- or short-term
borrowings, pledges, discounts or otherwise) the sales, leasing or other
operations of the Company and the Subsidiaries or any of them, or (y) engaged
in the business of financing the assets and operations of third parties, (z)
in any case, not, except as incidental to such financing business, engaged in
owning, leasing or operating any property which, but for this proviso, would
qualify as Principal Property or (B) any Subsidiary acquired or organized
after December 18, 1997, for the purpose of acquiring the stock or business or
assets of any Person other than the Company or any Restricted Subsidiary,
whether by merger, consolidation, acquisition of stock or assets or similar
transaction analogous in purpose or effect, so long as such Subsidiary does
not acquire by merger, consolidation, acquisition of stock or assets or
similar transaction analogous in purpose or effect all or any substantial part
of the business or assets of the Company or any Restricted Subsidiary; and (b)
any other Subsidiary which is hereafter designated by the Board of Directors
as a Restricted Subsidiary.
"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) that has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person, other than (a) temporary leases for a
term, including renewals at the option of the lessee, of not more than three
years; (b) leases between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries; and (c) leases of Principal Property executed by the
time of, or within 180 days after the latest of, the acquisition, the
completion of construction or improvement (including any improvements on
property which will result in such property becoming Principal Property), or
the commencement of commercial operation of such Principal Property.
"Secured Indebtedness" means (a) Indebtedness of the Company or a Restricted
Subsidiary which is secured by any Lien upon any Principal Property or
Restricted New 2030 Debentures and (b) Indebtedness of the Company or a
Restricted Subsidiary in respect of any conditional sale or other title
retention agreement covering Principal Property or Restricted New 2030
Debentures; but "Secured Indebtedness" shall not include any of the following:
(i) Indebtedness of the Company and the Restricted Subsidiaries
outstanding on December 18, 1997, secured by then existing Liens upon, or
incurred in connection with conditional sales agreements or other title
retention agreements with respect to Principal Property or Restricted
Securities;
(ii) Indebtedness which is secured by (A) purchase money Liens upon
Principal Property acquired after December 18, 1997 or (B) liens placed on
Principal Property after December 18, 1997, during construction or
improvement thereof (including any improvements on property which will
result in such property becoming Principal Property) or placed thereon
within 180 days after the later of acquisition, completion of construction
or improvement or the commencement of commercial operation of such
Principal Property or improvement, or placed on Restricted Securities
acquired after December 18, 1997, or (C) conditional sales agreements or
other title retention agreements with respect to any Principal Property or
Restricted Securities acquired after December 18, 1997, if (in each case
referred to in this subparagraph (ii)) (x) such Lien or agreement secures
all or any part of the Indebtedness incurred for the purpose of financing
all or any part of the purchase price or cost of construction of such
Principal Property or improvement or Restricted Securities and (y) such
Lien or agreement does not extend to any Principal Property or Restricted
Securities other than the Principal Property so acquired or the Principal
Property, or portion thereof, on which the property so constructed or such
improvement is located; provided, however, that the amount by which the
aggregate principal amount of Indebtedness secured by any such Lien or
agreement exceeds the cost to the Company or such Restricted Subsidiary of
the related acquisition, construction or improvement shall be considered to
be "Secured Indebtedness";
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(iii) Indebtedness which is secured by Liens on Principal Property or
Restricted Securities, which Liens exist at the time of acquisition (by any
manner whatsoever) of such Principal Property or Restricted Securities by
the Company or a Restricted Subsidiary;
(iv) Indebtedness of Restricted Subsidiaries owing to the issuer or any
other Restricted Subsidiary and Indebtedness of the Company owing to any
Restricted Subsidiary;
(v) In the case of any corporation which becomes (by any manner
whatsoever) a Restricted Subsidiary after December 18, 1997, Indebtedness
which is secured by Liens upon, or conditional sales agreements or other
title retention agreements with respect to, its property which constitutes
Principal Property or Restricted Securities, which Liens exist at the time
such corporation becomes a Restricted Subsidiary;
(vi) Guarantees by the Company of Secured Indebtedness and Attributable
Debt of any Restricted Subsidiaries and guarantees by a Restricted
Subsidiary of Secured Indebtedness and Attributable Debt of the Company and
any other Restricted Subsidiaries;
(vii) Indebtedness arising from any Sale and Leaseback Transaction;
(viii) Indebtedness secured by Liens on property of the Company or a
Restricted Subsidiary in favor of the United States of America, any State,
Territory or possession thereof, or the District of Columbia, or any
department, agency or instrumentality or political subdivision of the
United States of America, any State, Territory or possession thereof, or
the District of Columbia, in favor of any other country or any political
subdivision thereof, if such Indebtedness was 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 Lien; provided, however, that the amount by
which the aggregate principal amount of Indebtedness secured by any such
Lien exceeds the cost to the Company or such Restricted Subsidiary of the
related acquisition or construction shall be considered to be "Secured
Indebtedness";
(ix) Indebtedness secured by Liens on aircraft, airframes or aircraft
engines, aeronautic equipment or computers and electronic data processing
equipment; and
(x) The replacement, extension or renewal (or successive replacements,
extensions or renewals) of any Indebtedness (in whole or in part) excluded
from the definition of "Secured Indebtedness" by subparagraphs (i) through
(viii) above; provided, however, that no Lien securing, or conditional sale
or title retention agreement with respect to, such Indebtedness shall
extend to or cover any Principal Property or any Restricted Securities,
other than such property which secured the Indebtedness so replaced,
extended or renewed (plus improvements on or to any such Principal
Property); provided further, however, that to the extent such replacement,
extension or renewal increases the principal amount of Indebtedness secured
by such Lien or is in a principal amount in excess of the principal amount
of Indebtedness excluded from the definition of "Secured Indebtedness" by
subparagraphs (i) through (ix) above, the amount of such increase or excess
shall be considered to be "Secured Indebtedness".
In no event shall the foregoing provisions be interpreted to mean or their
operation to cause the same Indebtedness to be included more than once in the
calculation of "Secured Indebtedness" as that term is used in the New
Indenture.
"Securities" means unsecured debentures, notes or other evidences of
indebtedness to be issued in one or more series as provided in the New
Indenture and authenticated and delivered under the New Indenture and will
include the New 2030 Debentures.
"Subsidiary" means any corporation of which, at the time of determination,
the Company and/or one or more Subsidiaries owns or controls directly or
indirectly more than 50% of the shares of voting stock.
"Wholly owned", when used with reference to a Subsidiary, means a Subsidiary
of which all of the outstanding capital stock is owned by the Company or by
one or more wholly owned Subsidiaries.
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"Voting Stock", when used with reference to a Subsidiary, means stock of the
class or classes having general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of
such corporation provided that, for the purposes hereof, stock which carries
only the right to vote conditionally on the happening of an event shall not be
considered voting stock whether or not such event shall have happened.
MODIFICATION OF THE NEW INDENTURE
The New Indenture provides that the Company and the Trustee may, without the
consent of any Holders of New 2030 Debentures, enter into supplemental
indentures for the purposes, among other things, of adding to the Company's
covenants, adding additional Events of Default, establishing the form or terms
of Securities or curing ambiguities or inconsistencies in the New Indenture or
making other provisions, provided that any such action shall not adversely
affect the interests of the Holders of any outstanding series of Securities in
any material respect. (Section 9.01)
Modifications and amendments of the New Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the outstanding Securities of each series affected
thereby, except that no such modification or amendment may, without the
consent of the Holder of each outstanding Security affected thereby, (a)
change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Securities, (b) reduce the principal amount
of, rate of interest on, any premium payable upon the redemption of or the
amount of the principal of an Original Issue Discount Security or any other
Security which would be due and payable upon a declaration of acceleration of
the Maturity thereof upon the occurrence of an Event of Default, (c) change
the place of payment or the coin or currency in which any Security, or
interest thereon is payable, (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Security, (e) reduce the
percentage in principal amount of Securities, the consent of whose Holders is
required for modification or amendment of the New Indenture or for waiver of
compliance with certain provisions of the New Indenture or for waiver of
certain defaults, or (f) modify the requirements contained in the New
Indenture for consent to or approval of certain matters except to increase any
percentage for such consent or approval or to provide that certain other
provisions cannot be modified or waived without the consent of the Holder of
each Security affected thereby. (Section 9.02)
The Holders of a majority in aggregate principal amount of the outstanding
New 2030 Debentures may, on behalf of the Holders of all the New 2030
Debentures, waive compliance by the Company with certain restrictive
provisions of the New Indenture. (Section 10.08)
EVENTS OF DEFAULT
The New Indenture defines an Event of Default with respect to New 2030
Debentures as being any one of the following events: (a) default in the
payment of any interest on the New 2030 Debentures when due, and the
continuance of such default for a period of 30 days; (b) default in the
payment of principal of or any premium on the New 2030 Debentures at the date
on which such principal becomes due and payable as provided in the New 2030
Debenture or in the New Indenture, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise; (c) default in
the deposit of any sinking fund payment, when and as due on the New 2030
Debentures; (d) default in the performance or breach of any covenant or
warranty (a default in performance or breach of which is specifically dealt
with in the New Indenture) and the continuance of such default or breach for a
period of 60 days after written notice as provided in the New Indenture; or
(e) certain events involving bankruptcy, insolvency or reorganization.
(Section 5.01)
The New Indenture provides that if any Event of Default specified therein
shall occur and be continuing with respect to the New 2030 Debentures, other
than an Event of Default involving bankruptcy, insolvency or reorganization,
either the Trustee or the Holders of 25% in principal amount of the
outstanding New 2030 Debentures may declare the principal of the New 2030
Debentures to be due and payable. (Section 5.02) If an Event of Default
described in clause (e) above with respect to the New 2030 Debentures at the
time outstanding
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shall occur, the principal amount of all of the New 2030 Debentures will
automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. The Holders of a majority in aggregate principal
amount of the New 2030 Debentures may, on behalf of all Holders of New 2030
Debentures, waive any past default under the New Indenture with respect to the
New 2030 Debentures, except a default (a) in the payment of principal of, or
any premium or interest on, any New 2030 Debenture, and (b) in respect of a
covenant or provision of the New Indenture which cannot be modified or amended
without the consent of the Holder of each outstanding New 2030 Debenture.
(Section 5.13)
Subject to the provisions of the New Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
New Indenture at the request or discretion of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Section 6.03)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the outstanding New 2030
Debentures will have the right to direct the time, method and place of
conducting and proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the New
2030 Debentures. (Section 5.12)
No Holder of a New 2030 Debenture will have any right to institute any
proceeding with respect to the New Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the New 2030 Debentures, (ii) the Holders of
at least 25% in aggregate principal amount of the Outstanding New 2030
Debentures have made a written request to the Trustee to institute such
proceeding as trustee, (iii) the Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request, (iv) the Trustee has failed to
institute such proceeding, and has not received from the Holders of a majority
in aggregate principal amount of the outstanding New 2030 Debentures a
direction inconsistent with such request, within 60 days after such notice,
request and offer. (Section 5.07) However, such limitations do not apply to a
suit instituted by a Holder of a New 2030 Debenture for the enforcement of
payment of the principal of or any premium or interest on such New 2030
Debenture on or after the applicable due date specified in such New 2030
Debenture. (Section 5.08)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions and conditions of the New Indenture and, if so, specifying all such
known defaults. (Section 10.04)
DEFEASANCE AND COVENANT DEFEASANCE
The Company may elect, at its option at any time, to have the provisions of
Section 13.02, relating to defeasance and discharge of indebtedness, or
Section 13.03, relating to defeasance of certain restrictive covenants in the
New Indenture, applied to the New 2030 Debentures. (Section 13.01)
DEFEASANCE AND DISCHARGE
The New Indenture provides that, upon the Company's exercise of its option
to have Section 13.02 apply to any New 2030 Debentures, the Company will be
discharged from all its obligations with respect to such New 2030 Debentures
(except for certain obligations to exchange or register the transfer of New
2030 Debentures, to replace stolen, lost or mutilated New 2030 Debentures, to
maintain paying agencies and to hold moneys for payment in trust) upon the
deposit in trust for the benefit of the Holders of such New 2030 Debentures of
money or U.S. Government Obligations, or both, which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in any amount sufficient to pay the principal of and any premium
and interest on such New 2030 Debentures on the respective Stated Maturities
in accordance with the terms of the New Indenture and such New 2030
Debentures. Such defeasance or discharge may occur only if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the
38
<PAGE>
Company has received from, or there has been published by, the United States
Internal Revenue Service a ruling, or there has been a change in tax law, in
either case to the effect that Holders of such New 2030 Debentures will not
recognize gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge were not to occur.
(Sections 13.02 and 13.04)
DEFEASANCE OF CERTAIN COVENANTS
The New Indenture provides that, upon the Company's exercise of its option
to have Section 13.03 apply to any New 2030 Debentures, the Company may omit
to comply with certain restrictive covenants, including those described under
"Certain Covenants of the Company", and the occurrence of certain Events of
Default, which are described above in clause (d) (with respect to such
restrictive covenants) and under "Events of Default" and any that may be
described in the applicable Prospectus Supplement, will be deemed not to be or
result in any Event of Default, in each case with respect to such New 2030
Debentures. The Company, in order to exercise such option, will be required to
deposit, in trust for the benefit of the Holders of such New 2030 Debentures,
money or U.S. Government Obligations, or both, which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in an amount sufficient to pay the principal of and any premium
and interest on such New 2030 Debentures on the respective Stated Maturities
in accordance with the terms of the New Indenture and such New 2030
Debentures. The Company will also be required, among other things, to deliver
to the Trustee an Opinion of Counsel to the effect that Holders of such New
2030 Debentures will not recognize any gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and
defeasance were not to occur. In the event the Company exercised this option
with respect to any New 2030 Debentures and such New 2030 Debentures were
declared due and payable because of the occurrence of any Event of Default,
the amount of money and U.S. Government Obligations so deposited in trust
would be sufficient to pay amounts due on such New 2030 Debentures at the time
of their respective Stated Maturities but may not be sufficient to pay amounts
due on such New 2030 Debentures upon any acceleration resulting from such
Event of Default. In such case, the Company would remain liable for such
payments. (Sections 13.03 and 13.04)
NOTICES
Notices to Holders of New 2030 Debentures will be given by mail to the
addresses of such Holders as they may appear in the New 2030 Debenture
Register. (Section 1.06)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a New 2030 Debenture is registered as the
absolute owner thereof (whether or not such New 2030 Debenture may be overdue)
for the purpose of making payment and for all other purposes. (Section 3.08)
GOVERNING LAW
The New Indenture and the New 2030 Debentures will be governed by, and
construed in accordance with, the law of the State of New York. (Section 1.12)
THE TRUSTEE
Citibank, N.A. is the Trustee under the New Indenture. The Company has other
customary banking relationships with Citibank, N.A. in the ordinary course of
business.
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain federal income tax
consequences of the Exchange Offer to Holders of Old 2020 Debentures and of
the ownership and disposition of New 2030 Debentures acquired pursuant to the
Exchange Offer. The statements of law and legal conclusions set forth in this
summary are based on the opinion of Hunton & Williams, counsel to the Company.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations, Internal Revenue Service ("IRS") rulings,
official pronouncements and judicial decisions, all as in effect on the date
hereof and all of which are subject to change, possibly with retroactive
effect, or different interpretations. This summary is applicable only to
persons who hold Old 2020 Debentures as capital assets and who will hold New
2030 Debentures as capital assets. This summary does not discuss all the
federal income tax consequences that may be relevant to a Holder in light of
the Holder's particular circumstances. In particular, this summary does not
address any special rules that may be applicable to insurance companies, tax-
exempt persons, financial institutions, regulated investment companies,
dealers in securities or currencies, pass-through entities, persons that hold
Old 2020 Debentures or New 2030 Debentures as part of an integrated investment
(including a "straddle") consisting of Old 2020 Debentures or New 2030
Debentures and one or more other positions, foreign corporations, persons who
are not citizens or residents of the United States, or persons whose
functional currency is other than the United States dollar. In addition, this
summary does not address any state or local tax considerations that may be
relevant to a Holder's decision to exchange Old 2020 Debentures for New 2030
Debentures pursuant to the Exchange Offer.
THE FOLLOWING IS NOT TAX ADVICE TO ANY HOLDER OF OLD 2020 DEBENTURES. ALL
HOLDERS OF OLD 2020 DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING
THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE EXCHANGE OF
OLD 2020 DEBENTURES FOR NEW 2030 DEBENTURES AND OF THE OWNERSHIP AND
DISPOSITION OF NEW 2030 DEBENTURES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF
THEIR OWN PARTICULAR CIRCUMSTANCES.
EXCHANGE OF OLD 2020 DEBENTURES FOR NEW 2030 DEBENTURES
The exchange of Old 2020 Debentures for New 2030 Debentures (the "Exchange")
pursuant to the Exchange Offer will constitute a recapitalization within the
meaning of section 368(a)(1)(E) of the Code. A Holder of Old 2020 Debentures
who exchanges Old 2020 Debentures for New 2030 Debentures will recognize no
gain or loss on the Exchange, except that a cash-basis holder of Old 2020
Debentures who exchanges Old 2020 Debentures for New 2030 Debentures may be
required to recognize as interest income received on the Exchange Date an
amount equal to the interest accrued on such Old 2020 Debentures from October
1, 1997 through the Exchange Date. An exchanging Holder's tax basis in New
2030 Debentures received in the Exchange will be the same as such Holder's tax
basis in the Old 2020 Debentures exchanged. An exchanging Holder's holding
period for the New 2030 Debentures received in the Exchange will include its
holding period for the Old 2020 Debentures exchanged.
It is possible that the IRS could take the position that the excess, if any,
of the fair market value of New 2030 Debentures received by a Holder over the
fair market value of Old 2020 Debentures exchanged constitutes consideration
for the Holder's participation in the Exchange, and not consideration for the
Old 2020 Debentures. If the IRS successfully asserted such a position, such
excess likely would be treated as ordinary income to the Holder. The Company
intends to treat the entire value of the New 2030 Debentures as consideration
for the Old 2020 Debentures.
If a Holder's tax basis in Old 2020 Debentures immediately after the
acquisition of Old 2020 Debentures exceeded the principal amount of such Old
2020 Debentures, such excess constituted amortizable bond premium which the
Holder may have elected to amortize under a constant yield method under
section 171 of the Code. If such an electing Holder exchanges Old 2020
Debentures for New 2030 Debentures, the remaining bond premium on the New 2030
Debentures would be amortizable over the extended term of the New 2030
Debentures.
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Some Holders of Old 2020 Debentures may have acquired them at a "market
discount." For this purpose, "market discount" is the excess (if any) of the
principal amount over the Holder's acquisition price, subject to a statutory
de minimis exception. While accrued market discount generally must be
recognized to the extent of gain realized on the disposition of a market
discount debt instrument, the Exchange will not cause any exchanging Holders
of Old 2020 Debentures who acquired them at a market discount to recognize any
accrued market discount as income. Instead, any accrued market discount on Old
2020 Debentures that are exchanged for New 2030 Debentures will attach to the
New 2030 Debentures. In addition, unaccrued market discount on such Old 2020
Debentures will accrue over the extended term of the New 2030 Debentures.
NEW 2030 DEBENTURES
Stated Interest on New 2030 Debentures. In general, interest based on the
stated interest rate of the New 2030 Debentures will be ordinary income,
taxable when accrued, in the case of a Holder utilizing the accrual method of
accounting, or when received, in the case of a holder utilizing the cash
method of accounting.
No Original Issue Discount. The New 2030 Debentures will not be treated as
issued with original issue discount ("OID"), because the stated redemption
price at maturity ("SRPM") of the New 2030 Debentures will not exceed their
issue price. The SRPM of the New 2030 Debentures will equal the sum of the
principal amount plus the portion of interest in excess of the lower of 8 3/8%
or the Extension Coupon. The issue price of the New 2030 Debentures will be
their fair market value on their date of issue if, as expected, the New 2030
Debentures are considered to be "traded on an established market." If the New
2030 Debentures were not considered to be traded on an established market,
their issue price would be the fair market value of the Old 2020 Debentures,
which are so traded. In either case, the issue price will exceed the SRPM.
Bond Premium. If a Holder's tax basis in New 2030 Debentures immediately
after the Exchange exceeds the principal amount of such New 2030 Debentures,
such excess will constitute amortizable bond premium which the Holder may
elect to amortize under a constant yield method under section 171 of the Code.
A Holder that elects to amortize bond premium must reduce the tax basis in the
New 2030 Debentures by the amount so amortized. The amortizable bond premium
will be treated as an offset to interest income rather than as a separate
deduction item. An election to amortize bond premium under section 171 of the
Code by a Holder will apply to all obligations owned or acquired by the Holder
in the current and all subsequent taxable years and may not be revoked without
the permission of the IRS. If an election to amortize bond premium is not
made, a Holder must include the full amount of each interest payment in income
in accordance with its regular method of accounting and will receive a tax
benefit from the premium only in computing gain or loss upon the redemption,
sale or other disposition of the New 2030 Debentures.
Redemption or Sale of the New 2030 Debentures. In general, upon a
redemption, sale or other disposition of the New 2030 Debentures, a Holder
will recognize gain or loss equal to the difference between (i) the amount
realized on the disposition (other than amounts attributable to accrued
interest) and (ii) the Holder's tax basis in the New 2030 Debentures. Such
gain or loss will be capital gain or loss.
BACKUP WITHHOLDING
A Holder of New 2030 Debentures may be subject to backup withholding at a
rate of 31 percent with respect to interest paid or the proceeds of a
redemption, sale or other disposition of New 2030 Debentures, unless the
Holder provides its taxpayer identification number and certain required
certifications to the payor or otherwise establishes an exemption. Any amounts
so withheld would be allowed as a credit against the Holder's federal income
tax liability.
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PLAN OF DISTRIBUTION
The Company will exchange New 2030 Debentures for Old 2020 Debentures.
Accordingly, the Company will not receive any proceeds from the exchange of
New 2030 Debentures for Old 2020 Debentures.
Based on an interpretation by the staff of the Division of Corporation
Finance of the Commission, the Company believes that the New 2030 Debentures
issued pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by any Holder thereof without compliance with the
registration requirements of the Securities Act.
The Company has not entered into any arrangement or understanding with any
person to distribute the New 2030 Debentures to be received in the Exchange
Offer and, to the best of the Company's information and belief, each person
participating in the Exchange Offer is acquiring the New 2030 Debentures in
the ordinary course of business and has no arrangement or understanding with
any person to participate in the distribution of the New 2030 Debentures.
The Company has agreed to pay all expenses incident to the Exchange Offer
(other than commissions or concessions of any brokers or dealers).
VALIDITY OF NEW 2030 DEBENTURES
The validity of the offered New 2030 Debentures will be passed upon for the
Company by Hunton & Williams, New York, New York and Atlanta, Georgia.
INDEPENDENT AUDITORS
The consolidated financial statements as of December 31, 1996 and 1995 and
for each of the three years in the period ended December 31, 1996,
incorporated by reference in this Offering Circular from the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report
incorporated by reference herein.
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SCHEDULE A
FIXED SPREAD PRICING FORMULA TO DETERMINE THE
REFERENCE PRICE OF THE OLD 2020 DEBENTURES
YLD = Reference Yield of the Old 2020 Debentures expressed
as a decimal number.
CPN = The nominal rate of interest payable on the Old 2020
Debentures expressed as a decimal number.
N = The number of semi-annual interest payments, based
on the maturity date of the Old 2020 Debentures from
(but excluding)
the Exchange Date to (and including) the maturity
date of the Old 2020 Debentures.
S = The number of days from and including the semi-
annual interest payment date immediately preceding
the Exchange Date up to, but not including, the
Exchange Date. The number of days is computed using
the 30/360 day-count method.
exp = Exponentiate. The term to the left of "exp" is
raised to the power indicated by the term to the
right of "exp".
PRICE = The applicable Reference Price of the Old 2020
Debentures per $1,000 principal amount of an Old
2020 Debenture. The Reference Price of the Old 2020
Debentures is rounded to the nearest cent.
PRICE = 1,000
-----------------
(1 + YLD/2) exp (N - S/180)
+ N 1,000 (CPN/2)
(sigma) ---------------------
K=1 (1 + YLD/2) exp (K - S/180)
- 1,000 (CPN/2) (S/180)
A-1
<PAGE>
SCHEDULE B
HYPOTHETICAL PRICING EXAMPLE
FOR THE OLD 2020 DEBENTURES
This Schedule B provides a hypothetical illustration of the calculation of
the Reference Price of the Old 2020 Debentures based on hypothetical data, and
should, therefore, be used solely for the purpose of obtaining an
understanding of the calculation of the Reference Price of the Old 2020
Debentures, as quoted at a hypothetical Benchmark Treasury Yield, and should
not be used or relied upon for any other purpose.
OLD 2020 DEBENTURES
Maturity Date of the Old
2020 Debentures: April 1, 2020
Benchmark Treasury
Security: 6 3/8% U.S. Treasury Note due August 15, 2027
Fixed Spread: 0.52% (fifty-two basis points)
EXAMPLE:
Price Determination
Date: 2:00 p.m., New York City time, on December 15, 1997
Exchange Date: January 29, 1998
Benchmark Treasury Yield
on the Price
Determination Date = 6.01%
Fixed Spread = 0.52%
YLD = 6.53%
CPN = 8.375%
N = 45
S = 118
PRICE = $1,214.42
B-1
<PAGE>
SCHEDULE C
FIXED SPREAD PRICING FORMULA TO DETERMINE THE
REFERENCE PRICE OF THE NEW 2030 DEBENTURES
YLD = Reference Yield of the New 2030 Debentures expressed
as a decimal number.
CPN = The nominal rate of interest payable on the New 2030
Debentures expressed as a decimal number to April 1,
2020.
EXT = The nominal rate of interest payable on the New 2030
Debentures expressed as a decimal number from April
1, 2020 to April 1, 2030.
N = The number of semi-annual interest payments, based
on the maturity date of the Old 2020 Debentures from
(but excluding) the Exchange Date to (and including)
the maturity date of the Old 2020 Debentures.
M = The number of semi-annual interest payments, based
on the maturity date of the New 2030 Debentures from
(but excluding) the Exchange Date to (and including)
the maturity date of the New 2030 Debentures.
S = The number of days from and including the semi-
annual interest payment date immediately preceding
the Exchange Date up to, but not including, the
Exchange Date. The number of days is computed using
the 30/360 day-count method.
exp = Exponentiate. The term to the left of "exp" is
raised to the power indicated by the term to the
right of "exp".
PRICE = The applicable Reference Price of the New 2030
Debentures per $1,000 principal amount of a
Debenture. The Reference Price of the New 2030
Debentures is rounded to the nearest cent.
PRICE = 1,000
----------------------
(1 + YLD/2) exp (M - S/180)
+ N 1,000 (CPN/2)
(sigma) ---------------------
K = 1 (1 + YLD/2) exp (K - S/180)
+ M 1,000 (EXT/2)
(sigma) ---------------------
K = N+1 (1 + YLD/2) exp (K - S/180)
- 1,000 (CPN/2) (S/180)
C-1
<PAGE>
SCHEDULE D
HYPOTHETICAL PRICING EXAMPLE
FOR THE NEW 2030 DEBENTURES
This Schedule D provides a hypothetical illustration of the calculation of
the Reference Price of the New 2030 Debentures based on hypothetical data, and
should, therefore, be used solely for the purpose of obtaining an
understanding of the calculation of the Reference Price of the New 2030
Debentures, as quoted at a hypothetical Benchmark Treasury Yield, and
Extension Coupon, and should not be used or relied upon for any other purpose.
NEW 2030 DEBENTURES
Maturity Date of the New
2030 Debentures: April 1, 2030
Benchmark Treasury
Security: 6 3/8% U.S. Treasury Note due August 15, 2027
Fixed Spread: 0.60% (sixty basis points)
EXAMPLE:
Price Determination
Date: 2:00 p.m., New York City time, on December 15, 1997
Exchange Date: January 29, 1998
Benchmark Treasury Yield
on the Price
Determination Date = 6.01%
Fixed Spread = 0.60%
YLD = 6.61%
CPN = 8.375%
EXT = 7.82%
N = 45
M = 65
S = 118
PRICE = $1,224.42
D-1
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LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
8 3/8% DEBENTURES DUE 2020
FOR
DEBENTURES DUE 2030
OF
UNITED PARCEL SERVICE OF AMERICA, INC.
PURSUANT TO THE OFFERING CIRCULAR
DATED DECEMBER 18, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON THURSDAY, JANUARY 22, 1998, UNLESS EXTENDED ("THE EXPIRATION
DATE").
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should
be completed, signed, and submitted to the Exchange Agent:
CITIBANK, N.A.
<TABLE>
<CAPTION>
By Mail: By Overnight Courier Delivery: By Hand:
<S> <C> <C>
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data Distribution, Inc. c/o Citicorp Data Distribution, Inc. Corporate Trust Window
P.O. Box 7072 404 Sette Drive 111 Wall Street, 5th Floor
Paramus, New Jersey 07653 Paramus, New Jersey 07652 New York, New York 10043
</TABLE>
Facsimile for Eligible Institutions:
(201) 262-3240
Facsimile Confirmation Only:
(800) 422-2077
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
For any questions regarding this Letter of Transmittal or for any additional
information you may contact the Exchange Agent.
The undersigned hereby acknowledges receipt of the Offering Circular dated
December 18, 1997 (as it may be supplemented and amended from time to time,
the "Offering Circular") of United Parcel Service of America, Inc., a Delaware
corporation ("Company"), and this Letter of Transmittal (the "Letter of
Transmittal") and the Notice of Guaranteed Delivery, of even date herewith,
that together constitute the Company's offer (the
<PAGE>
"Exchange Offer") to exchange an aggregate principal amount of up to
$700,000,000 of its Debentures Due 2030 (the "New 2030 Debentures") for a like
amount of its issued and outstanding 8 3/8% Debentures due 2020 (the "Old 2020
Debentures") from its registered holders (individually, a "Holder" and
collectively, the "Holders") thereof. Capitalized terms used but not defined
herein have the meanings ascribed to them in the Offering Circular.
The undersigned hereby tenders the Old 2020 Debentures described in Box 1
below, upon the terms and subject to the conditions described in the Offering
Circular and this Letter of Transmittal. The undersigned is the Holder of all
the Old 2020 Debentures and the undersigned represents that it has received
from each beneficial owner of the tendered Old 2020 Debentures ("Beneficial
Owners") valid instructions which authorize and instruct the undersigned to
take the action described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the tendered
Old 2020 Debentures, the undersigned hereby exchanges, assigns and transfers
to, or upon the order of, the Company all right, title, and interest in, to
and under the tendered Old 2020 Debentures.
Please issue the New 2030 Debentures exchanged for tendered Old 2020
Debentures in the name(s) of the undersigned. If Old 2020 Debentures not
tendered or not exchanged are to be delivered to a person other than to the
Holder of the Old 2020 Debentures tendered or to an address other than that of
the Holder of such Old 2020 Debentures, such Holder should so indicate in the
section of this Letter of Transmittal entitled "Special Delivery Instructions"
below (see Box 2).
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned
with respect to the tendered Old 2020 Debentures, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver the tendered Old 2020 Debentures to
the Company or cause ownership of the tendered Old 2020 Debentures to be
transferred to, or upon the order of, the Company, on the books of the
registrar for the Debentures and deliver all accompanying evidences of
transfer and authenticity to, or upon the order of, the Company upon receipt
by the Exchange Agent, as the undersigned's agent, of the New 2030 Debentures
to which the undersigned is entitled upon acceptance by the Company of the
tendered Old 2020 Debentures pursuant to the Exchange Offer, and (ii) receive
all benefits and otherwise exercise all rights of beneficial ownership of the
tendered Old 2020 Debentures, all in accordance with the terms of the Exchange
Offer.
The undersigned understands that tenders of Old 2020 Debentures pursuant to
the procedures described under the caption "The Exchange Offer--Procedures for
Tendering Old 2020 Debentures" in the Offering Circular and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of
the Exchange Offer, subject only to withdrawal of such tenders on the terms
set forth in the Offering Circular under the caption "The Exchange Offer--
Withdrawal Rights." All authority herein conferred or agreed to be conferred
shall survive the death or incapacity of the undersigned and any Beneficial
Owner(s), and every obligation of the undersigned or any Beneficial Owner(s)
hereunder shall be binding upon the heirs, representatives, successors, and
assigns of the undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign, and transfer the tendered Old
2020 Debentures and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances, and
adverse claims when the tendered Old 2020 Debentures are acquired by the
Company as contemplated herein. The undersigned and each Beneficial Owner
will, upon request, execute and deliver any additional documents reasonably
requested by the Company or the Exchange Agent as necessary or desirable to
complete and give effect to the transactions contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 1 is true and correct.
2
<PAGE>
Holders of Old 2020 Debentures that are tendering by book-entry transfer to
the Exchange Agent's account at DTC can execute the tender through the DTC
Automated Tender Offer Program ("ATOP"), for which the transaction will be
eligible. DTC participants that are accepting the Exchange Offer must transmit
their acceptance to DTC, which will verify the acceptance and execute a book-
entry delivery to the Exchange Agent's DTC account. DTC will then send an
Agent's Message to the Exchange Agent for its acceptance. DTC participants may
also accept the Exchange Offer prior to the Expiration Date by submitting a
Notice of Guaranteed Delivery through ATOP.
[_]CHECK HERE IF OLD 2020 DEBENTURES ARE BEING DELIVERED HEREWITH.
[_]CHECK HERE IF OLD 2020 DEBENTURES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE "USE OF GUARANTEED DELIVERY" BELOW (Box 3).
[_]CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE "USE OF BOOK-ENTRY TRANSFER"
BELOW (Box 4).
3
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THE
BOXES
BOX 1
DESCRIPTION OF DEBENTURES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL AGGREGATE
NAMES(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S), CERTIFICATE AMOUNT PRINCIPAL
EXACTLY AS NAME(S) APPEAR(S) ON OLD 2020 DEBENTURE CERTIFICATE(S) NUMBER(S) OF REPRESENTED BY AMOUNT
(PLEASE FILL IN, IF BLANK) DEBENTURES* CERTIFICATE(S) TENDERED**
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL
- --------------------------------------------------------------------------------
</TABLE>
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Old 2020
Debentures. All other tenders must be in integral multiples of $1,000 of
principal amount. Unless otherwise indicated in this column, the
principal amount of all Old 2020 Debentures identified in this Box 1 or
delivered to the Exchange Agent herewith shall be deemed tendered. See
Instruction 4.
4
<PAGE>
BOX 2
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF NEW 2030 DEBENTURES EXCHANGED FOR OLD 2020
DEBENTURES AND UNTENDERED OLD 2020 DEBENTURES ARE TO BE SENT TO SOMEONE
OTHER THAN THE UNDERSIGNED, OR TO THE UNDERSIGNED AT AN ADDRESS OTHER THAN
THAT SHOWN ABOVE.
Mail New 2030 Debenture(s) and any Old 2020 Debentures not tendered hereby
to:
Name(s):
-----------------------------------------------------------------------------
(please print)
Address:
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(include Zip Code)
Tax Identification or
Social Security No.:
-----------------------------------------------------------------------------
5
<PAGE>
BOX 3
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF DEBENTURES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Holder(s): ________________________________________________________
Window Ticket No. (if any): __________________________________________________
Date of Execution of Notice of Guaranteed Delivery: __________________________
Name of Eligible Institution that Guaranteed Delivery: _______________________
If Delivered by Book-Entry Transfer, complete the following:
DTC Account Number: _____________________________________________________
Transaction Code Number: ________________________________________________
BOX 4
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF OLD 2020 DEBENTURES IS TO BE MADE BY
BOOK-ENTRY TRANSFER.
Name of Tendering Institution: _______________________________________________
Account Number: ______________________________________________________________
Transaction Code Number: _____________________________________________________
______________________________________________________________________________
6
<PAGE>
- --------------------------------------------------------------------------------
BOX 5
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
Signature Guarantee
x _________________________________ (If required by Instruction 5)
x _________________________________ Authorized Signature
(Signature of Holder(s)
or Authorized Signatory) x _________________________________
Note: The above lines must be Name: _____________________________
signed by the registered holder(s) (please print)
of Old 2020 Debentures as their
name(s) appear(s) therein or by
person(s) authorized to become
registered holder(s) (evidence of
such authorization must be
transmitted with this Letter of
Transmittal). If signature is by a
trustee, executor, administrator,
guardian, attorney-in-fact,
officer, or other person acting in
a fiduciary or representative
capacity, such person must set
forth his or her full title below.
See Instruction 5
Title: ____________________________
Name of Firm: _____________________
(Must be an Eligible
Institution as
defined in Instruction 2)
Address: __________________________
_____________________________
_____________________________
(Zip Code)
Name(s): __________________________ Area Code and Telephone Number:
Capacity: _________________________ _____________________________
Address: __________________________ Dated: ____________________________
_______________________________
(Zip Code)
Area Code and Telephone Number:
_______________________________
Tax Identification or Social
Security Number:
_______________________________
7
<PAGE>
PAYORS NAME: CITIBANK, N.A.
NAME: (If joint names, list first and circle the
name of the person or entity whose number you enter
in Part 1 below. See instructions if your name has
changed.
SUBSTITUTE
FORM W-9
DEPARTMENT OF -----------------------------------------------------
THE TREASURY ADDRESS: ____________________________________________
INTERNAL -----------------------------------------------------
REVENUE CITY, STATE AND ZIP CODE: ___________________________
SERVICE -----------------------------------------------------
LIST ACCOUNT NUMBER(S) (OPTIONAL): __________________
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
-----------------------------------------------------
--------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR ----------------------
TAXPAYOR IDENTIFICATION Social Security Number
NUMBER IN THE BOX AT RIGHT
AND CERTIFY BY SIGNING AND OR
DATING BELOW
----------------------
Taxpayor Identification
Number
--------------------------------------------------------
PART 2--Check the box if you are NOT PART 3 --
subject to backup withholding under Awaiting
the provisions of section TIN [_]
3406(a)(1)(C) of the Internal
Revenue Code because (1) you have
not been notified that you are
subject to backup withholding as a
result of failure to report all
interest or dividends or (2) the
Internal Revenue Service has
notified you that you are no longer
subject to backup withholding.
- -------------------------------------------------------------------------------
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION
PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
SIGNATURE ___________________________________ DATE ______________________
NAME (Please Print) __________________________________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
exchange agent, 31% of all reportable payments made to be will be withheld,
but will be refunded if I provide a certified taxpayer identification number
within 60 days.
______________________________________ _____________________________________
Signature Date
______________________________________
Name (Please Print)
8
<PAGE>
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD 2020 DEBENTURES. This
Letter of Transmittal is to be completed by Holders of tendered Old 2020
Debentures if certificates representing such tendered Old 2020 Debentures are
to be forwarded herewith pursuant to the procedures set forth in the Offering
Circular under "The Exchange Offer--Procedures for Tendering Old 2020
Debentures," unless delivery of such certificates is to be made by book-entry
transfer to the Exchange Agent's account maintained by DTC through ATOP. For a
Holder to properly tender Old 2020 Debentures pursuant to the Exchange Offer,
a properly completed and duly executed copy of this Letter of Transmittal,
including the Substitute Form W-9, and any other documents required by this
Letter of Transmittal must be received by the Exchange Agent at its address
set forth herein, and either (i) certificates for tendered Old 2020 Debentures
must be received by the Exchange Agent at its address set forth herein, or
(ii) such tendered Old 2020 Debentures must be transferred pursuant to the
procedures for book-entry transfer described in the Offering Circular under
the caption "The Exchange Offer--Procedures for Tendering" (and a confirmation
of such transfer received by the Exchange Agent) in each case prior to
Expiration Date. The method of delivery of certificates for tendered Old 2020
Debentures, this Letter of Transmittal and all other required documents to the
Exchange Agent is at the election and risk of the tendering holder and the
delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. Instead of delivery by mail, it is
recommended that the Holder use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. No Letter
of Transmittal or tendered Old 2020 Debentures should be sent to the Company.
Neither the Company nor the Exchange Agent is under any obligation to notify
any tendering holder of the Company's acceptance of tendered Old 2020
Debentures prior to the closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. If a Holder desires to tender Old 2020
Debentures pursuant to the Exchange Offer and (a) certificates representing
such tendered Old 2020 Debentures are not immediately available, (b) time will
not permit such Holder(s) Letter of Transmittal, certificates representing
such tendered Old 2020 Debentures and all other required documents to reach
the Exchange Agent on or prior to the Expiration Date, or (c) the procedures
for book-entry transfer cannot be completed on or prior to the Expiration
Date, such Holder may tender Old 2020 Debentures with the effect that such
tender will be deemed to have been received on or prior to the Expiration Date
if the procedures set forth below and in the Offering Circular under "The
Exchange Offer--Guaranteed Delivery Procedures" (including the completion of
Box 3 above) are followed. Pursuant to such procedures, (i) the tender must be
made by or through an Eligible Institution (as defined), (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Company herewith, or an Agent's Message with respect
to a guaranteed delivery that is accepted by the Company, must be received by
the Exchange Agent on or prior to the Expiration Date, and (iii) the
certificates for the tendered Old 2020 Debentures, in proper form for transfer
(or a Book-Entry Confirmation of the transfer of such tendered Old 2020
Debentures to the Exchange Agent's account at DTC as described in the Offering
Circular), together with a Letter of Transmittal (or manually signed facsimile
thereof) properly completed and duly executed, with any required signature
guarantees and any other documents required by the Letter of Transmittal or a
properly transmitted Agent's Message, must be received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution
of the Notice of Guaranteed Delivery. Any Holder who wishes to tender Old 2020
Debentures pursuant to the guaranteed delivery procedures described above must
ensure that the Exchange Agent receives the Notice of Guaranteed Delivery
relating to such tendered Old 2020 Debentures prior to the Expiration Date.
Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by an Eligible Holder who
attempted to use the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO HOLDERS. Only a Holder in whose name Old
2020 Debentures are registered on the books of the registrar (or the legal
representative or attorney-in-fact of such registered holder)
9
<PAGE>
may execute and deliver this Letter of Transmittal. Any Beneficial Owner of
Old 2020 Debentures who is not the Holder must arrange promptly with the
Holder to execute and deliver this Letter of Transmittal on his or her behalf.
4. PARTIAL TENDERS. Tenders of Old 2020 Debentures will be accepted only in
integral multiples of $1,000 in principal amount. If less than the entire
principal amount of Old 2020 Debentures held by the Holder is tendered, the
Holder should fill in the principal amount tendered in the column labeled
"Aggregate Principal Amount Tendered" of the box entitled "Description of
Debentures Tendered" (see Box 1) above. The entire principal amount of Old
2020 Debentures delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. If the entire principal amount of all Old
2020 Debentures held by the Holder is not tendered, then new Certificates
representing the Old 2020 Debentures for the principal amount of Old 2020
Debentures not tendered and New 2030 Debentures issued in exchange for any Old
2020 Debentures tendered and accepted will be sent to the Holder at its
registered address, unless a different address is provided in the box entitled
"Special Delivery Instructions" on this Letter of Transmittal, as soon as
practicable following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
Holder(s) of the tendered Old 2020 Debentures, the signature must correspond
with the name(s) as written on the face of the tendered Old 2020 Debentures
without alteration, enlargement or any change whatsoever.
If any of the tendered Old 2020 Debentures are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal. If
any tendered Old 2020 Debentures are held in different names, it will be
necessary to complete, sign and submit as many separate copies of the Letter
of Transmittal as there are different names in which such tendered Old 2020
Debentures are held.
If this Letter of Transmittal is signed by the Holder(s) of Old 2020
Debentures, and New 2030 Debentures issued in exchange therefor are to be
issued (and any untendered principal amount of Old 2020 Debentures is to be
reissued) in the name of the Holder(s), then such Holder(s) need not and
should not endorse any Old 2020 Debentures, nor provide a separate bond power.
In any other case, such Holder(s) must either properly endorse the tendered
Old 2020 Debentures or transmit a properly completed separate bond power with
this Letter of Transmittal with the signature(s) on the endorsement or bond
power guaranteed by a Medallion Signature Guarantor (as defined below).
If this Letter of Transmittal is signed by a person other than the Holder(s)
of any tendered Old 2020 Debentures, such tendered Old 2020 Debentures must be
endorsed or accompanied by appropriate bond powers, in each case, signed as
the name(s) of the Holder(s) appear(s) on the tendered Old 2020 Debentures,
with the signature(s) on the endorsement or bond power guaranteed by a
Medallion Signature Guarantor.
If this Letter of Transmittal or any tendered Old 2020 Debentures or bond
powers are signed by trustees, executors, administrators, guardians, attorney-
in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by the Company, evidence satisfactory to the Company of their
authority to so act must be submitted with this Letter of Transmittal.
Signatures on this Letter of Transmittal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program (each a "Medallion Signature Guarantor"), unless the Old 2020
Debentures are tendered (i) by the Holder of the Old 2020 Debentures (or by a
participant in DTC whose name appears on a security position listing as the
owner of such Old 2020 Debentures) who has not completed Box 2 ("Special
Delivery Instructions") on this Letter of Transmittal, or (ii) for the account
of a member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. ("NASD") or a commercial bank
or trust company having an office or correspondent in the United States (each
of the foregoing being referred to as an "Eligible Institution"). If the
tendered Old 2020 Debentures are registered in the name
10
<PAGE>
of a person other than the signer of the Letter of Transmittal or if Old 2020
Debentures not tendered are to be returned to a person other than the Holder,
then the signature on this Letter of Transmittal accompanying the tendered Old
2020 Debentures must be guaranteed by a Medallion Signature Guarantor as
described above. Beneficial Owners whose tendered Old 2020 Debentures are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if they desire to tender such Old 2020 Debentures.
6. SPECIAL DELIVERY INSTRUCTIONS. Holders should indicate in Box 2 ("Special
Delivery Instructions") the name and address to which the New 2030 Debentures
and/or substitute Old 2020 Debentures for principal amounts not tendered or
not accepted for exchange are to be sent, if different from the name and
address of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old 2020 Debentures pursuant to the Exchange
Offer. If, however, a transfer tax is imposed for any reason other than the
transfer and exchange of Old 2020 Debentures pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the Holder or
on any other person) will be payable by the Holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such Holder.
It will not be necessary for transfer tax stamps to be affixed to the
tendered Old 2020 Debentures listed in this Letter of Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
Holder(s) of any Old 2020 Debentures which are accepted for exchange must
provide the Exchange Agent (as payor) with its correct taxpayer identification
number ("TIN"), which, in the case of a Holder who is an individual, is his or
her social security number. If the Exchange Agent is not provided with the
correct TIN, the Holder may be subject to backup withholding and a $50 penalty
imposed by the Internal Revenue Service ("IRS"). (If withholding results in an
over-payment of taxes, a refund may be obtained.) Certain Holders (including,
among others, all corporations and certain foreign individuals) are not
subject to these backup withholding and reporting requirements. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional instructions.
To prevent backup withholding, each Holder of tendered Old 2020 Debentures
must provide such Holder's correct TIN by completing the Substitute Form W-9
set forth herein, certifying that the TIN provided is correct (or that such
Holder is awaiting a TIN), and that (i) the Holder has not been notified by
the IRS that such Holder is subject to backup withholding as a result of
failure to report all interest or dividends or (ii) if previously so notified,
the IRS has notified the Holder that such Holder is no longer subject to
backup withholding. If the tendered Old 2020 Debentures are registered in more
than one name or are not in the name of the actual owner, consult the
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for information on which TIN to report.
The Company reserves the right in its sole discretion to take whatever steps
are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old 2020
Debentures will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the right to
reject any and all Old 2020 Debentures not validly tendered or any Old 2020
Debentures the Company's acceptance of which would, in the opinion of the
Company or its counsel, be unlawful. The Company also reserves the right to
waive any conditions of the Exchange Offer or defects or irregularities in
tenders of Old 2020 Debentures as to any ineligibility of any Holder who seeks
to tender Old 2020 Debentures in the Exchange Offer. The interpretation of the
terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Company shall be final and
binding on all parties. Unless waived, any defects or irregularities in
11
<PAGE>
connection with tenders of Old 2020 Debentures must be cured within such time
as the Company shall determine. Neither the Company, the Exchange Agent nor
any other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old 2020 Debentures, nor shall any
of them incur any liability for failure to give such notification. Tenders of
Old 2020 Debentures will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old 2020 Debentures received by
the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned by the
Exchange Agent to the Holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to amend
waive or modify any of the conditions in the Exchange Offer in the case of any
Old 2020 Debentures.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Old 2020 Debentures or transmittal of this Letter of
Transmittal will be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose tendered
Old 2020 Debentures have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated herein for further
instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Offering Circular or this
Letter of Transmittal may be directed to the Exchange Agent or the Information
Agent at the addresses and telephone numbers indicated herein. Holders may
also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF EXCHANGE NOTES; RETURN OF
NOTES. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Old 2020 Debentures as soon as
practicable after the Expiration Date and will issue New 2030 Debentures
therefor on the fifth business day following the Expiration Date. For purposes
of the Exchange Offer, the Company shall be deemed to have accepted tendered
Old 2020 Debentures when, as and if the Company has given written or oral
notice (immediately followed in writing) thereof to the Exchange Agent. If any
tendered Old 2020 Debentures are not exchanged pursuant to the Exchange Offer
for any reason, such unexchanged Old 2020 Debentures will be returned, without
expense, to the undersigned at the address shown in Box 1 or at a different
address as may be indicated herein under "Special Delivery Instructions" (Box
2).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures set
forth in the Offering Circular under the caption "The Exchange Offer--
Withdrawal Rights."
12
