PROSPECTUS
Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-2699
Freeport-McMoRan Copper & Gold Inc.
Debt Securities
Preferred Stock
Warrants
______________________________
Freeport-McMoRan Copper & Gold Inc. (the "Company" or "FCX") may offer
and issue from time to time, together or separately, in one or more series
(i) Debt Securities, which may be either senior debt securities ("Senior
Securities"), senior subordinated debt securities ("Senior Subordinated
Securities") or subordinated debt securities ("Subordinated Securities"),
consisting of debentures, notes, bonds and/or other unsecured evidences of
indebtedness, (ii) shares of the Company's Preferred Stock, par value $0.10
per share ("Preferred Stock"), and (iii) warrants ("Warrants") to purchase
Debt Securities or Preferred Stock. The foregoing securities are
collectively referred to as the "Securities." The Securities will be
offered at an aggregate initial offering price not to exceed U.S.
$599,992,400 (or its equivalent (based on the applicable exchange rate at
the time of sale) in one or more foreign currencies, currency units or
composite currencies as shall be designated by FCX) at prices and on terms
to be determined at the time of sale.
The accompanying Prospectus Supplement sets forth with regard to the
particular Securities in respect of which this Prospectus is being
delivered: (i) in the case of the Debt Securities, the title, aggregate
principal amount, denominations (which may be in United States dollars or in
any other currency, currencies or currency unit, including the European
Currency Unit), maturity, interest rate, if any (which may be fixed or
variable), or method of calculation thereof, and time of payment of any
interest, premium and additional amounts, if any, any terms for redemption
at the option of the Company or the holder, any terms for sinking fund
payments, any conversion or exchange rights, any listing on a securities
exchange and the initial public offering price and any other terms in
connection with the offering and sale of such Debt Securities; (ii) in the
case of Preferred Stock, the designation, stated value and liquidation
preference per share, initial public offering price, dividend rate (or
method of calculation), dates on which dividends shall be payable and dates
from which dividends shall accrue, any redemption or sinking fund
provisions, conversion or exchange rights, whether the Company has elected
to offer the Preferred Stock in the form of depositary shares, any listing
of the Preferred Stock on a securities exchange and any other terms in
connection with the offering and sale of such Preferred Stock; and (iii) in
the case of Warrants, the number and terms thereof, the designation and the
number of Securities issuable upon their exercise, the exercise price, any
listing of the warrants or the underlying Securities on a securities
exchange and any other terms in connection with the offering, sale and
exercise of the Warrants. The Prospectus Supplement will also contain
information, as applicable, about certain United States federal income tax
considerations relating to the Securities in respect of which this
Prospectus is being delivered.
The Senior Securities will rank equally with all other unsubordinated
and unsecured indebtedness of the Company. The Senior Subordinated
Securities will be subordinated to all existing and future Senior
Indebtedness (as defined) of the Company, and senior to all existing and
future Subordinated Indebtedness (as defined) of the Company. The
Subordinated Securities will be subordinated to all existing and future
Senior Indebtedness and Senior Subordinated Indebtedness of the Company.
All or a portion of any Debt Securities may be issued in permanent global
form.
FCX may sell Securities to or through one or more underwriters,
dealers or agents or to other purchasers. The accompanying Prospectus
Supplement sets forth the names of any underwriters, dealers or agents
involved in the sale of the Securities in respect of which this Prospectus
is being delivered, the principal amounts, if any, to be purchased by any
underwriters, dealers or sold through any agents and the compensation, if
any, of such underwriters or agents. See "Plan of Distribution."
This Prospectus may not be used to consummate sales of Securities
unless accompanied by a Prospectus Supplement.
PROSPECTIVE PURCHASERS OF SECURITIES SHOULD CAREFULLY CONSIDER THE
MATTERS SET FORTH UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
April 15, 1997
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained or incorporated by
reference in this Prospectus or in the Prospectus Supplement, and, if given
or made, such information or representations must not be relied upon as
having been authorized by FCX or any underwriter, agent or dealer. This
Prospectus and the accompanying Prospectus Supplement do not constitute an
offer to sell or a solicitation of an offer to buy any securities other than
the securities to which they relate or an offer to sell, or a solicitation
of an offer to buy, to any person in any jurisdiction where such an offer to
or solicitation would be unlawful. Neither the delivery of this Prospectus
nor the accompanying Prospectus Supplement, nor any sale made thereunder
shall, under any circumstances, create the implication that the information
contained or incorporated by reference herein or therein is correct as of
any time subsequent to their respective dates.
Certain persons participating in the offering of the Securities may
engage in transactions that stabilize, maintain or otherwise affect the
prices of such Securities or other securities of FCX, including those
activities described in the Prospectus Supplement. For a description of
such activities, see "Underwriting" in the Prospectus Supplement.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed with the Commission 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, and at the regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois, 60661 and at Seven World Trade Center, 13th Floor, New
York, New York, 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C., 20549, at prescribed rates. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the Commission
(http:\www.sec.gov). Such reports, proxy statements and other information
concerning the Company can also be inspected at the offices of the New York
Stock Exchange ("NYSE") at 20 Broad Street, New York, New York, 10005.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits referred to as the "Registration
Statement") with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"), pertaining to the Securities covered by this
Prospectus. This Prospectus, filed as a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement
or the exhibits and schedules thereto, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, and to which
reference is hereby made. Statements made in this Prospectus as to the
contents of any contract, agreement or other document filed as an exhibit to
the Registration Statement are summaries of the terms of such contracts,
agreements or documents. Reference is made to each such exhibit for a more
complete description of the matters involved, and such statements shall be
deemed qualified in their entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (File No 1-9916) and Current Reports on Form 8-K dated
February 18, 1997, February 21, 1997, February 26, 1997, February 27, 1997,
February 28, 1997, March 26, 1997 and April 9, 1997, which have been filed
by the Company with the Commission pursuant to the Exchange Act, are by this
reference incorporated in and made a part of this Prospectus.
All reports and other documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference herein and to be
part of this Prospectus from their respective dates of filing. Any
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded to the
extent that a statement contained herein or in any other document
subsequently filed which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, upon a written or oral request, a copy
of any or all of the documents that are incorporated herein by reference
(other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents). Requests
should be directed to Freeport-McMoRan Copper & Gold Inc., Attention:
Secretary, 1615 Poydras Street, New Orleans, Louisiana, 70112 (Telephone:
(504) 582-4000).
THE COMPANY
Freeport-McMoRan Copper & Gold Inc., a Delaware corporation ("FCX" or
the "Company"), is one of the world's largest copper and gold companies in
terms of reserves and production, and believes that it has one of the lowest
cost copper producing operations in the world, taking into account customary
credits for related gold and silver production.
FCX's principal operating subsidiary is P.T. Freeport Indonesia
Company, a limited liability company organized under the laws of the
Republic of Indonesia and domesticated in Delaware ("PT-FI"). PT-FI engages
in the exploration for and development, mining and processing of copper,
gold and silver in Irian Jaya, Indonesia pursuant to an agreement (a "COW"
or "Contract of Work") with the Government of the Republic of Indonesia (the
"Indonesian Government") and in the worldwide marketing of concentrates
containing such metals. PT-FI's largest mine, Grasberg, was discovered in
1988 and contains the largest single gold reserve and one of the three
largest open-pit copper reserves in the world.
Through P.T. IRJA Eastern Minerals Corporation ("Eastern Mining"), FCX
holds an additional COW in Irian Jaya. Eastern Mining was formed in 1994
for the purpose of acquiring, holding and developing the Eastern Mining COW.
FCX is also engaged in the smelting and refining of copper
concentrates in Spain through its indirect, wholly-owned subsidiary,
Atlantic Copper Holding, S.A.
The Company's principal executive offices are located at 1615 Poydras
Street, New Orleans, Louisiana, 70112 and its telephone number is (504) 582-
4000.
RISK FACTORS
An investment in any Securities involves certain risks. Accordingly,
prospective investors should consider carefully the following factors, in
addition to the other information concerning the Company and its business
contained or incorporated by reference in this Prospectus, and any
accompanying Prospectus Supplement, before purchasing any of the Securities
offered hereby. To the extent any of the information contained in this
Prospectus and any accompanying Prospectus Supplement constitutes a
"forward-looking statement" as defined in Section 27A(i)(1) of the
Securities Act, the risk factors set forth below are meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those in the forward-looking statement.
Prices of Minerals
Because FCX's revenues are derived primarily from the sale of
concentrates containing copper and gold, FCX's earnings are directly related
to market prices for copper and gold. Prices for such minerals historically
have fluctuated widely and are affected by numerous factors beyond FCX's
control.
Location and Industry Risks
PT-FI's mining operations are located in steeply mountainous terrain
in a very remote area of Indonesia, which makes the conduct of its
operations difficult and has required PT-FI to overcome special engineering
difficulties and develop extensive infrastructure facilities. The area is
subject to considerable rainfall, which has led to periodic floods and mud
slides. The mine site is also in an active seismic area, and earth tremors
have been experienced from time to time. PT-FI also is subject to the usual
risks encountered in the mining industry, including unexpected geological
conditions resulting in cave-ins, floodings and rock-bursts and unexpected
changes in rock stability conditions. None of these factors has caused any
significant interruptions to production or significant property damage,
although no assurances can be given that delays or damage will not occur in
the future. PT-FI has substantial insurance involving such amounts and
types of coverage as it believes are appropriate for its exploration,
development, mining and processing activities in Indonesia.
Political Factors
Maintaining a good relationship with the Indonesian Government is of
particular importance to the Company because its principal operations are
located in Indonesia. PT-FI's mining complex was Indonesia's first copper
mining project and was the first major foreign investment in Indonesia
following the economic development program instituted by the Suharto
administration in 1967. PT-FI works closely with the central, provincial and
local governments in development efforts in the vicinity of its operations.
The Company operates in Indonesia through PT-FI by virtue of the PT-FI COW
and through Eastern Mining by virtue of the Eastern Mining COW, both of
which have 30-year terms, provide for two 10-year extensions under certain
conditions, and govern PT-FI's and Eastern Mining's rights and obligations
relating to taxes, exchange controls, repatriation and other matters. Both
COWs were concluded pursuant to the 1967 Foreign Capital Investment Law,
which expresses Indonesia's foreign investment policy and provides basic
guarantees of remittance rights and protection against nationalization, a
framework for economic incentives and basic rules regarding other rights and
obligations of foreign investors.
PT-FI's mining operations are located in the Indonesian province of
Irian Jaya, which occupies the western half of the island of New Guinea and
became part of Indonesia during the early 1960s. The area surrounding PT-
FI's mining development is sparsely populated by primitive local tribes and
former residents of more populous areas of Indonesia, some of whom have
resettled in Irian Jaya under the Indonesian Government's transmigration
program. Certain members of the local population oppose Indonesian rule over
Irian Jaya, and several small separatist groups seek political independence
for the province. Sporadic attacks on civilians by the separatists and
sporadic but highly publicized conflicts between separatists and the
Indonesian military have led to allegations of human rights violations. PT-
FI personnel have not been involved in those conflicts. The Indonesian
military occasionally has exercised its right to appropriate transportation
and other equipment of PT-FI.
PT-FI's policy has been to operate in Irian Jaya in compliance with
Indonesian laws and in a manner that improves the lives of the local
population. PT-FI incurs significant costs associated with its social and
cultural activities. Such activities include comprehensive job training
programs, basic education programs, extensive malaria control and general
public health programs, agricultural assistance programs, a business
incubator program to encourage the local people to establish their own small
scale businesses, cultural preservation programs, and charitable donations.
Following civil disturbances in the mining town of Tembagapura and the
lowlands town of Timika in early 1996 and as a result of subsequent meetings
with tribal leaders, the Company, in cooperation with the Indonesian
Government, agreed to redistribute and refocus its community development
programs by dedicating 1% of PT-FI's revenues over the next ten years to
fund these efforts and, among other things, to increase the number of local
Irianese in its work force. The Indonesian Government agreed as part of its
development efforts in Irian Jaya to create an integrated development plan
calling for the participation of the local tribes in creating and developing
the community development projects funded by the Company. While management
believes that its efforts to be responsive to the issues relating to the
impact of its operations on the local tribes should ensure that mining
operations will not be disrupted, social and political instability in the
area may, in the future, have an adverse impact on PT-FI's mining
operations.
Reserves
FCX reserve amounts, which are determined in accordance with
established mining industry practices and standards, are estimates only.
PT-FI's mines, whether in the production or development phase may not
conform to geological concepts or other expectations, so that the volume and
grade of reserves recovered and the rates of production may be more or less
than anticipated. Because ore bodies do not contain uniform grades of
minerals, ore recovery rates will vary from time to time, resulting in
variations in volumes of minerals sold from period to period. Further,
market price fluctuations in copper, gold and, to a lesser extent, silver,
and changes in operating and capital costs may render certain ore reserves
uneconomic to develop. No assurance can be given that FCX's exploration
programs will result in the discovery of commercially exploitable mineral
deposits.
Environmental and Government Regulation
The Company's exploration and mining activities in Irian Jaya involve
significant engineering and environmental challenges that relate primarily
to the location of the mine in remote, rugged highlands and the disposition
of tailings through discharge into a river that deposits them in a
controlled deposition area near the sea. The Company has sought to preserve
and protect the environment in its area of operations.
The Company has expended significant resources, both financial and
managerial, to comply with environmental regulations and permitting and
approval requirements and anticipates that it will continue to do so in the
future. There can be no assurance that additional significant costs and
liabilities will not be incurred in order to comply with such current and
future regulations.
Holding Company Structure
Because FCX is primarily a holding company, conducting business
through its subsidiaries, its ability to meet its obligations under the Debt
Securities and its other indebtedness and to pay dividends on its Preferred
Stock will depend on the earnings and cash flow of its subsidiaries and the
ability of its subsidiaries to pay dividends and to advance funds to the
Company. Under certain circumstances, contractual and legal restrictions,
as well as the financial condition and operating requirements of PT-FI and
the Company's other subsidiaries, could limit the Company's ability to
obtain cash from its subsidiaries for the purpose of meeting its debt
service obligations, including the payment of principal and interest on any
Debt Securities. Any right of the Company to participate in any
distribution of the assets of PT-FI and its other subsidiaries upon the
liquidation, reorganization or insolvency thereof would, with certain
exceptions, be subject to the claims of creditors (including trade
creditors) and preferred stockholders (if any) of such subsidiaries.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement,
the net proceeds from the sale of the Securities will be used for general
corporate purposes, including the repayment of existing indebtedness,
capital expenditures and additions to working capital. The Company
anticipates that it and its subsidiaries will raise additional funds from
time to time through equity or debt financings, including borrowings under
its revolving credit facilities, to finance their businesses.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
of the Company and its consolidated subsidiaries for the periods indicated.
Years Ended December 31,
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
Ratio of earnings to fixed charges 6.5x 3.6x 7.5x 6.0x 4.5x
Ratio of earnings to fixed charges,
preferred stock dividends and minimum
distributions (unaudited) 3.5x 1.2x 2.1x 3.0x 2.6x
For purposes of calculating the ratios, "earnings" consist of income
from continuing operations before income taxes, minority interest and fixed
charges and "fixed charges" consist of interest and that portion of rent
which is deemed representative of interest. For purposes of calculating
the ratio of earnings to fixed charges, preferred stock dividends and
minimum distributions, the preferred stock dividend requirements were
assumed to be equal to the pretax earnings which would be required to cover
such dividend requirements. The amount of such pretax earnings required to
cover preferred stock dividends was computed using tax rates for the
applicable year. "Minimum distributions" for purposes of calculating this
ratio consist of required minimum distributions for the Company's Class A
Common Stock that expired May 1, 1993.
DESCRIPTION OF DEBT SECURITIES
Debt Securities may be issued from time to time in one or more series
by the Company. The Debt Securities will constitute either indebtedness
designated as Senior Indebtedness ("Senior Securities"), indebtedness
designated as Senior Subordinated Indebtedness ("Senior Subordinated
Securities") or indebtedness designated as Subordinated Indebtedness
("Subordinated Securities"). The particular terms of each series of Debt
Securities offered by a particular Prospectus Supplement will be described
in such Prospectus Supplement or Prospectus Supplements relating to such
series. Senior Securities, Senior Subordinated Securities and Subordinated
Securities will each be issued under separate indentures (individually an
"Indenture" and collectively the "Indentures") to be entered into prior to
the issuance of such Debt Securities, forms of which Indentures are filed as
exhibits to this Registration Statement. The Indentures will be
substantially identical, except for provisions relating to subordination.
Information regarding the Trustee under an Indenture will be included in any
Prospectus Supplement relating to the Debt Securities issued thereunder.
The following discussion includes a summary description of all material
terms of the Indentures, other than terms which are specific to a particular
series of Debt Securities and which will be described in the Prospectus
Supplement relating to such series. The following summaries do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all of the provisions of the Indentures, including the
definitions therein of certain terms capitalized in this Prospectus.
Wherever particular Sections or Articles or defined terms of the Indentures
are referred to herein or in a Prospectus Supplement, such Sections or
defined terms are incorporated herein or therein by reference.
Other than to the extent applicable to the Debt Securities of a
particular series, as indicated in the applicable Prospectus Supplement,
there are no provisions of the Indentures that limit the amount of
indebtedness that may be issued or incurred by the Company or any
subsidiary, that restrict the Company's or any subsidiary's ability to incur
secured indebtedness, that restrict FCX's ability to pay dividends or make
other distributions, nor do the Indentures contain provisions that would
afford holders of the Debt Securities protection in the event of a change in
control, highly leveraged transaction, recapitalization or similar
transaction involving FCX, any of which could adversely affect the holders
of the Debt Securities.
General
The Indentures do not limit the aggregate amount of Debt Securities
which may be issued thereunder, and Debt Securities may be issued thereunder
from time to time in separate series up to the aggregate amount from time to
time authorized by the Company for each series. Debt Securities of a series
may be issued in registered form without coupons ("Registered Debt
Securities"), in bearer form with or without coupons attached ("Bearer Debt
Securities") or in the form of one or more Global Securities in registered
or bearer form (each, a "Global Security"). Bearer Debt Securities, if any,
will be offered only to non-United States persons and to offices located
outside the United States of certain United States financial institutions.
The Senior Securities will be unsecured and unsubordinated obligations of
the Company and will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of the Company. The Senior Subordinated
Securities and the Subordinated Securities will be subordinated in right of
payment to the prior payment in full of the Senior Indebtedness (as defined)
of the Company, as described below under "Subordination of Senior
Subordinated Securities and Subordinated Securities" and in a Prospectus
Supplement applicable to an offering of Senior Subordinated Securities or
Subordinated Securities.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the series of Debt Securities in respect of
which this Prospectus is being delivered: (a) the title of such Debt
Securities; (b) any limit on the aggregate principal amount of such Debt
Securities; (c) whether such Debt Securities will be issued as Registered
Debt Securities, Bearer Debt Securities or any combination thereof, and any
limitation on issuance of such Bearer Debt Securities and any provisions
regarding the transfer or exchange of such Bearer Debt Securities, including
exchange for Registered Debt Securities of the same series; (d) whether any
of such Debt Securities are to be issuable as a Global Security, whether
such Global Securities are to be issued in temporary global form or
permanent global form, and, if so, the terms and conditions, if any, upon
which interests in such Securities in global form may be exchanged, in whole
or in part, for the individual Debt Securities represented thereby; (e) the
person to whom any interest on any Debt Security of the series shall be
payable if other than the person in whose name the Debt Security is
registered on the record date; (f) the date or dates on which such Debt
Securities will mature; (g) the rate or rates of interest, if any, or the
method of calculation thereof, which such Debt Securities will bear; (h) the
date or dates from which any such interest will accrue, the interest payment
dates on which any such interest on such Debt Securities will be payable and
the record date for any interest payable on any interest payment date; (i)
the place or places where the principal of, interest, premium and additional
amounts (if any) on such Debt Securities will be payable; (j) the period or
periods within which, the events upon the occurrence of which, and the price
or prices at which, such Debt Securities may, pursuant to any optional or
mandatory provisions, be redeemed or purchased, in whole or in part, by the
Company and any terms and conditions relevant thereto; (k) the power or
obligation of the Company, if any, to redeem or repurchase such Debt
Securities; (l) the denominations in which any such Debt Securities will be
issuable, if other than denominations of $1,000 and any integral multiple
thereof; (m) the currency, currencies or currency unit or units of payment
of principal of and any premium, additional amounts (if any) and interest on
such Debt Securities if other than U.S. dollars; (n) any index or formula
used to determine the amount of payments of principal of and any premium,
additional amounts (if any) and interest on such Debt Securities; (o) if the
principal of or any premium, additional amounts (if any) or interest on such
Debt Securities is to be payable, at the election of the Company or a Holder
thereof, in one or more currencies or currency units other than that or
those in which such Debt Securities are stated to be payable, the currency,
currencies or currency units in which payment of the principal of and any
premium, additional amounts (if any) and interest on Debt Securities of such
series as to which such election is made shall be payable, and the periods
within which and the terms and conditions upon which such election is to be
made; (p) if other than the principal amount thereof, the portion of the
principal amount of such Debt Securities of the series which will be payable
upon declaration of the acceleration of the maturity thereof; (q) the
applicability of any provisions described under "Certain Covenants of the
Company" and any additional restrictive covenants (including any defined
terms relating thereto) included for the benefit of the holders of such Debt
Securities; (r) the applicability of, deletions from, modifications of or
additions to any provisions described under "Events of Default" (including
any defined terms relating thereto) and any additional Events of Default
with respect to the Debt Securities; (s) the applicability of any provisions
described under "Defeasance"; and (t) any other terms of such Debt
Securities not inconsistent with the provisions of the respective
Indentures.
Debt Securities may be issued at a discount from their principal
amount. Any United States federal income tax considerations and other
special considerations applicable to any such Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in
a foreign currency or currencies or a foreign currency unit or units or if
the principal of and any premium and interest on any series of Debt
Securities is payable in a foreign currency or currencies or a foreign
currency unit or units, the restrictions, elections, general tax
considerations, specific terms and other information with respect to such
issue of Debt Securities and such foreign currency or currencies or foreign
currency unit or units will be set forth in the applicable Prospectus
Supplement.
Debt Securities may be presented for exchange and registered Debt
Securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the Debt Securities and the
applicable Indenture. Such services will be provided without charge, other
than any tax or other governmental charge payable in connection therewith,
but subject to the limitations provided in the applicable Indenture. Bearer
Debt Securities and the coupons, if any, appertaining thereto will be
transferable by delivery.
Unless otherwise set forth in the applicable Prospectus Supplement,
Debt Securities may bear interest at a fixed rate or a floating rate. Debt
Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate may be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted Debt Securities or to
certain Debt Securities issued at par which are treated as having been
issued at a discount for United States federal income tax purposes will be
described in the relevant Prospectus Supplement.
Debt Securities may be issued from time to time with payment terms
which are calculated by reference to the value, rate or price of one or more
commodities, currencies or indices. Holders of such Debt Securities may
receive a principal amount (including premium, if any) on any principal
payment date, or a payment of additional amounts (if any), interest on any
interest payment date, that is greater than or less than the amount of
principal (including premium, if any) or additional amounts and interest
otherwise payable on such dates, depending upon the value, rate or price on
the applicable dates of the applicable currency, commodity or index.
Information as to the methods for determining the amount of principal,
premium (if any) or interest payable on any date, the currencies,
commodities or indices to which the amount payable on such date is linked
and certain additional tax considerations will be set forth in the
applicable Prospectus Supplement.
Senior Debt
The Senior Securities will rank pari passu with all other unsecured
and unsubordinated debt of the Company and senior to any Subordinated Debt
Securities and Subordinated Securities.
Subordination of Senior Subordinated Securities and Subordinated Securities
The indebtedness evidenced by the Senior Subordinated Securities and
the Subordinated Securities will be subordinated and junior in right of
payment to the extent set forth in the respective Indenture to the prior
payment in full of amounts then due on all Senior Indebtedness (as defined
below). No payment shall be made by the Company on account of principal of
(or premium or additional amounts, if any) or interest on the Senior
Subordinated Securities or the Subordinated Securities or on account of the
purchase or other acquisition of Senior Subordinated Securities or the
Subordinated Securities, if the maturity of any of the Senior Subordinated
Securities or the Subordinated Securities shall have been accelerated, until
all amounts due have been paid on all outstanding Senior Indebtedness, or if
there shall have occurred and be continuing (a) a default in the payment of
principal (or premium or additional amounts, if any) or interest on any
Senior Indebtedness beyond any applicable grace period with respect thereto,
or any event of default with respect to any Senior Indebtedness resulting in
the acceleration of the maturity of such Senior Indebtedness, unless and
until such default or event of default shall have been cured or waived or
shall have ceased to exist and such acceleration shall have been rescinded
or annulled or (b) any such default in payment or event of default shall be
the subject of a judicial proceeding. By reason of these provisions in the
event of default of any Senior Indebtedness, whether now outstanding or
hereafter issued, payments of principal of (and premium, if any) and
interest on the Senior Subordinated Securities or the Subordinated
Securities may not be permitted to be made until such default is cured or
such Senior Indebtedness is paid in full.
Upon any distribution of assets of the Company upon any receivership,
dissolution, winding-up, liquidation, reorganization or similar proceedings
of the Company, whether voluntary or involuntary, or in bankruptcy or
insolvency, all principal of (and premium and additional amounts, if any)
and interest due upon all Senior Indebtedness must be paid in full before
the Holders of the Senior Subordinated Securities and the Subordinated
Securities or the Trustee is entitled to receive or retain any assets so
distributed in respect of the Senior Subordinated Securities or the
Subordinated Securities. By reason of this provision, in the event of
insolvency, Holders of the Senior Subordinated Securities and the
Subordinated Securities may recover less, ratably, than other creditors of
the Company, including holders of Senior Indebtedness.
"Senior Indebtedness" means, when used with respect to any series of
Senior Subordinated Securities or Subordinated Securities, the principal of
(and premium, if any) and interest on (a) all indebtedness of the Company
(including indebtedness of others guaranteed by the Company) other than the
Subordinated Securities which is (i) for money borrowed or (ii) evidenced by
a note or similar instrument given in connection with the acquisition of any
businesses, properties or assets of any kind, (b) obligations of the Company
as lessee under leases required to be capitalized on the balance sheet of
the lessee under generally accepted accounting principles, and (c)
amendments, renewals, extensions, modifications and refunding of any such
indebtedness or obligation, in any such case whether outstanding on the date
of the Senior Subordinated Indenture or the Subordinated Indenture or
thereafter created, incurred or assumed, except that, with respect to the
Senior Subordinated Securities, any particular indebtedness, obligation,
liability, guaranty, assumption, deferral, renewal, extension or refunding
shall not constitute "Senior Indebtedness" if it is expressly stated in the
governing terms, or in the assumption or guarantee, thereof that the
indebtedness involved is not senior in right of payment to the Senior
Subordinated Securities or that such indebtedness is pari passu with or
junior to the Senior Subordinated Securities and, with respect to
Subordinated Securities, any particular indebtedness, obligation, liability,
guaranty, assumption, deferral, renewal, extension or refunding shall not
constitute "Senior Indebtedness" if it is expressly stated in the governing
terms, or in the assumption or guarantee, thereof that the indebtedness
involved is not senior in right of payment to the Subordinated Securities or
that such indebtedness is pari passu with or junior to the Subordinated
Securities. As of December 31, 1996, the amount of Senior Indebtedness of
the Company was approximately $800.0 million.
If this Prospectus is being delivered in connection with a series of
Senior Subordinated Securities or Subordinated Securities, the accompanying
Prospectus Supplement or the information incorporated herein by reference
will set forth the approximate amount of Senior Indebtedness outstanding as
of the end of the Company's most recent fiscal quarter.
Form, Exchange, Registration, Conversion, Transfer and Payment
Debt Securities are issuable in definitive form as Registered Debt
Securities, as Bearer Debt Securities or both. Unless otherwise indicated
in an applicable Prospectus Supplement, Bearer Debt Securities will have
interest coupons attached. Debt Securities are also issuable in temporary
or permanent global form.
Registered Debt Securities of any series will be exchangeable for
other Registered Debt Securities of the same series and of a like aggregate
principal amount and tenor of different authorized denominations. In
addition, with respect to any series of Bearer Debt Securities, at the
option of the holder, subject to the terms of the Indenture, such Bearer
Debt Securities (with all unmatured coupons, except as provided below, and
all matured coupons in default) will be exchangeable into Registered Debt
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. Bearer Debt Securities surrendered in
exchange for Registered Debt Securities between a record date and the
relevant date for payment of interest shall be surrendered without the
coupon relating to such date for payment of interest, and interest accrued
as of such date will not be payable in respect of the Registered Debt
Security issued in exchange for such Bearer Debt Security, but will be
payable only to the holder of such coupon when due in accordance with the
terms of the Indenture.
Debt Securities may be presented for exchange as provided above, and
Registered Debt Securities may be presented for registration of transfer
(with the form of transfer endorsed thereon duly executed), at the office or
agency of the Company maintained for such purposes and at any other office
or agency maintained for such purpose with respect to any series of Debt
Securities and referred to in the applicable Prospectus Supplement, without
a service charge and upon payment of any taxes and other governmental
charges as described in the Indenture. Such transfer or exchange will be
effected upon the Company or its agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request.
Bearer Debt Securities may only be presented for exchange at an office or
agency of the Company (or any other office or agency maintained for such
purpose) located outside the United States and referred to in the applicable
Prospectus Supplement.
In the event of any redemption in part, the Company shall not be
required to (a) issue, register the transfer of or exchange Debt Securities
of any series during a period beginning at the opening of business 15 days
prior to the selection of Debt Securities of that series for redemption and
ending on the close of business on (i) if Debt Securities of the series are
issued only as Registered Debt Securities, the day of mailing of the
relevant notice of redemption and (ii) if Debt Securities of the series are
issued as Bearer Debt Securities, the day of the first publication of the
relevant notice of redemption except that, if Securities of the series are
also issued as Registered Debt Securities and there is no publication, the
day of mailing of the relevant notice of redemption; (b) register the
transfer of or exchange any Registered Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Registered Debt
Security being redeemed in part; or (c) exchange any Bearer Debt Security
called for redemption, except to exchange such Bearer Debt Security for a
Registered Debt Security of that series and like tenor which is
simultaneously surrendered for redemption.
Payment and Paying Agents
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of principal of (and any premium) and interest on Bearer Debt
Securities will be payable, subject to any applicable laws and regulations,
in the designated currency or currency unit, at the offices of such Paying
Agents ("Paying Agents") outside the United States as the Company may
designate from time to time, at the option of the holder, by check or by
transfer to an account maintained by the payee with a bank located outside
the United States; provided, however, that the written certification
described above under "Form, Exchange, Registration and Transfer" has been
delivered prior to the first actual payment of interest. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of interest on
Bearer Debt Securities on any interest payment date will be made only
against surrender to the Paying Agent of the coupon relating to such
interest payment date. No payment with respect to any Bearer Debt Security
will be made at any office or agency of the Company in the United States or
by check mailed to any address in the United States or by transfer to any
account maintained with a bank located in the United States, nor shall any
payments be made in respect of Bearer Debt Securities upon presentation to
the Company or its designated Paying Agents within the United States.
Notwithstanding the foregoing, payments of principal of (and any premium)
and interest on Bearer Debt Securities denominated and payable in U.S.
dollars will be made at the office of the Company's Paying Agent in the
United States, if (but only if) payment of the full amount thereof in U.S.
dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of principal of (and any premium), additional amounts (if any) and
interest on Registered Debt Securities will be made in the designated
currency or currency unit at the office of such Paying Agent or Paying
Agents as the Company may designate 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 shall appear on
records of the Security Registrar. Unless otherwise indicated in an
applicable Prospectus Supplement, payment of any installment of interest on
Registered Debt Securities will be made to the person in whose name such
Registered Debt Security is registered at the close of business on the
record date for such interest.
Unless otherwise indicated in the applicable Prospectus Supplement,
the Corporate Trust Office of the Trustee will be designated as a Paying
Agent for the Trustee for payments with respect to Debt Securities which are
issuable solely as Registered Debt Securities, and the Company will maintain
a Paying Agent outside the United States for payments with respect to Debt
Securities (subject to limitations described above in the case of Bearer
Debt Securities) which are issued solely as Bearer Debt Securities, or as
both Registered Debt Securities and Bearer Debt Securities. Any Paying
Agents outside the United States and any other Paying Agents in the United
States initially designated by the Company for the Debt Securities will be
named in an applicable Prospectus Supplement. 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, if Debt Securities of a series are issued solely as Registered
Debt Securities, the Company will be required to maintain a Paying Agent in
each place of payment for such series and, if Debt Securities of a series
are issued as Bearer Securities, the Company will be required to maintain
(a) a Paying Agent in the United States for principal payments with respect
to any Registered Debt Securities of the series (and for payments with
respect to Bearer Debt Securities of the series in the circumstances
described above, but not otherwise), and (b) a Paying Agent in a place of
payment located outside the United States where Securities of such series
and any coupons appertaining thereto may be presented and surrendered for
payment.
All monies paid by the Company to a Paying Agent for the payment of
principal of and any premium, additional amounts (if any) or interest on any
Debt Security which remain unclaimed at the end of two years after such
principal, premium or interest shall have become due and payable will
(subject to applicable escheat laws) be repaid to the Company and the holder
of such Debt Security or any coupon will thereafter look only to the Company
for payment thereof.
Temporary Global Securities
If so specified in the applicable Prospectus Supplement, all or any
portion of the Debt Securities of a series which are issuable as Bearer Debt
Securities will initially be represented by one or more temporary global
Debt Securities, without interest coupons, to be deposited with a common
depository in London for the Euroclear System ("Euroclear") and CEDEL Bank
S.A. ("CEDEL") for credit to the designated accounts. On and after the date
determined as provided in any such temporary global Debt Security and
described in the applicable Prospectus Supplement, each such temporary
global Debt Security will be exchangeable for definitive Bearer Debt
Securities, definitive Registered Debt Securities or all or a portion of a
permanent global security, or any combination thereof, as specified in the
applicable Prospectus Supplement, but, unless otherwise specified in the
applicable Prospectus Supplement, only upon written certification in the
form and to the effect described under "Form, Exchange, Registration and
Transfer." No Bearer Debt Security delivered in exchange for a portion of a
temporary global Debt Security will be mailed or otherwise delivered to any
location in the United States in connection with such exchange.
Unless otherwise specified in the applicable Prospectus Supplement,
interest in respect of any portion of a temporary global Debt Security
payable in respect of an payment date occurring prior to the issuance of
definitive Debt Securities or a permanent global Subordinated Debt Security
will be paid to each of Euroclear and CEDEL with respect to the portion of
the temporary global Debt Security held for its account. Each of Euroclear
and CEDEL will undertake in such circumstances to credit such interest
received by it in respect of a temporary global Debt Security to the
respective accounts for which it holds such temporary global Debt Security
only upon receipt in each case of written certification in the form and to
the effect described above under "Form, Exchange, Registration and Transfer"
as of the relevant payment date regarding the portion of such temporary
global Debt Security on which interest is to be so credited.
Permanent Global Securities
If any Debt Securities of a series are issuable in permanent global
form, the applicable Prospectus Supplement will describe the circumstances,
if any, under which beneficial owners of interests in any such permanent
global Debt Securities may exchange such interests for Debt Securities of
such series and of like tenor and principal amount in any authorized form
and denomination. No Bearer Debt Security delivered in exchange for a
portion of a permanent global Debt Security shall be mailed or otherwise
delivered to any location in the United States in connection with such
exchange. Notwithstanding the foregoing, unless otherwise specified in an
applicable Prospectus Supplement, interests in a permanent global Bearer
Debt Security may be exchanged in whole (but not in part) at the expense of
the Company, for definitive Bearer Debt Securities, at the request of any
owner of a beneficial interest in such permanent global Bearer Debt
Security.
Book-Entry Debt Securities
The Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities that will be deposited with, or on
behalf of, a Depositary ("Depositary") or its nominee identified in the
applicable Prospectus Supplement. In such a case, one or more Global
Securities will be issued in a denomination or aggregate denominations equal
to the portion of the aggregate principal amount of Outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in registered form, a Global Security may not be registered for
transfer or exchange except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary
to such Depositary or another nominee of such Depositary or by such
Depositary or any nominee to a successor Depositary or a nominee of such
successor Depositary and except in the circumstances described in the
applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global
Security will be described in the applicable Prospectus Supplement. The
Company expects that the following provisions will apply to depositary
arrangements.
Unless otherwise specified in the applicable Prospectus Supplement,
Debt Securities which are to be represented by a Global Security to be
deposited with or on behalf of a Depositary will be represented by a Global
Security registered in the name of such Depositary or its nominee. Upon the
issuance of such Global Security, and the deposit of such Global Security
with or on behalf of the Depositary for such Global Security, the Depositary
will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such
Global Security to the accounts of institutions that have accounts with such
Depositary or its nominee ("participants"). The accounts to be credited
will be designated by the underwriters or agents of such Debt Securities or
by the Company, if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interest in such Global Security will be
limited to participants or Persons that may hold interests through
participants. Ownership of beneficial interests by participants in such
Global Security will be shown on, and the transfer of that ownership
interest will be effected only through, records maintained by the Depositary
or its nominee for such Global Security. Ownership of beneficial interests
in such Global Security by Persons that hold through participants will be
shown on, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
participant. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated
form. The foregoing limitations and such laws may impair the ability to
transfer beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is
the registered owner of such Global Security, such Depositary or such
nominee, as the case may be, will be considered the sole owner or Holder of
the Debt Securities represented by such Global Security for all purposes
under the applicable Indenture. Unless otherwise specified in the
applicable Prospectus Supplement, owners of beneficial interests in such
Global Security will not be entitled to have Debt Securities of the series
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities of
such series in certificated form and will not be considered the Holders
thereof for any purposes under the applicable Indenture. Accordingly, each
Person owning a beneficial interest in such Global Security must rely on the
procedures of the Depositary and, if such Person is not a participant, on
the procedures of the participant through which such Person owns its
interest, to exercise any rights of a Holder under the applicable Indenture.
The Company understands that under existing industry practices, if the
Company requests any action of Holders or an owner of a beneficial interest
in such Global Security desires to give any notice or take any action a
Holder is entitled to give or take under an Indenture, the Depositary would
authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
Limitations on Issuance of Bearer Debt Securities
In compliance with United States Federal tax laws and regulations,
Bearer Debt Securities (including securities in permanent global form that
are either Bearer Debt Securities or exchangeable for Bearer Debt
Securities) will not be offered or sold during the restricted period (as
defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)) (generally, the first 40 days after the closing
date, and, with respect to unsold allotments, until sold) within the United
States or to United States persons (each as defined below) other than to an
office located outside the United States of a United States financial
institution (as defined in Section 1.165-12(c)(1)(v) of the United States
Treasury Regulations), purchasing for its own account or for resale or for
the account of certain customers, that provides a certificate stating that
it agrees to comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the Code and the United States Treasury Regulations thereunder, or to
certain other persons described in Section 1.163-5(c)(2)(i)(D)(1)(iii)(B) of
the United States Treasury Regulations. Moreover, such Bearer Debt
Securities will not be delivered in connection with their sale during the
restricted period within the United States. Any underwriters and dealers
participating in the offering of Bearer Debt Securities must covenant that
they will not offer or sell during the restricted period any Bearer Debt
Securities within the United States or to United States persons (other than
the persons described above) or deliver in connection with the sale of
Bearer Debt Securities during the restricted period any Bearer Debt
Securities within the United States and that they have in effect procedures
reasonably designed to ensure that their employees and agents who are
directly engaged in selling the Bearer Debt Securities are aware of the
restrictions described above. No Bearer Debt Security (other than a
temporary global Bearer Debt Security) will be delivered in connection with
its original issuance nor will interest be paid on any Bearer Debt Security
until receipt by the Company of the written certification described above
under "Form, Exchange, Registration and Transfer." Each Bearer Debt
Security, other than a temporary global Bearer Debt Security, will bear a
legend to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States Federal
income tax laws, including the limitations provided in Sections 165(j) and
1287(a) of the Internal Revenue Code."
As used herein, "United States person" means any citizen or resident
of the United States, any corporation, partnership or other entity created
or organized in or under the laws of the United States and any estate or
trust the income of which is subject to United States Federal income
taxation regardless of its source, and "United States" means the United
States of America (including the states and the District of Columbia) and
its possessions.
Certain Covenants of the Company
Unless otherwise specified in the applicable Prospectus Supplement,
the Indentures will provide that the Company will not consolidate with or
merge into any Person, or sell, lease, convey, transfer or otherwise dispose
of all or substantially all of its assets to any Person, and the Company
will not permit any Person to consolidate or merge into the Company or sell,
lease, convey, transfer or otherwise dispose of all or substantially all of
its assets to the Company unless: (a) the Person formed by or surviving
such consolidation or merger (if other than the Company), or to which such
sale, lease, conveyance, transfer or other disposition shall be made
(collectively, the "Successor"), is a corporation organized and existing
under the laws of the United States or any State thereof or the District of
Columbia, and the Successor assumes by supplemental indenture in a form
satisfactory to the Trustee all of the obligations of the Company under the
Indenture; (b) immediately after giving effect to such transaction and
treating any Debt that becomes an obligation of the Company or any
subsidiary as a result thereof as having been incurred by the Company or
such subsidiary at the time of such transaction, no Default or Event of
Default shall have occurred and be continuing; and (c) the Company shall
have delivered to the Trustee an Officer's Certificate and Opinion of
Counsel, each stating that such merger, consolidation, sale or conveyance
and such supplemental indenture, if any, complies with the Indenture.
Events of Default
Unless otherwise specified in the applicable Prospectus Supplement, an
Event of Default is defined under each Indenture with respect to Debt
Securities of any series issued under such Indenture as being: (a) default
for 30 days in payment of any interest or additional amounts, if any, on the
Debt Securities of such series; (b) default in payment of any principal on
the Debt Securities of such series upon maturity or otherwise; provided
that, if such default is a result of the voluntary redemption by the holders
of such Debt Securities, the amount thereof shall be in excess of
$50,000,000 or the equivalent thereof in any other currency or composite
currency; (c) default for 60 days after written notice in the observance or
performance of any other covenant or agreement in the Debt Securities of
such series or the Indenture other than a covenant or agreement included in
the Indenture which is not applicable to the Debt Securities of such series;
(d) certain events of bankruptcy, insolvency or reorganization; or (e)
failure to pay at maturity, or other default which results in the
acceleration of any Debt in an amount in excess of $50,000,000 or the
equivalent thereof in any other currency or composite currency without such
Debt having been discharged or such acceleration having been cured, waived,
rescinded or annulled for a period of 30 days after written notice thereof
("Debt" being defined to mean obligations (other than non-recourse
obligations or the Debt Securities of such series), of, or guaranteed or
assumed by, the Company for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments).
Unless otherwise specified in the applicable Prospectus Supplement,
each Indenture provides that (a) if an Event of Default due to the default
in payment of principal, premium or additional amounts, if any, or interest
on, any series of Debt Securities issued under such Indenture or due to the
Default in the performance of any other covenant or agreement applicable to
the Debt Securities of such series but not applicable to Debt Securities of
any other series issued under such Indenture shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in
principal amount of the outstanding Debt Securities of such series may
declare the principal (or such portion thereof as may be specified in the
terms thereof) of all Debt Securities of such series and interest accrued
thereof to be due and payable immediately; and (b) if an Event of Default
due to a default in the performance of any covenants or agreements
applicable to outstanding Debt Securities of more than one series issued
under such indenture or an Event of Default described in clause (d) above
shall have occurred and be continuing, either the Trustee or the holders of
not less than 25% in principal amount of the outstanding Debt Securities of
all such affected series (treated as one class) may declare the principal
(or such portion thereof as may be specified in the terms thereof) of all
such Debt Securities and interest accrued thereon to be due and payable
immediately. If an Event of Default due to certain events of bankruptcy,
insolvency or reorganization shall occur, the principal (or such portion
hereof as may be specified in the terms thereof) of and interest accrued on
all Debt Securities then outstanding shall become due and payable
immediately, without action by the Trustee or the holders of any such Debt
Securities. Upon certain conditions such declarations may be annulled and
past defaults may be waived (except a continuing default in payment of
principal of (or premium, if any) or interest on, or in respect of the
conversion of, such Debt Securities) by the holders of a majority in
principal amount of the outstanding Debt Securities of all such affected
series (treated as one class).
Each Indenture provides that the Trustee, subject to the duty of the
Trustee during a default to act with the required standard of care, has no
obligation to exercise any right or power granted it under such Indenture at
the request of holders of Debt Securities unless the Trustee is indemnified
by such holders. Subject to such provisions in each Indenture for the
indemnification of the Trustee and certain other limitations, the holders of
a majority in principal amount of the outstanding Debt Securities of all
affected series issued under such Indenture (treated as one class) may
direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee with respect to such series.
Each Indenture provides that no holder of Debt Securities of any
series issued under such Indenture may institute any action against the
Company under such Indenture (except actions for payment of overdue
principal, premium and additional amounts, (if any) or interest or to
enforce conversion rights (if any)) unless (a) such holder previously shall
have given to the Trustee written notice of default and continuance thereof,
(b) the holders of not less than 25% in principal amount of the Debt
Securities of all affected series issued under such Indenture (treated as
one class) shall have made a written request upon the Trustee to institute
such action and shall have offered the Trustee reasonable indemnity, (c) the
Trustee shall not have instituted such action within 60 days of such request
and (d) the Trustee shall not have received directions inconsistent with
such written request by the holders of a majority in principal amount of the
outstanding Debt Securities of all affected series issued under such
indenture (treated as one class).
Each Indenture contains a covenant that the Company will file annually
with the Trustee a certificate of no default or a certificate specifying any
default that exists.
Defeasance
Each Indenture provides that the Company may defease and be discharged
from any and all obligations (except as otherwise described in (a) below)
with respect to the Debt Securities of any series which have not already
been delivered to the Trustee for cancellation and which have either become
due and payable or are by their terms due and payable within one year (or
scheduled for redemption within one year) by irrevocably depositing with the
Trustee, as trust funds, money or, in the case of Debt Securities payable
only in U.S. dollars, U.S. Government Obligations (as defined) which through
the payment of principal and interest in accordance with their terms will
provide money, in an amount certified to be sufficient to pay at maturity
(or upon redemption) the principal of (and premium and additional amounts,
if any) and interest on such Debt Securities.
In addition, each Indenture provides that with respect to each series
of Debt Securities issued under such Indenture, the Company may elect either
(a) to defease and be discharged from any and all obligations with respect
to the Debt Securities of such series (except for the obligations to
register the transfer or exchange or convert the Debt Securities of such
series, to replace temporary or mutilated, destroyed, lost or stolen Debt
Securities of such series, to maintain an office or agency in respect of the
Debt Securities of such series and to hold moneys for payment in trust) or
(b) to be released from the restrictions described under "Certain Covenants
of the Company" and, to the extent specified in connection with the issuance
of such series of Debt Securities, other covenants applicable to such series
of Debt Securities, upon the deposit with the Trustee (or other qualifying
trustee), as trust funds, or money or, in the case of Debt Securities
payable only in U.S. dollars, U.S. Government Obligations which through the
payment of principal and interest in accordance with their terms will
provide money, in an amount certified to be sufficient to pay at maturity
(or upon redemption) the principal of (and premium and additional amounts,
if any) and interest on the Debt Securities of such series. Such a trust
may only be established if, among other things, the Company has delivered to
the Trustee an opinion of counsel (as specified in the Indenture) to the
effect that the holders of the Debt Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have bene the
case if such defeasance had not occurred. Such opinion, in the case of a
defeasance under clause (a) above, must refer to and be based upon a ruling
of the Internal Revenue Service or a change in applicable Federal income tax
law occurring after the date of such Indenture.
In the event of any "legal" defeasance of any series of Subordinated
Debt Securities issued thereunder, the Subordinated Debt Indenture provides
that holders of all outstanding Senior Indebtedness will receive written
notice of such defeasance.
The foregoing provisions relating to defeasance may be modified in
connection with the issuance of any series of Debt Securities, and any such
modification will be described in the accompanying Prospectus Supplement.
Modification of the Indenture
Unless otherwise specified in the applicable Prospectus Supplement,
each Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt
Securities to: (a) secure such Debt Securities, (b) evidence the assumption
by a successor entity of the obligations of the Company, (c) add covenants
or Events of Default for the protection of the holders of any Debt
Securities, (d) establish the form or terms of such Debt Securities of any
series, (e) evidence the acceptance of appointment by a successor trustee or
(f) cure any ambiguity or correct any inconsistency in the Indenture or
amend the Indenture in any other manner which the Company may deem necessary
or desirable, if such action will not adversely affect the interests of the
holders of Debt Securities issued thereunder.
Unless otherwise specified in the applicable Prospectus Supplement,
each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of Debt Securities of all series issued under such
Indenture then outstanding and affected (voting as a single class), to add
any provisions to, or change in any manner or eliminate any of the
provisions of, such Indenture or modify in any manner the rights of the
holders of the Debt Securities of each such series; provided that the
Company and the Trustee may not, without the consent of the holder of each
outstanding Debt Security affected thereby, (a) extend the final maturity of
any Debt Security, or reduce the principal amount thereof, or reduce or
alter the method of computation of any amount payable in respect of interest
thereon or extend the time for payment thereof, or reduce or alter the
method of computation of any amount payable on redemption thereof or extend
the time for payment thereof, or change the currency in which the principal
thereof, premium or additional amounts, if any, or interest thereon is
payable, or reduce the amount payable upon acceleration or alter certain
provisions of the Indenture relating to the Debt Securities issued
thereunder not denominated in U.S. dollars, or impair the right to institute
suit for the enforcement of any conversion or any payment on any Debt
Security when due or materially and adversely affect any conversion rights
or (b) reduce the aforesaid percentage in principal amount of Debt
Securities of any series issued under such Indenture, the consent of the
holders of which is required for any such modification.
The Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding Subordinated Debt Securities without the
consent of each holder of Senior Indebtedness then outstanding that would be
adversely affected thereby.
The Trustee
Information regarding the Trustee under an Indenture will be included
in any Prospectus Supplement relating to the Debt Securities issued
thereunder. The Indentures will provide that in case an Event of Default
shall occur (and be continuing), the Trustee will be required to use the
degree of care and skill of a prudent man in the conduct of his own affairs.
The Trustee will be under no obligation to exercise any of its powers under
the Indentures at the request of any of the holders of the Debt Securities,
unless such holders shall have offered the Trustee reasonable indemnity
against the costs, expenses and liabilities which might be incurred by the
Trustee. The Indentures and provisions of the Trust Indenture Act
incorporated by reference therein contain limitations on the right of a
Trustee, should it become a creditor of the Company to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claim as security or otherwise.
DESCRIPTION OF PREFERRED STOCK
The following is a description of certain general terms and provisions
of the Preferred Stock. The particular terms of any series of Preferred
Stock will be described in the applicable Prospectus Supplement. If so
indicated in a Prospectus Supplement, the terms of any such series may
differ from the terms set forth below. The summary of terms of the
Company's Preferred Stock contained in this Prospectus and the applicable
Prospectus Supplement does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Company's Certificate of
Incorporation and the certificate of designations relating to the applicable
series of the Preferred Stock (the "Certificate of Designations"), which
will be filed as an exhibit to or incorporated by reference in the
Registration Statement of which this Prospectus is a part at the time of
issuance of such series of the Preferred Stock.
The Company's Certificate of Incorporation authorizes the issuance of
50,000,000 shares of Preferred Stock, par value of $0.10 per share. As of
December 31, 1996, there were outstanding 13,999,600 depositary shares, each
representing 0.05 shares of the Company's Step-Up Convertible Preferred
Stock, 6,000,000 depositary shares, each representing 0.05 shares of the
Company's Gold-Denominated Preferred Stock, 4,305,580 depositary shares,
each representing 0.05 shares of Gold-Denominated Preferred Stock, Series
II, and 4,760,000 depositary shares, each representing 0.025 shares of the
Company's Silver-Denominated Preferred Stock. See "Outstanding Preferred
Stock." The Company's Preferred Stock may be issued from time to time by
the Board of Directors in one or more series, without stockholder approval.
The Board of Directors is authorized to determine the voting powers (if
any), designation, preferences and relative, participating, options or other
special rights, and qualifications, limitations or restrictions thereof, for
each series of Preferred Stock that may be issued, and to fix the number of
shares of each such series. Thus, the Board of Directors, without
stockholder approval, could authorize the issuance of Preferred Stock with
voting, conversion and other rights that could adversely affect the voting
power and other rights of holders of Class A Common Stock and Class B Common
Stock or other series of Preferred Stock or that could have the effect of
delaying, deferring or preventing a change in control of the Company.
General
Reference is made to the Prospectus Supplement for the following terms
of and information relating to the Preferred Stock of any series (to the
extent such terms are applicable to such Preferred Stock): (a) the specific
designation, number of shares, seniority and purchase price; (b) any
liquidation preference per share; (c) any date of maturity; (d) any
redemption, payment or sinking fund provisions; (e) any dividend rate or
rates and the dates on which any such dividends will be payable (or the
method by which such rates or dates will be determined); (f) any voting
rights; (g) the currency or units based on or relating to currencies in
which such Preferred Stock are denominated and/or in which payments will or
may be payable; (h) the methods by which amounts payable in respect of such
Preferred Stock may be calculated and any commodities, currencies or
indices, or value, rate or price relevant to such calculation; (i) whether
the Preferred Stock is convertible or exchangeable and, if so, the Preferred
Stock or Debt Securities into which such Preferred Stock is convertible or
exchangeable, the terms and conditions upon which such conversions or
exchanges will be effected including the initial conversion or exchange
prices or rates, the conversion or exchange period and any other related
provisions; (j) the place or places where dividends and other payments on
the Preferred Stock will be payable; and (k) and any additional voting,
dividend, liquidation, redemption, sinking fund and other rights,
preferences, privileges, limitations and restrictions.
The Preferred Stock offered hereby will be issued in one or more
series. The holders of Preferred Stock will have no preemptive rights.
Preferred Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable. Neither the par value nor
the liquidation preference is indicative of the price at which the Preferred
Stock will actually trade on or after the date of issuance. All shares of
Preferred Stock shall be of equal rank with each other, regardless of
series. The applicable Prospectus Supplement will contain a description of
certain United States federal income tax consequences relating to the
purchase and ownership of the series of Preferred Stock offered by such
Prospectus Supplement.
As described under "Description of Depositary Shares," the Company
may, at its option, elect to offer depositary shares ("Depositary Shares")
evidenced by depositary receipts ("Depositary Receipts"), each representing
an interest (to be specified in the Prospectus Supplement relating to the
particular series of the Preferred Stock) in a share of the particular
series of the Preferred Stock issued and deposited with a Depositary (as
defined below).
Dividends
Holders of shares of Preferred Stock of each series shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
of the Company legally available for payment, cash dividends, payable at
such dates and at such rates per share per annum as set forth in the
applicable Prospectus Supplement. Such rate may be fixed or variable or
both. Each declared dividend shall be payable to holders of record as they
appear on the stock books of the Company on such record dates determined by
the Board of Directors or a duly authorized committee thereof.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. If
dividends on a series of Preferred Stock are noncumulative and if the Board
of Directors fails to declare a dividend in respect of a dividend period
with respect to such series, then holders of such Preferred Stock will have
no right to receive a dividend in respect of such dividend period, and the
Company will have no obligation to pay the dividend for such period, whether
or not dividends are declared payable on any future dividend payment dates.
Unless full cumulative dividends for all past dividend periods on all
outstanding shares of cumulative Preferred Stock and any other series of
capital stock of the Company ranking on a parity with the Preferred Stock
have been paid, or declared and set apart for payment, the Company may not
(a) declare, pay or set apart any amounts for dividends on, or make any
other distribution in cash or other property in respect of, the Class A or
Class B Common Stock or any other stock of the Company ranking junior to the
Preferred Stock as to dividends or distribution of assets upon liquidation,
dissolution or winding up of the affairs of the Company (the Class A or
Class B Common Stock and such other stock being referred to herein as
"Junior Stock") other than a dividend payable solely in Junior Stock, (b)
purchase, redeem or otherwise acquire for value any shares of Junior Stock,
directly or indirectly, other than as a result of a reclassification of
Junior Stock, or the exchange or conversion of one Junior Stock for or into
another Junior Stock, or other than through the use of proceeds of a
substantially contemporaneous sale of other Junior Stock, or (c) make any
payment on account of, or set aside money for, a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares of
Junior Stock. If the funds available for the payment of dividends are
insufficient to pay in full the dividends payable on all outstanding shares
of cumulative Preferred Stock and any other series of capital stock of the
Company ranking on a parity with the Preferred Stock, the total available
funds to be paid in partial dividends on such Preferred Stock and such other
series shall be divided among the Preferred Stock and such other series in
proportion to the aggregate amount of dividends accrued and unpaid with
respect to such Preferred Stock and such other series. Accruals of
dividends will not bear interest.
Convertibility and Exchangeability
The terms, if any, on which shares of any series of Preferred Stock
may be exchanged for or converted (mandatorily or otherwise) into shares of
Preferred Stock or Debt Securities (including any rights to receive payments
in cash or Preferred Stock or Debt Securities based on the value, rate or
price of one or more specified commodities, currencies or indices) will be
set forth in the Prospectus Supplement relating thereto. The Preferred
Stock will not be exchangeable for or convertible into Class A or Class B
Common Stock of the Company.
Redemption
The terms, if any, on which shares of Preferred Stock of any series
may be redeemed will be set forth in the related Prospectus Supplement.
If fewer than all of the outstanding shares of any series of Preferred
Stock are to be redeemed, the number of shares of such series and the method
of effecting such redemption, whether by lot or pro rata, will be as
determined by the Company (with adjustment to avoid redemption of fractional
shares).
Liquidation
Unless otherwise specified in the applicable Prospectus Supplement, in
the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, after payment or provision for payment of the
debts and other liabilities of the Company, the holders of shares of any
series of the Preferred Stock, together with any other Preferred Stock and
any other series of capital stock of the Company ranking on a parity with
such series of the Preferred Stock, will be entitled to receive out of the
remaining net assets of the Company an amount per share as set forth in the
related Prospectus Supplement plus accrued and unpaid dividends before any
distribution is made or set apart for the holders of Junior Stock. If the
amounts payable with respect to such Preferred Stock are not paid in full,
the holders of such Preferred Stock and any stock of the Company on a parity
with such Preferred Stock as to distribution of assets upon the liquidation,
dissolution or winding up of the Company will have the right to share
ratably in any distribution of the remaining assets of the Company in
proportion to the full respective preferential amounts to which they are
entitled. After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of such series of Preferred Stock
will not be entitled to any further participation in any distribution of the
remaining assets by the Company. A consolidation or merger of the Company
with one or more corporations or the sale of all or substantially all of the
assets of the Company will not be deemed to be a liquidation, dissolution or
winding up of the Company.
Voting
The Preferred Stock of a series will not be entitled to vote, except
as provided below or in the applicable Prospectus Supplement and as required
by applicable law. Unless otherwise indicated in the Prospectus Supplement
relating to a series of Preferred Stock, each share of such series will not
be entitled to vote on matters which holders of such series are entitled to
vote. Unless otherwise specified in the related Prospectus Supplement, at
any time dividends in an amount equal to six quarterly dividend payments on
the Preferred Stock of such series shall have accrued and be unpaid, holders
of such Preferred Stock shall have the right to a separate class vote
together with the holders of shares of other series of stock of the Company
ranking on a parity with such series of Preferred Stock either as to
dividends or the distribution of assets upon liquidating, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable (such other series of stock being herein referred to as "Other
Voting Stock") to elect two members to the Board of Directors until
dividends on such Preferred Stock have been paid in full or declared and set
apart in trust for payment. In such case, the Board of Directors will be
increased by two directors, and the holders of Preferred Stock of such
series (either alone or with the holders of Other Voting Stock) will have
the exclusive right as members of such class, as outlined above, to elect
two directors at the next annual meeting of stockholders. Additionally,
without the affirmative vote of the holders of a majority of the shares of
Preferred Stock of such series then outstanding, voting as a separate class,
the Company may not (i) create, authorize or issue any series or class of
stock ranking prior to the shares of Preferred Stock of such series with
respect to dividends or distributions of assets upon liquidation,
dissolution or winding up or (ii) change the rights, powers or preferences
or qualifications, limitations or restrictions thereof with respect to the
Preferred Stock of such series if such action would materially adversely
affect such holders.
As more fully described under "Description of Depositary Shares"
below, if the Company elects to issue Depositary Shares, each representing a
fraction of a share of a series of the Preferred Stock, each such Depositary
Share will, in effect, be entitled to such fraction of a vote per Depositary
Share.
No Other Rights
The share of a series of Preferred Stock will not have any
preferences, voting powers or relative, participating, optional or other
special rights except as set forth above or in the related Prospectus
supplement, the Certificate of Incorporation or the applicable certificate
of designations or as otherwise required by law.
Transfer Agent and Registrar
The transfer agent for each series of Preferred Stock will be
described in the related Prospectus Supplement.
Outstanding Preferred Stock
All of the Company's outstanding Preferred Stock, and any other series
of Preferred Stock upon which the right to vote for directors has been
granted in accordance with the Certificate, have the right to vote with the
holders of the Class A Common Stock, voting together as a single class, to
elect that number of directors that constitutes 20% of the authorized number
of members of the Board of Directors (or if 20% is not a whole number, then
the nearest whole number of directors that is closest to 20% of such
membership). Set forth below is a summary of certain general terms and
provisions of the series of Preferred Stock outstanding as of the date of
this Prospectus.
Step-Up Convertible Preferred Stock. As of December 31, 1996, the
Company had outstanding 699,980 shares of Step-Up Convertible Preferred
Stock, par value $0.10 per share (the "Step-Up Convertible Preferred
Stock"). The Step-Up Convertible Preferred Stock is represented by
depositary shares, each of which represents 0.05 shares of such stock and
which trade on the NYSE. The Step-Up Convertible Preferred Stock ranks, as
to payment of dividends and distribution upon liquidation, pari passu with
the Company's Gold-Denominated Preferred Stock (as defined below) and the
Silver-Denominated Preferred Stock (as defined below) and senior to the
Company's Class A Common Stock and Class B Common Stock.
The Step-Up Convertible Preferred Stock has a liquidation preference
equivalent to $25.00 per depositary share and is convertible at the option
of the holder at any time, unless previously redeemed, into shares of Class
A Common Stock at a rate of .813 shares per depositary share (equivalent to
a conversion price of $30.75 per share of Class A Common Stock), subject to
adjustments in certain circumstances. Dividends on the Step-Up Convertible
Preferred Stock are cumulative and are payable quarterly in an amount
equivalent to $1.75 per annum per depositary share until redemption or
conversion.
Prior to August 1, 1999, the Step-Up Convertible Preferred Stock is
redeemable at the option of the Company, in whole or in part, for such
number of shares of Class A Common Stock as are issuable at the conversion
rate determined pursuant to the certificate of designations. The Company
may exercise this option only if, for 20 trading days within any period of
30 consecutive trading days, including the last trading day of such period,
the trading prices of the Class A Common Stock has exceeded 125% of the
conversion price in effect on the last trading day and the Company has
satisfied certain other conditions as set forth in the certificate of
designations. After August 1, 1999, the Step-Up Convertible Preferred Stock
is fully redeemable at the option of the Company at a redemption price
equivalent to $25.00 per depositary share, plus accrued and unpaid
dividends, which redemption price, subject to certain exceptions, the
Company may pay, at its option, in cash, Class A Common Stock or any
combination thereof.
The Step-Up Convertible Preferred Stock has limited voting rights with
respect to the election of directors upon the failure of the Company to pay
dividends in an amount equal to six full quarterly dividends and the right
to vote as a separate class on any proposal to amend the Certificate so as
to adversely affect the rights of holders of Step-Up Convertible Preferred
Stock or create, authorize or issue any series or class of stock ranking
senior to the shares of Step-Up Convertible Preferred Stock with respect to
dividends or the distribution of assets upon liquidation, dissolution or
winding up of the Company. The Step-Up Convertible Preferred Stock does not
have voting rights with respect to any amendment to the Certificate to
authorize other series of stock of the Company ranking on a parity with or
junior to the Step-Up Convertible Preferred Stock as to dividends or
distributions upon liquidation, dissolution or winding up of the Company.
Gold-Denominated Preferred Stock. As of December 31, 1996, the
Company had outstanding 300,000 shares of Gold-Denominated Preferred Stock
("Series I") and 215,279 shares of Gold-Denominated Preferred Stock, Series
II ("Series II" and, together with Series I, the "Gold-Denominated Preferred
Stock"). The Gold-Denominated Preferred Stock is represented by depositary
shares, each of which represents 0.05 shares of such stock and which are
traded on the NYSE. The Gold-Denominated Preferred Stock ranks, as to the
payment of dividends and distribution upon liquidation, pari passu with the
Step-Up Convertible Preferred Stock and the Silver-Denominated Preferred
Stock and senior to the Company's Class A Common Stock and Class B Common
Stock.
The Gold-Denominated Preferred Stock has a liquidation preference
equivalent to the dollar equivalent value of 0.10 ounces of gold per
depositary share plus accrued and unpaid dividends. Dividends on the Gold-
Denominated Preferred Stock are cumulative and are payable quarterly, in the
case of Series I, in an amount equivalent to the dollar value of 0.000875
ounces of gold per depositary share and, in the case of Series II, in an
amount equivalent to the dollar equivalent value of 0.0008125 ounces of gold
per depositary share.
Each of Series I and Series II is subject to mandatory redemption, out
of funds legally available therefor, on August 1, 2003 and on February 1,
2006, respectively, at an amount equivalent to the dollar equivalent value
of 0.10 ounce of gold per depositary share plus accrued and unpaid
dividends. The Gold-Denominated Preferred Stock is not subject to
redemption at the option of the Company, except that, if at any dividend
payment date for a series of Gold-Denominated Preferred Stock the number of
outstanding shares of that series is less than 15% of the total amount of
shares originally issued in that series, the Company will have the right to
redeem the shares of such series of Gold-Denominated Preferred Stock, in
whole but not in part, at a redemption price equivalent to the dollar
equivalent value of the liquidation preference described above plus accrued
and unpaid dividends to the date fixed for such redemption. The Company
does not have the right to make any mandatory or optional redemption of any
Gold-Denominated Preferred Stock unless full cumulative dividends for all
past dividend periods shall have been paid or declared and set aside for
payment upon all depositary shares and all other outstanding shares of stock
of the Company ranking, as to dividends, on a parity with the Gold-
Denominated Preferred Stock. For purposes of this discussion, the "dollar
equivalent value" of a specified number of ounces of gold means that number
of ounces multiplied by a reference price determined by taking the average
of the London P.M. gold fixing price for an ounce of gold on a specified
number of days prior to the date of determination.
The Gold-Denominated Preferred Stock has limited voting rights with
respect to the election of directors upon the failure of the Company to pay
dividends in an amount equal to six full quarterly dividends and the right
to vote as a separate class on any proposal to amend the Certificate so as
to adversely affect the rights of holders of Gold-Denominated Preferred
Stock or create, authorize or issue any series or class of stock ranking
senior to the shares of Gold-Denominated Preferred Stock with respect to
dividends or the distribution of assets upon liquidation, dissolution or
winding upon of the Company. The Gold-Denominated Preferred Stock does not
have voting rights with respect to any amendment to the Certificate to
authorize other series of stock of the Company ranking on a parity with or
junior to the Gold-Denominated Preferred Stock as to dividends or
distributions upon liquidation, dissolution or winding up.
Silver-Denominated Preferred Stock. As of December 31, 1996, the
Company had outstanding 119,000 shares of Silver-Denominated Preferred Stock
(the "Silver-Denominated Preferred Stock"). The Silver-Denominated
Preferred Stock is represented by depositary shares, each of which
represents 0.025 shares of such stock and which are traded on the NYSE. The
Silver-Denominated Preferred Stock ranks, as to the payment of dividends and
distribution upon liquidation, pari passu with the Step-Up Convertible Stock
and the Gold-Denominated Preferred Stock and senior to the Company's Class A
Common Stock and Class B Common Stock.
The depositary shares have a liquidation preference equivalent to the
dollar equivalent value of 4.0 ounces of silver per depositary share, plus
accrued and unpaid dividends. Dividends on the Silver-Denominated Preferred
Stock are cumulative and payable quarterly, in an amount equivalent to the
dollar value of 0.04125 ounces of silver per depositary share.
The Company will redeem annually on August 1 beginning in 1999, out of
funds legally available therefor, a number of Silver-Denominated Preferred
Stock shares equal to one-eighth of the shares originally issued, at an
amount equivalent to the dollar equivalent value of 4.0 ounces of silver per
depositary share plus accrued and unpaid dividends. Silver-Denominated
Preferred Stock is not subject to redemption at the option of the Company,
except that, if at any time the total number of shares of Silver-Denominated
Preferred Stock outstanding shall be less than 15% of the total number of
shares of Silver-Denominated Preferred Stock originally issued, the Company
will have the right to redeem the shares of Silver-Denominated Preferred
Stock, in whole but not in part, on any subsequent quarterly dividend date
at a redemption price equivalent to the dollar equivalent value of the
liquidation preference described above plus accrued and unpaid dividends on
the shares of Silver-Denominated Preferred Stock to the date fixed for
redemption. The Company will not have the right to make a mandatory or
optional redemption of any shares of Silver-Denominated Preferred Stock
unless full cumulative dividends for all past dividend periods shall have
been paid or declared and set aside for payment upon all shares of Silver-
Denominated Preferred Stock and all other outstanding shares of stock of
the Company ranking, as to dividends, pari passu with the Silver-Denominated
Preferred Stock. For purposes of this discussion, the "dollar equivalent
value" of a specified number of ounces of silver means that number of ounces
multiplied by a reference price determined by taking the average of the
London silver fixing price for an ounce of silver on a specified number of
days prior to the date of determination.
The Silver-Denominated Preferred Stock has limited voting rights with
respect to the election of directors upon the failure of the Company to pay
dividends in an amount equal to six full quarterly dividends and the right
to vote as a separate class on any proposal to amend the Certificate so as
to adversely affect the rights of holders of Silver-Denominated Preferred
Stock or create, authorize or issue any series or class of stock ranking
senior to the shares of Silver-Denominated Preferred Stock with respect to
dividends or the distribution of assets upon liquidation, dissolution or
winding up of the Company. The Silver-Denominated Preferred Stock does not
have voting rights with respect to any amendment to the Certificate to
authorize other series of stock of the Company ranking on a parity with or
junior to the Silver-Denominated Preferred as to dividends or distributions
upon liquidation, dissolution or winding up.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of
certain provisions of the Deposit Agreement (as defined below) and of the
Depositary Shares and Depositary Receipts does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the form
of Deposit Agreement and form of Depositary Receipts relating to each series
of the Preferred Stock which will be filed with the Commission as an exhibit
to the Registration Statement of which this Prospectus is a part.
General
The Company may, at its option, elect to have shares of Preferred
Stock represented by Depositary Shares. The shares of any series of the
Preferred Stock underlying the Depositary Shares will be deposited under a
separate deposit agreement (the "Deposit Agreement") between the Company and
a bank or trust company selected by the Company (the "Depositary"). The
Prospectus Supplement relating to a series of Depositary Shares will set
forth the name and address of the Depositary. Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable interest in the number of shares of Preferred
Stock underlying such Depositary Share, to all the rights and preferences of
the Preferred Stock underlying such Depositary Share (including dividend,
voting, redemption, conversion, exchange and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the
applicable interest in a number of shares of a particular series of the
Preferred Stock described in the applicable Prospectus Supplement.
Upon surrender of Depositary Shares at the office of the Depositary
and upon payment of the charges provided in the Deposit Agreement and
subject to the terms thereof, a holder of Depositary Shares will be entitled
to have the Depositary deliver to such holder the number of whole shares of
Preferred Stock evidenced by the surrendered Depositary Shares.
Dividends and Other Distributions
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record
holders of Depositary Shares representing such Preferred Stock in proportion
to the numbers of such Depositary Shares owned by such holders on the
relevant record date.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary
Shares entitled thereto or the Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale
to such holders.
The Deposit Agreement also contains provisions relating to the manner
in which any subscription or similar rights offered by the Company to
holders of Preferred Stock shall be made available to holders of Depositary
Shares.
Conversion and Exchange
If any Preferred Stock underlying the Depositary Shares is subject to
provisions relating to its conversion or exchange as set forth in the
Prospectus Supplement relating thereto, each record holder of Depositary
Shares will have the right or obligation to convert or exchange such
Depositary Shares into Preferred Stock or Debt Securities (including any
right to receive payments in cash or Preferred Stock or Debt Securities
based on the value, rate or price of one or more specified commodities,
currencies or indices) pursuant to the terms thereof.
Redemption of Depositary Shares
If Preferred Stock underlying the Depositary Shares is subject to
redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in
part, of the Preferred Stock held by the Depositary. The redemption price
per Depositary Share will be equal to the aggregate redemption price payable
with respect to the number of shares of Preferred Stock underlying the
Depositary Shares. Whenever the Company redeems Preferred Stock from the
Depositary, the Depositary will redeem as of the same redemption date a
proportionate number of Depositary Shares representing the shares of
Preferred Stock that were redeemed. If less than all the Depositary Shares
are to be redeemed, the Depositary Shares to be redeemed will be selected by
lot or pro rata as may be determined by the Company.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of
the holders of the Depositary Shares will cease, except the right to receive
the redemption price payable upon such redemption. Any funds deposited by
the Company with the Depositary for any Depositary Shares which the holders
thereof fail to redeem shall be returned to the Company after a period of
two years from the date such funds are so deposited.
Voting
Upon receipt of notice of any meeting or action in lieu of any meeting
at which the holders of any shares of Preferred Stock underlying the
Depositary Shares are entitled to vote, the Depositary will mail the
information contained in such notice to the record holders of the Depositary
Shares relating to such Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the number
of shares of Preferred Stock underlying such holder's Depositary Shares.
The Depositary will endeavor, insofar as practicable, to vote the number of
shares of Preferred Stock underlying such Depositary Shares in accordance
with such instructions, and the Company will agree to take all action which
may be deemed necessary by the Depositary in order to enable the Depositary
to do so.
Amendment of the Deposit Agreement
The form of Depositary Receipt evidencing the Depositary Shares and
any provision of the Deposit Agreement may at any time be amended by
agreement between the Company and the Depositary, provided, however, that
any amendment which materially and adversely alters the rights of the
existing holders of Depositary Shares will not be effective unless such
amendment has been approved by the record holders of at least a majority of
the Depositary Shares then outstanding.
Charges of Depositary
The Company will pay all transfer and other taxes and governmental
charges that arise solely from the existence of the depositary arrangements.
The Company will pay charges of the Depositary in connection with the
initial deposit of the Preferred Stock and any exchange or redemption of the
Preferred Stock. Holders of Depositary Shares will pay all other transfer
and other taxes and governmental charges, and, in addition, such other
charges as are expressly provided in the Deposit Agreement to be for their
accounts.
Miscellaneous
The Company, or at the option of the Company, the Depositary, will
forward to the holders of Depositary Shares all reports and communications
from the Company which the Company is required to furnish to the holders of
Preferred Stock.
Neither the Depositary nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of
the Company and the Depositary under the Deposit Agreement will be limited
to performance in good faith of their duties thereunder and they will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Share or Preferred Stock unless satisfactory indemnity has been
furnished. The Company and the Depositary may rely upon written advice of
counsel or accountants, or information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Shares or other persons
believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary; Termination of the Deposit Agreement
The Depositary may resign at any time by delivering to the Company
notice of its election to do so, and the Company may at any time remove the
Depositary, any such resignation or removal to take effect upon the
appointment of a successor Depositary and its acceptance of such
appointment. Such successor Depositary will be appointed by the Company
within 60 days after delivery of the notice of resignation or removal. The
Deposit Agreement may be terminated at the direction of the Company or by
the Depositary if a period of 90 days shall have expired after the
Depositary has delivered to the Company written notice of its election to
resign and a successor depositary shall not have been appointed. Upon
termination of the Deposit Agreement, the Depositary will discontinue the
transfer of Depositary Receipts, will suspend the distribution of dividends
to the holders thereof, and will not give any further notices (other than
notice of such termination) or perform any further acts under the Deposit
Agreement except that the Depositary will continue to deliver Preferred
Stock certificates, together with such dividends and distributions and the
net proceeds of any sales of rights, preferences, privileges or other
property in exchange for Depositary Receipts surrendered. Upon request of
the Company, the Depositary shall deliver all books, records, certificates
evidencing Preferred Stock, Depositary Receipts and other documents relating
to the subject matter of the Deposit Agreement to the Company.
DESCRIPTION OF WARRANTS
General
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), as well as other types of Warrants. Warrants
may be issued independently or together with any Debt Securities or
Preferred Stock and may be attached to or separate from such Debt Securities
or Preferred Stock. Each series of Warrants will be issued under a separate
warrant agreement (each a "Warrant Agreement") to be entered into between
the Company and a warrant agent ("Warrant Agent"). The following sets forth
certain general terms and provisions of the Warrants offered hereby.
Further terms of the Warrants and the applicable Warrant Agreement are set
forth in the applicable Prospectus Supplement.
Debt Warrants
The applicable Prospectus Supplement will describe the following terms
of the Debt Warrants in respect of which this Prospectus is being delivered:
(a) the title of such Debt Warrants; (b) the aggregate number of such Debt
Warrants; (c) the price or prices at which such Debt Warrants will be
issued; (d) the currency or currencies, including composite currencies, in
which the price of such Debt Warrants may be payable; (e) the designation,
aggregate principal amount and terms of the Debt Securities purchasable upon
exercise of such Debt Warrants; (f) the price at which and currency or
currencies, including composite currencies, in which the Debt Securities
purchasable upon exercise of such Debt Warrants may be purchased; (g) the
date on which the right to exercise such Debt Warrants shall commence and
the date on which such right shall expire; (h) if applicable, the minimum or
maximum amount of such Debt Warrants which may be exercised at any one time;
(i) if applicable, the designation and terms of the Debt Securities or
Preferred Stock with which such Debt Warrants are issued and the number of
such Debt Warrants issued with each such Debt Security or Preferred Stock;
(j) if applicable, the date on and after which such Debt Warrants and the
related Debt Securities or Preferred Stock will be separately transferable;
(k) information with respect to book-entry procedures, if any; (l) if
applicable, a discussion of certain United States Federal income tax
considerations; and (m) any other terms of such Debt Warrants, including
terms, procedures and limitations relating to the exchange and exercise of
such Debt Warrants.
Other Warrants
The Company may issue other Warrants. The applicable Prospectus
Supplement will describe the following terms of any such other Warrants in
respect of which this Prospectus is being delivered: (a) the title of such
Warrants; (b) the aggregate number of such Warrants; (c) the price or prices
at which such Warrants will be issued; (d) the currency or currencies,
including composite currencies, in which the price of such Warrants may be
payable; (e) the designation and terms of the Preferred Stock (including
rights to receive payments in cash or securities based on the value, rate or
price of one or more specified commodities, currencies or indices)
purchasable upon exercise of such warrants; (f) the price at which and the
currency or currencies, including composite currencies, in which the
securities purchasable upon exercise of such Warrants may be purchased; (g)
the date on which the right to exercise such Warrants shall commence and the
date on which such right shall expire; (h) if applicable, the minimum or
maximum amount of such Warrants which may be exercised at any one time; (i)
of applicable, the designation and terms of the Debt Securities or Preferred
Stock with which such Warrants are issued and the number of such Warrants
issued with each such Debt Security or share of Preferred Stock; (j) if
applicable, the date on and after which such Warrants and the related Debt
Securities or Preferred Stock will be separately transferable; (k)
information with respect to book-entry procedures, if any; (l) if
applicable, a discussion of certain United States Federal income tax
considerations; and (m) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants.
PLAN OF DISTRIBUTION
FCX may offer Securities to or through underwriters, through agents or
dealers or directly to other purchasers.
The distribution of Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed,
at market prices prevailing at the time of sale, at prices related to such
market prices or at negotiated prices.
In connection with the sale of Securities, underwriters, dealers or
agents may receive compensation from FCX or from purchasers in the form of
discounts, concessions or commissions. Underwriters, dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters within the meaning of the Securities Act.
Pursuant to agreements which may be entered into between the Company
and any underwriters or agents named in the Prospectus Supplement, such
underwriters or agents may be entitled to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act.
If so indicated in a Prospectus Supplement, the Company will authorize
underwriters or other persons acting as agents to solicit offers by certain
institutional investors to purchase Debt Securities or Preferred Stock from
the Company pursuant to contracts providing for payment and delivery on a
future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but shall in
all cases be subject to the approval of the Company. The obligations of the
purchaser under any such contract will not be subject to any conditions
except (a) the investment in the Debt Securities or Preferred Stock by the
institution shall not at the time of delivery be prohibited by the laws of
any jurisdiction in the United States to which such institution is subject,
and (b) if a portion of the Debt Securities or Preferred Stock is being sold
to underwriters, FCX shall have sold to such underwriters the Debt
Securities or Preferred Stock not sold for delayed delivery. Underwriters
and such other persons will not have any responsibility in respect of the
validity or performance of such contracts.
All Debt Securities, Preferred Stock and Warrants offered will be a
new issue of securities with no established trading market. Any
underwriters to whom such Debt Securities, Preferred Stock and Warrants are
sold for public offering and sale may make a market in such Debt Securities,
Preferred Stock and Warrants, but such underwriters will not be obligated to
do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of or the trading markets for any
Debt Securities, Preferred Stock and Warrants.
Certain of the underwriters or agents and their associates may be
customers of, engage in transactions with and perform services for the
Company in the ordinary course of business.
The specific terms and manner of sale of the Securities in respect of
which this Prospectus is being delivered are set forth or summarized in the
Prospectus Supplement.
LEGAL MATTERS
The validity of the Securities offered will be passed upon for FCX by
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P. Counsel to
any underwriters, dealers or agents with respect to any distribution of
Securities will be named in the applicable Prospectus Supplement.
EXPERTS
The audited financial statements and schedules of the Company
incorporated in this Prospectus by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 have been audited by
Arthur Andersen LLP, independent public accountants as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in accounting and
auditing in giving said report. Future audited financial statements and
schedules of the Company and the reports thereon of the Company's
independent public accountants also will be incorporated by reference in
this Prospectus in reliance upon the authority of those accountants as
experts in giving those reports to the extent said firm has audited those
financial statements and consented to the use of their reports thereon.
The Company's reserves as of December 31, 1995 and 1996 incorporated
in this Prospectus by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 have been verified by Independent
Mining Consultants, Inc., and such reserve information has been incorporated
by reference in this Prospectus in reliance upon the authority of said firm
as experts in mining, geology and reserve determination.
