AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 26, 1995
REGISTRATION NOS. 33-60415 AND 33-60415-01
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
<TABLE>
<S> <C>
RJR NABISCO HOLDINGS CAPITAL TRUST I RJR NABISCO HOLDINGS CORP.
(Exact name of Registrant as specified in its (Exact name of Registrant as specified in its
charter) charter)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
APPLIED FOR 13-3490602
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1301 AVENUE OF THE AMERICAS 1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10019
(212) 258-5600 (212) 258-5600
(Address and telephone number (Address and telephone number
of principal executive offices) of principal executive offices)
</TABLE>
-------------------
JO-ANN FORD, ESQ.
RJR NABISCO HOLDINGS CORP.
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 258-5600
(Name, address and telephone number
of agent for service)
-------------------
COPIES TO:
<TABLE>
<S> <C>
DAVID W. FERGUSON, ESQ. DAVID J. SORKIN, ESQ.
DAVIS POLK & WARDWELL SIMPSON THACHER & BARTLETT
450 LEXINGTON AVENUE 425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10017
(212) 450-4000 (212) 455-2000
</TABLE>
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the Exchange Offer (the "Offer") described in the enclosed
Prospectus have been satisfied or waived.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE><CAPTION>
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Preferred Securities of RJR
Nabisco Holdings Capital
Trust I and Junior
Subordinated Debentures of
RJR Nabisco Holdings Corp.... 49,000,000(1) $24.75(2) $1,212,750,000(3) $418,188.93
Guarantees of the Preferred
Securities by Holdings..... -- (4)
Total........................ 49,000,000 $24.75 $1,212,750,000 $418,188.93(5)
</TABLE>
(1) Estimated maximum amount of each class of securities listed above issuable
by RJR Nabisco Holdings Corp. and RJR Nabisco Holdings Capital Trust I
pursuant to the Offer as described herein.
(2) Each holder of a Series B Depositary Share representing 1/1000 of a share of
Series B Cumulative Preferred Stock will receive one Preferred Security.
(3) Calculated in accordance with Rule 457(f) under the Securities Act of 1933.
(4) Pursuant to Rule 457(n) under the Securities Act of 1933, no fee is payable
with respect to the Guarantees.
(5) Previously paid.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
CROSS REFERENCE SHEET
RJR NABISCO HOLDINGS CORP.
RJR NABISCO HOLDINGS CAPITAL TRUST I
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM NO. CAPTION IN PROSPECTUS
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page; Inside Front
Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover Page; Available
Information; Incorporation of Certain
Documents by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Prospectus Summary; Special Considerations
Relating to the Offer; Holdings; RJR
Nabisco Holdings Capital Trust I; Selected
Consolidated Financial Data
4. Terms of the Transaction................... The Offer; Description of the Preferred
Securities; Description of the Junior
Subordinated Debentures; Description of the
Preferred Securities Guarantee; Taxation
5. Pro Forma Financial Information............ Not Applicable
6. Material Contacts with the Company Being
Acquired................................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................ Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
10. Information with Respect to S-3
Registrants................................ Not Applicable
11. Incorporation of Certain Information by
Reference.................................. Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants................................ Not Applicable
13. Incorporation of Certain Information by
Reference.................................. Not Applicable
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants.......... Not Applicable
15. Information With Respect to S-3 Companies.. Not Applicable
16. Information with Respect to S-2 or S-3
Companies.................................. Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies.................. Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited......... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer....................... Incorporation of Certain Documents by
Reference
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 26, 1995
PROSPECTUS
RJR NABISCO HOLDINGS CAPITAL TRUST I
OFFER TO EXCHANGE ITS
% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPRSSM")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY AND
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY RJR NABISCO HOLDINGS CORP.)
FOR UP TO 49,000,000 OUTSTANDING SERIES B DEPOSITARY SHARES,
EACH REPRESENTING 1/1000 OF A SHARE OF
SERIES B CUMULATIVE PREFERRED STOCK
OF
RJR NABISCO HOLDINGS CORP.
THE OFFER, THE PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1995,
UNLESS THE OFFER IS EXTENDED.
-------------------
RJR Nabisco Holdings Capital Trust I, a Delaware statutory business trust
(the "Trust"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter
of Transmittal" which, together with this Prospectus, constitute the "Offer"),
to exchange its % Trust Originated Preferred Securities ("TOPrS"),
representing preferred undivided beneficial interests in the assets of the Trust
(the "Preferred Securities"), for up to 49,000,000 of the outstanding Series B
Depositary Shares ("Depositary Shares"), each representing 1/1000 of a share of
Series B Cumulative Preferred Stock (the "Series B Preferred") of RJR Nabisco
Holdings Corp., a Delaware corporation ("Holdings"). Exchanges will be made on
the basis of one Preferred Security for each Depositary Share validly tendered
and accepted for exchange in the Offer. As of the date of this Prospectus, there
are 50,000,000 Depositary Shares outstanding. Depositary Shares not accepted for
exchange because of proration will be returned. Concurrently with the issuance
of Preferred Securities in exchange for Depositary Shares validly tendered in
the Offer, Holdings will deposit in the Trust as trust assets its % Junior
Subordinated Debentures due 2044 (the "Junior Subordinated Debentures"), having
an aggregate principal amount equal to the aggregate stated liquidation amount
of the Preferred Securities to be issued by the Trust.
(cover page continues)
-------------------
SEE "RISK FACTORS" STARTING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
RELATING TO THE PREFERRED SECURITIES THAT SHOULD BE CONSIDERED BY INVESTORS,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE
JUNIOR SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES MAY BE DEFERRED AND
THE RELATED FEDERAL INCOME TAX CONSEQUENCES.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
Merrill Lynch & Co., Lehman Brothers, Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated and Smith Barney Inc. have been retained as Dealer
Managers to solicit exchanges of Depositary Shares for Preferred Securities. See
"The Offer--Dealer Managers; Soliciting Dealers". First Chicago Trust Company of
New York has been retained as Exchange Agent in connection with the Offer.
MacKenzie Partners, Inc. has been retained to act as Information Agent to assist
in connection with the Offer.
-------------------
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO.
LEHMAN BROTHERS MORGAN STANLEY & CO.
PAINEWEBBER INCORPORATED SMITH BARNEY INC.
The date of this Prospectus is , 1995.
SM"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
NEITHER THE BOARD OF DIRECTORS OF HOLDINGS NOR HOLDINGS NOR THE TRUSTEES NOR
THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF DEPOSITARY SHARES AS TO WHETHER
TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF DEPOSITARY SHARES
ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS
ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF DEPOSITARY SHARES MUST
SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR
TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER
OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN). SEE "THE
OFFER--PROCEDURES FOR TENDERING".
For a description of the other terms of the Offer, see "The Offer--Terms of
the Offer", "-- Expiration Date; Extensions; Amendments; Termination",
"--Withdrawal of Tenders" and "--Acceptance of Shares and Proration".
Consummation of the Offer is conditioned on, among other things, receipt of at
least 15,000,000 validly tendered Depositary Shares (which condition may be
waived). Application has been made to list the Preferred Securities on the New
York Stock Exchange (the "NYSE"). In order to satisfy the NYSE listing
requirements, acceptance of Depositary Shares validly tendered in the Offer is
subject to the condition that as of the Expiration Date there be at least 400
record or beneficial holders of Preferred Securities in exchange for such
Depositary Shares (the "Minimum Distribution Condition"), which condition may
not be waived. See "The Offer--Expiration Date; Extensions; Amendments;
Termination" and "--Conditions to the Offer".
The Trust expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Offer, and not accept for exchange any
Depositary Shares and promptly return all Depositary Shares upon the failure of
any of the conditions specified above or in "The Offer-- Conditions to the
Offer", (ii) waive any condition to the Offer (other than the Minimum
Distribution Condition) and accept all Depositary Shares previously tendered
pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain
all Depositary Shares tendered pursuant to such Exchange Offer until the
Expiration Date, subject, however, to all withdrawal rights of holders, see "The
Offer-- Withdrawal of Tenders", (iv) amend the terms of the Offer or (v) modify
the form of the consideration to be paid pursuant to the Offer. Any amendment
applicable to the Offer will apply to all Depositary Shares tendered pursuant to
the Offer. The minimum period during which the Offer must remain open following
material changes in the terms of the Offer or the information concerning the
Offer, other than a change in the percentage of securities sought or the price,
depends upon the facts and circumstances, including the relative materiality of
such terms or information. See "The Offer--Expiration Date; Extensions;
Amendments; Termination".
Holdings will own directly or indirectly all of the securities representing
common undivided beneficial interests in the assets of the Trust (the "Common
Securities" and, together with the Preferred Securities, the "Trust
Securities"). The Trust exists for the purpose of (a) issuing (i) its Preferred
Securities in exchange for Depositary Shares validly tendered in the Offer and
delivering such Depositary Shares to Holdings in consideration for the deposit
by Holdings of Junior Subordinated Debentures having an aggregate stated
principal amount equal to the aggregate stated liquidation amount of such
Preferred Securities in the Trust as trust assets and (ii) its Common Securities
to Holdings in exchange for cash and investing the proceeds thereof in an
equivalent amount of Junior Subordinated Debentures and (b) engaging in such
other activities as are necessary and incidental thereto. The Preferred
Securities and the Common Securities will rank pari passu with each other and
will have equivalent terms; provided that (i) if an Event of Default (as defined
herein) under the Declaration (as defined herein) occurs and is continuing, the
holders of Preferred Securities will have a priority over holders of the Common
Securities with respect to payments in respect of distributions and payments
upon liquidation, redemption or otherwise and (ii) holders of Common Securities
have the exclusive right (subject to the terms of the Declaration) to appoint,
replace or remove Trustees and to increase or decrease the number of Trustees,
subject to the right of holders of Preferred Securities to appoint a Trustee
(the "Special Regular Trustee") upon the occurrence of certain events described
ii
<PAGE>
herein. See "Prospectus Summary--Description of Preferred Securities and Junior
Subordinated Debentures".
Cash distributions on the Preferred Securities will be cumulative from the
first day following the Expiration Date (the "Accrual Date") at an annual rate
of % of the liquidation amount of $25 per Preferred Security, and will be
payable quarterly in arrears on the last day of March, June, September and
December of each year, commencing on September 30, 1995 ("distributions"). Cash
distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of % of the stated liquidation amount of $25 per
Preferred Security, compounded quarterly to the extent permitted by applicable
law. The term "distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. In addition, holders of
the Preferred Securities will be entitled to an additional cash distribution at
the rate of 9.25% per annum of the liquidation amount thereof from June 1, 1995
through the Expiration Date (the "Pre-Issuance Accrued Interest") in lieu of
dividends accumulating and unpaid after June 1, 1995 on their Depositary Shares
accepted for exchange, such additional distribution to be made on September 30,
1995 to holders of the Preferred Securities on the record date for such
distribution. The distribution rate and the distribution and other payment dates
for the Preferred Securities will correspond to the interest rate and the
interest and other payment dates on the Junior Subordinated Debentures deposited
in the Trust as trust assets. As a result, if principal or interest is not paid
on the Junior Subordinated Debentures, including as a result of Holdings'
election to extend the interest payment period on the Junior Subordinated
Debentures as described below, the Trust will not make payments on the Trust
Securities. The Junior Subordinated Debentures provide that, so long as Holdings
shall not be in default in the payment of interest on the Junior Subordinated
Debentures, Holdings shall have the right to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period from
time to time for a period not exceeding 20 consecutive quarterly interest
periods (each, an "Extension Period"). No interest shall be due and payable
during an Extension Period and, as a consequence, distributions on the Trust
Securities will also be deferred, but at the end of such Extension Period
Holdings shall pay all interest then accrued and unpaid on the Junior
Subordinated Debentures, together with interest thereon at the rate specified
for the Junior Subordinated Debentures compounded quarterly to the extent
permitted by applicable law ("Compounded Interest"), and corresponding
distributions will be paid by the Trust on the Trust Securities. All references
herein to interest shall include Compounded Interest unless otherwise stated.
There could be multiple Extension Periods of varying lengths (up to nine
Extension Periods of 20 consecutive quarterly interest periods each or more
numerous shorter Extension Periods) throughout the term of the Junior
Subordinated Debentures, provided that no Extension Period may extend beyond the
maturity of the Junior Subordinated Debentures. During any such Extension
Period, Holdings may not declare or pay dividends on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock; provided that Holdings will be permitted to
pay accrued dividends (and cash in lieu of fractional shares) upon the
conversion, other than at the option of Holdings, of any of its preferred stock,
including its Series C Conversion Preferred Stock and ESOP Convertible Preferred
Stock, in accordance with the terms of such stock. See "Risk Factors",
"Description of the Junior Subordinated Debentures-- Interest", "--Option to
Extend Interest Payment Period" and "--Tax Consequences of Extension".
The obligations of Holdings under the Junior Subordinated Debentures are
unsecured obligations of Holdings and will be subordinate and junior in right of
payment, to the extent set forth herein, to all Senior Indebtedness (as defined
herein) of Holdings, except obligations and securities made pari passu or
subordinate by their terms, but senior to all capital stock now or hereafter
issued by Holdings and to any guarantee now or hereafter entered into by
Holdings in respect of its capital stock. Holdings' obligations under the
Preferred Securities Guarantee are unsecured and will rank (i) subordinate and
junior in right of payment to all Senior Indebtedness of Holdings, and to the
Junior Subordinated Debentures, and (ii) senior to all capital stock now or
hereafter issued by Holdings and to any guarantee now or hereafter entered into
by Holdings in respect of its capital stock.
iii
<PAGE>
The payment of distributions out of moneys held by the Trust (as defined
herein) and payments on liquidation of the Trust and the redemption of Preferred
Securities, as set forth below, are guaranteed by Holdings on a subordinated
basis as and to the extent described herein (the "Preferred Securities
Guarantee"). See "Description of the Preferred Securities Guarantee". The
Preferred Securities Guarantee is a full and unconditional guarantee from the
time of issuance of the Preferred Securities, but the Preferred Securities
Guarantee covers distributions and other payments on the Preferred Securities
only if and to the extent that Holdings has made a payment of interest or
principal on the Junior Subordinated Debentures deposited in the Trust as trust
assets.
For a description of redemption rights with respect to the Preferred
Securities, the possible dissolution of the Trust and distribution of Junior
Subordinated Debentures held by the Trust to holders of the Trust Securities and
the liquidation amount on the Preferred Securities, see "Risk Factors",
"Description of the Preferred Securities--Special Event Redemption or
Distribution", "--Liquidation Distribution Upon Dissolution" and "Description of
the Junior Subordinated Debentures".
The Depositary Shares are listed and principally traded on the NYSE. On June
19, 1995, the last full day of trading prior to the first public announcement of
the Offer, the closing sales price of the Depositary Shares on the NYSE as
reported on the Composite Tape was $24.875 per share. The closing sales price of
the Depositary Shares on the NYSE on , 1995 was $ . STOCKHOLDERS ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE DEPOSITARY SHARES. To the
extent that Depositary Shares are tendered and accepted in the Offer, the terms
on which untendered Depositary Shares could subsequently be sold could be
adversely affected. See "Listing and Trading of Preferred Securities and
Depositary Shares".
Holdings will pay to Soliciting Dealers (as defined herein) designated by
the record or beneficial owner, as appropriate, of Depositary Shares a
solicitation fee of $0.50 per Depositary Share validly tendered and accepted for
exchange pursuant to the Offer, subject to certain conditions. Soliciting
Dealers are not entitled to a solicitation fee for Depositary Shares
beneficially owned by such Soliciting Dealer. See "The Offer--Dealer Managers;
Soliciting Dealers".
iv
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY HOLDINGS, THE TRUST, THE TRUSTEES OR
THE DEALER MANAGERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF HOLDINGS OR THE TRUST SINCE THE RESPECTIVE
DATES AS OF WHICH INFORMATION IS GIVEN HEREIN. THE OFFER IS NOT BEING MADE TO
(NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF DEPOSITARY SHARES
IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF
WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, HOLDINGS
AND THE TRUST MAY, AT THEIR DISCRETION, TAKE SUCH ACTION AS THEY MAY DEEM
NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER TO
HOLDERS OF DEPOSITARY SHARES IN SUCH JURISDICTION. IN ANY JURISDICTION THE
SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE OFFER TO BE MADE BY A
LICENSED BROKER OR DEALER, THE OFFER IS BEING MADE ON BEHALF OF THE TRUST BY THE
DEALER MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED
UNDER THE LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
Holdings is subject to the information 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 concerning Holdings can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024; Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material can also be inspected and copied at the offices of the NYSE, 20 Broad
Street, New York, N.Y. 10005.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") filed
by Holdings and the Trust with the Commission under the Securities Act of 1933,
as amended (the "Securities Act"). This Prospectus does not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of any document summarize
the material terms thereof. Reference is made to the copy of such document filed
or incorporated by reference as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is subject to and
qualified in its entirety by such reference. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to Holdings, the Trust and the securities offered
hereby.
No separate financial statements of the Trust have been included or
incorporated by reference herein. Holdings and the Trust do not consider that
such financial statements would be material to holders of Preferred Securities
because the Trust is a newly-formed special purpose entity, has no operating
history, has no independent operations and is not engaged in, and does not
propose to engage in, any activity other than its holding as trust assets the
Junior Subordinated Debentures of Holdings and its issuance of Trust Securities.
The Trust anticipates that it will not be required to file with the
1
<PAGE>
Commission or to distribute to holders of Preferred Securities periodic reports
regarding the Trust. See "RJR Nabisco Holdings Capital Trust I", "Description of
the Preferred Securities", "Description of the Preferred Securities Guarantee"
and "Description of the Junior Subordinated Debentures". The Trust is a
statutory business trust formed under the laws of the State of Delaware.
Holdings, as of the date hereof, beneficially owns all of the beneficial
interests in the Trust.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Holdings' Annual Report on Form 10-K for the year ended December 31, 1994
("Holdings 10-K"), Holdings' 10-K as amended by Form 10K-A dated March 16, 1995,
its Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
("Holdings First Quarter 10-Q"), and its Proxy Statement dated March 20, 1995
have been filed with the Commission and are incorporated herein by reference.
All documents filed by Holdings pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the Expiration Date shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified and
superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Holdings will provide without charge to each
person, including any beneficial owner of Depositary Shares, to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests for such documents should be
directed to Holdings at 1301 Avenue of the Americas, New York, New York
(Telephone (212) 258-5600) Attention: Investor Relations Department. In order to
ensure timely delivery of the documents, any request should be made not later
than five business days prior to the Expiration Date.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................................................................... 4
Risk Factors.......................................................................... 16
Comparison of Preferred Securities and Depositary Shares.............................. 23
RJR Nabisco Holdings Corp............................................................. 27
RJR Nabisco Holdings Capital Trust I.................................................. 29
Selected Consolidated Financial Data.................................................. 32
Capitalization........................................................................ 34
The Offer............................................................................. 35
Listing and Trading of Preferred Securities and Depositary Shares..................... 43
Transactions and Arrangements Concerning the Offer.................................... 44
Fees and Expenses; Transfer Taxes..................................................... 44
Price Range of Depositary Shares...................................................... 45
Description of the Preferred Securities............................................... 46
Description of the Preferred Securities Guarantee..................................... 58
Description of the Junior Subordinated Debentures..................................... 61
Description of the Series B Preferred and Depositary Shares........................... 69
Relationship Between the Preferred Securities, the Junior Subordinated Debentures and
the Preferred Securities Guarantee.................................................. 72
Taxation.............................................................................. 74
Legal Matters......................................................................... 77
Experts............................................................................... 77
ERISA Matters......................................................................... 77
</TABLE>
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PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information contained elsewhere in, or incorporated
by reference in, this Prospectus.
RJR NABISCO HOLDINGS CORP.
The operating subsidiaries of Holdings owned through RJR Nabisco, Inc.
("RJRN") comprise one of the largest tobacco and food companies in the world. In
the United States, the tobacco business is conducted by R.J. Reynolds Tobacco
Company ("RJRT"), the second largest manufacturer of cigarettes, and the
packaged foods business is conducted by Nabisco Holdings Corp. ("Nabisco
Holdings") through its wholly owned subsidiary, Nabisco, Inc. ("Nabisco"), the
largest manufacturer and marketer of cookies and crackers. RJRN owns
approximately 80.5% of the economic interest and approximately 97.6% of the
voting power of Nabisco Holdings. Tobacco operations outside the United States
are conducted by R.J. Reynolds Tobacco International, Inc. ("Tobacco
International") and packaged food operations outside the United States are
conducted by Nabisco International, Inc. ("Nabisco International") and Nabisco
Ltd., subsidiaries of Nabisco. RJRT's and Tobacco International's tobacco
products are sold around the world under a variety of brand names. Food products
are sold in the United States, Canada, Latin America and certain other
international markets.
TOBACCO
RJRT's largest selling cigarette brands in the United States include
WINSTON, DORAL, CAMEL, SALEM, VANTAGE and MONARCH. RJRT's other cigarette
brands, including NOW, MORE, BEST VALUE, STERLING, MAGNA and CENTURY, are
marketed to meet a variety of smoker preferences. All RJRT brands are marketed
in a variety of styles. Tobacco International operates in over 160 markets
around the world and is the second largest of two international cigarette
producers that have significant positions in the American Blend segment of the
international tobacco market.
FOOD
Nabisco's domestic operations represent one of the largest packaged food
businesses in the world. Through its domestic divisions, Nabisco manufactures
and markets cookies, crackers, snack foods, hard and bite-size candy, gum, nuts,
hot cereals, margarine, pet foods, dry-mix dessert products and other grocery
products under established and well-known trademarks, including OREO, CHIPS
AHOY!, NEWTONS, SNACKWELL'S, RITZ, PREMIUM, LIFE SAVERS, PLANTERS, A.1, GREY
POUPON, MILK-BONE, CREAM OF WHEAT, FLEISCHMANN'S and BLUE BONNET. Nabisco
International is also a leading producer of biscuits, baking powder, powdered
desserts, industrial yeasts and processed milk products in many of the 17 Latin
American countries in which it has operations. Nabisco Ltd. conducts Nabisco's
Canadian operations through a biscuit division and a grocery division. Excluding
private label brands, the biscuit division produced nine of the top ten cookies
and nine of the top ten crackers in Canada in 1994.
RJR NABISCO HOLDINGS CAPITAL TRUST I
RJR Nabisco Holdings Capital Trust I is a statutory business trust that was
formed under the Delaware Business Trust Act (the "Business Trust Act") on June
20, 1995. The Trust's original declaration of trust will be amended and restated
in its entirety as of the date the Trust accepts Depositary Shares in the Offer
(as so amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. See "The
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Offer--Terms of the Offer" and "--Acceptance of Shares and Proration" for
information regarding the Trust's acceptance of Depositary Shares in the Offer.
The Declaration will be qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Upon issuance of the Preferred Securities,
the holders thereof will own all of the issued and outstanding Preferred
Securities. Holdings has agreed to acquire Common Securities in an amount equal
to at least 3% of the total capital of the Trust and will own, directly or
indirectly, all of the issued and outstanding Common Securities. The Preferred
Securities and the Common Securities will have equivalent terms; provided that
(i) if an Event of Default under the Declaration occurs and is continuing, the
holders of Preferred Securities will have a priority over the holders of the
Common Securities with respect to payments in respect of distributions and
payments upon liquidation, redemption or otherwise and (ii) holders of Common
Securities have the exclusive right (subject to the terms of the Declaration) to
appoint, replace or remove Trustees and to increase or decrease the number of
Trustees, subject to the right of holders of Preferred Securities to appoint one
additional Trustee of the Trust is the Special Regular Trustee upon the
occurrence of certain events described herein.
The number of trustees (the "Trustees") of the Trust shall initially be
five. Three of the Trustees (the "Regular Trustees") are individuals who are
employees or officers of Holdings. The fourth trustee is The Bank of New York
(the "Institutional Trustee"), which will act as the indenture trustee for
purposes of the Trust Indenture Act under the Declaration and will serve as the
Indenture Trustee for the Junior Subordinated Debentures. The fifth trustee is
The Bank of New York (Delaware), which has its principal place of business in
the State of Delaware (the "Delaware Trustee"). Pursuant to the Declaration, the
Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as hereinafter defined) pursuant to which the
Junior Subordinated Debentures will be issued. The Institutional Trustee, acting
on behalf of the Trust, will promptly make distributions to the holders of the
Trust Securities out of funds in the Trust. The Preferred Securities Guarantee,
which will be separately qualified under the Trust Indenture Act, will be held
by The Bank of New York, acting in its separate capacity as indenture trustee
with respect to the Preferred Securities Guarantee, for the benefit of the
holders of the Preferred Securities. As used in this Prospectus, the term
"Institutional Trustee" refers to The Bank of New York acting either in its
capacity as the trustee under the Declaration or in its capacity as indenture
trustee under, and the holder of, the Preferred Securities Guarantee, as the
context may require.
The Trust exists for the purpose of (a) issuing (i) its Preferred Securities
in exchange for Depositary Shares validly tendered in the Offer and delivering
such Depositary Shares to Holdings in consideration for the deposit by Holdings
of Junior Subordinated Debentures, having an aggregate stated principal amount
equal to the aggregate stated liquidation amount of such Preferred Securities,
in the Trust as trust assets, and (ii) its Common Securities to Holdings in
exchange for cash and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures and (b) engaging in such other activities as are
necessary and incidental thereto. The rights of the holders of the Trust
Securities, including economic rights, rights to information and voting rights,
are as set forth in the Declaration, the Business Trust Act and the Trust
Indenture Act. See "RJR Nabisco Holdings Capital Trust I" and "Description of
the Preferred Securities". The Declaration does not permit the incurrence by the
Trust of any indebtedness for borrowed money or the making of any investment
other than in the Junior Subordinated Debentures. In the Declaration, Holdings
has agreed to pay for all debts and obligations (other than with respect to the
Trust Securities) and all costs and expenses of the Trust, including the fees
and expenses of the Trustees and any income taxes, duties and other governmental
charges, and all costs and expenses with respect thereto, to which the Trust may
become subject, except for United States withholding taxes. See "Risk Factors",
"RJR Nabisco Holdings Capital Trust I" and "Description of the Preferred
Securities".
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CERTAIN POTENTIAL BENEFITS AND RISKS TO INVESTORS
Prospective investors should carefully review the information contained
elsewhere in this Prospectus prior to making a decision regarding the Offer and
should particularly consider the following matters:
POTENTIAL BENEFITS TO EXCHANGING HOLDERS
. The cash distributions rate on the Preferred Securities will be
basis points greater than the dividend rate on the Depositary Shares. See
"Comparison of Preferred Securities and Depositary Shares".
. Although the obligations of Holdings under the Junior Subordinated
Debentures and the Preferred Securities Guarantee will be unsecured and will be
subordinated and junior in right of payment to all Senior Indebtedness of
Holdings, they will be senior to all capital stock of Holdings now or hereafter
issued by Holdings (including the Depositary Shares).
. While no dividends are required to be paid with respect to the Depositary
Shares, interest payments on the Junior Subordinated Debentures and therefore
distributions on the Preferred Securities may not be deferred for more than 20
consecutive quarterly interest periods. See "Description of the Preferred
Securities". However, to date, Holdings has made each quarterly dividend payment
with respect to the Depositary Shares on the scheduled dividend payment date,
and dividends on the Series B Preferred accrue whether or not such dividends are
declared. See "Description of the Series B Preferred and Depositary
Shares--Dividends".
. The Offer will allow Holdings to achieve certain tax efficiencies while
preserving its flexibility with respect to future financings. In contrast to
dividend payments with respect to the Depositary Shares which are not deductible
by Holdings, Holdings will be able to deduct interest payments on the Junior
Subordinated Debentures for United States federal income tax purposes. See "The
Offer-- Purpose of the Offer".
. So long as payments of interest and other payments are made when due on
the Junior Subordinated Debentures, such payments will be sufficient to cover
cash distributions and other payments made on the Preferred Securities (and the
Common Securities) because (i) the aggregate principal amount of Junior
Subordinated Debentures deposited as trust assets will be equal to the sum of
(x) the aggregate stated liquidation amount of the Preferred Securities issued
by the Trust in exchange for the Depositary Shares accepted in the Offer and (y)
the amount of proceeds received by the Trust from the issuance of the Common
Securities to Holdings, which proceeds will be used by the Trust to purchase an
equal principal amount of Junior Subordinated Debentures, (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures will
match the distribution rate and distribution and other payment dates for the
Preferred Securities, (iii) the Declaration provides that Holdings shall pay for
all debts and obligations (other than with respect to the Trust Securities) and
all costs and expenses of the Trust, and (iv) the Declaration further provides
that the Trustees shall not permit the Trust to, among other things, engage in
any activity that is not consistent with the purposes of the Trust. See "The
Offer--Description of Preferred Securities and Junior Subordinated Debentures"
and "RJR Nabisco Holdings Capital Trust I".
. The Trust will have no independent operations and will exist for the sole
purpose of effecting the Offer and issuing the Trust Securities as described
herein and owning and holding the Junior Subordinated Debentures. See "RJR
Nabisco Holdings Capital Trust I".
. If (i) the Trust fails to pay distributions in full on the Preferred
Securities for six consecutive regularly scheduled quarterly distribution
periods; or (ii) an Event of Default under the Declaration occurs and is
continuing (each, an "Appointment Event"), then the Declaration provides that
the
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holders of the Preferred Securities may appoint a Special Regular Trustee of the
Trust who need not be an officer or employee of or otherwise affiliated with
Holdings. Under the Declaration, any such Special Regular Trustee shall have the
same rights, powers and privileges as a Regular Trustee. See "Description of the
Preferred Securities--Voting Rights". Holders of Depositary Shares also have
limited voting rights. However, with certain exceptions, in the event that
dividends on all series of Preferred Stock, including the Series B Preferred,
are in arrears and unpaid for six quarterly periods, the board of directors of
Holdings is required to be increased by two directors and the holders of Series
B Preferred, together with the holders of all other series of Preferred Stock
then entitled to vote thereon, shall be entitled to elect two directors of the
expanded board of directors. See "Description of Series B Preferred and
Depositary Shares--Voting".
. The Institutional Trustee will have the power to exercise all rights,
powers and privileges under the Indenture with respect to the Junior
Subordinated Debentures, including its rights to enforce Holdings' obligations
under the Junior Subordinated Debentures upon the occurrence of an Indenture
Event of Default, and will also have the right to enforce the Preferred
Securities Guarantee on behalf of the holders of the Preferred Securities. In
addition, the holders of the Preferred Securities will have certain rights to
direct the Institutional Trustee with respect to certain matters under the
Declaration and the Preferred Securities Guarantee. If the Institutional Trustee
fails to enforce its rights under the Indenture or fails to enforce the
Preferred Securities Guarantee, any holder of Preferred Securities may, after a
period of 90 days has elapsed from such holder's written request to the
Institutional Trustee to enforce such rights or the Preferred Securities
Guarantee, institute a legal proceeding against Holdings to enforce such rights
or the Preferred Securities Guarantee, as the case may be. See "Description of
the Preferred Securities" and "Description of the Preferred Securities
Guarantee".
POTENTIAL RISKS TO EXCHANGING HOLDERS
. Participation in the Offer will be a taxable event for holders of
Depositary Shares. See "Risk Factors--Tax Consequences of the Offer".
. The obligations of Holdings under (i) the Junior Subordinated Debentures
and the Preferred Securities Guarantee are subordinate in right of payment to
all Senior Indebtedness (as defined herein) of Holdings, except obligations or
securities made pari passu or subordinate by their terms, and (ii) the Preferred
Securities Guarantee is also subordinate in right of payment to the Junior
Subordinated Debentures. See "Risk Factors--Ranking of Subordinated obligations
under the Preferred Securities Guarantee and Junior Subordinated Debentures;
Dependence on Holdings".
. The Trust's ability to make distributions on the Preferred Securities is
entirely dependent upon Holdings making interest payments on the Junior
Subordinated Debentures when and as required, and the interest payment period on
the Junior Subordinated Debentures may be extended under certain circumstances
by Holdings in its sole discretion for up to 20 consecutive quarterly interest
periods. See "Risk Factors--Ranking of Subordinated Obligations under Preferred
Securities Guarantee and Junior Subordinated Debentures; Dependence on
Holdings", "--Option to Extend Interest Payment Period; Tax Impact of Extension"
and "--Potential Market Volatility During Extension Period".
. Should Holdings not make interest or other payments on the Junior
Subordinated Debentures for any reason, including as a result of Holdings'
election to defer payments of interest on the Junior Subordinated Debentures by
extending the interest payment period on the Junior Subordinated Debentures, the
Trust will not make distributions or other payments on the Trust Securities. In
such an event, holders of the Preferred Securities would not be able to rely on
the Preferred Securities Guarantee since the Preferred Securities Guarantee
covers distributions and other payments on the Preferred Securities only if and
to the extent that Holdings has made a payment to the Trust of interest or
principal on the Junior Subordinated Debentures deposited in the Trust as trust
assets. See "Risk
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Factors--Ranking of Subordinated Obligations under Preferred Securities
Guarantee and Junior Subordinated Debentures; Dependence on Holdings".
. If Holdings elects to defer payments of interest on the Junior
Subordinated Debentures by extending the interest period on the Junior
Subordinated Debentures, distributions on the Preferred Securities would also be
deferred but the Trust will continue to accrue interest income (as original
issue discount) in respect of such Debentures which will be taxable to
beneficial owners of Preferred Securities. As a result, beneficial owners of
Preferred Securities during an Extension Period will include their pro rata
share of the interest in gross income in advance of the receipt of cash. See
"Taxation-- Income from the Preferred Securities".
. Holders of Preferred Securities will have limited voting rights and,
subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment Event, will not be able to
appoint, remove or replace, or to increase or decrease the number of, Trustees,
which rights are vested exclusively in the Common Securities.
. While the Depositary Shares are not redeemable prior to August 19, 1998,
the Junior Subordinated Debentures (and thus the Preferred Securities) in
certain circumstances will be redeemable prior to that date upon the occurrence
of a Tax Event (as defined herein).
. While dividends with respect to Depositary Shares are eligible for the
dividends received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends received deduction for
corporate holders. See "Comparison of Preferred Securities and Depositary
Shares" and "Taxation--Accrual of Original Issue Discount and Premium".
. While application has been made to list the Preferred Securities on the
NYSE, the Preferred Securities are a new issue of securities with no established
trading market. In addition, liquidity of the Preferred Securities will be
affected by the number of Depositary Shares exchanged in the Offer. See "Risk
Factors--Listing and Trading of Preferred Securities and Depositary Shares".
. Under certain circumstances, Junior Subordinated Debentures could be
distributed to holders of Preferred Securities. In such event, the Trust would
be dissolved and the holders would become holders of Junior Subordinated
Debentures. While Holdings will use its best efforts in such a situation to have
the Junior Subordinated Debentures listed on the NYSE, there is no guarantee
that such listing will take place or that a market will exist for such Junior
Subordinated Debentures. See "Description of the Preferred Securities--Special
Event Redemption or Distribution."
POTENTIAL RISK TO NON-EXCHANGING HOLDERS
. The liquidity and trading market for untendered Depositary Shares could be
adversely affected to the extent Depositary Shares are tendered and accepted in
the Offer. See "Risk Factors--Listing and Trading of Preferred Securities and
Depositary Shares".
. The Junior Subordinated Debentures will rank senior in right of payment to
the untendered Depositary Shares.
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THE OFFER
PURPOSE OF THE OFFER
The purpose of the Offer is to refinance the Series B Preferred with the
Preferred Securities and to achieve certain tax efficiencies while preserving
Holdings' flexibility with respect to future financings. This refinancing will
permit Holdings to deduct interest payable on the Junior Subordinated Debentures
for United States federal income tax purposes; dividends payable on the Series B
Preferred are not deductible. See "The Offer--Purpose of the Offer".
TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Trust hereby offers to exchange its Preferred
Securities for up to 49,000,000 of the outstanding Depositary Shares of
Holdings. Exchanges will be made on the basis of one Preferred Security for each
Depositary Share validly tendered and accepted for exchange in the Offer. See
"The Offer--Terms of the Offer".
EXPIRATION DATE; WITHDRAWALS
Upon the terms and conditions of the Offer, including the provisions
relating to proration described herein, the Trust will accept for exchange up to
49,000,000 Depositary Shares validly tendered and not withdrawn prior to 12:00
Midnight, New York City time, on , 1995, or if the Offer is extended by
the Trust, in its sole discretion, the latest date and time to which the Offer
has been extended (the "Expiration Date"). Tenders of Depositary Shares pursuant
to the Offer may be withdrawn at any time prior to the Expiration Date and,
unless accepted for exchange by the Trust, may be withdrawn at any time after 40
Business Days (as defined herein) after the date of this Prospectus. Depositary
Shares not accepted because of proration will be returned to the tendering
holders at the Trust's expense as promptly as practicable following the
Expiration Date. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by law
to close. See "The Offer--Expiration Date; Extensions; Amendments; Termination",
"--Withdrawal of Tenders" and "--Acceptance of Shares and Proration". Tenders
must be made to the Exchange Agent in order to be valid.
CONDITIONS TO THE OFFER; EXTENSIONS; AMENDMENTS; TERMINATION
Consummation of the offer is conditioned on, among other things, (i) receipt
of at least 15,000,000 validly tendered Depositary Shares (which condition may
be waived by the Trust) and (ii) tenders by a sufficient number of holders of
Depositary Shares to meet the Minimum Distribution Condition, which condition
may not be waived. See "The Offer--Conditions to the Offer" and "--Expiration
Date; Extensions; Amendments; Termination".
The Trust expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Offer, and not accept for exchange any
Depositary Shares and promptly return all Depositary Shares, upon the failure of
any of the conditions specified above, (ii) waive any condition to the Offer
(other than the Minimum Distribution Condition) and accept all Depositary Shares
previously tendered pursuant to the Offer, (iii) extend the Expiration Date of
the Offer and retain all Depositary Shares tendered pursuant to such Exchange
Offer until the expiration date, subject, however, to all withdrawal rights of
holders, see "The Offer--Withdrawal of Tenders", (iv) amend the terms of the
Offer or (v) modify the form of the consideration to be paid pursuant to the
Offer. Any amendment applicable to the Offer will apply to all Depositary Shares
tendered pursuant to the Offer. The minimum period during which the Offer must
remain open following material changes in the terms of the Offer or the
information concerning the Offer, other than a change in the percentage of
securities sought or the price, depends upon the facts and circumstances,
including the relative materiality of such
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terms or information. See "The Offer--Conditions to the Offer" and "Expiration
Date; Extensions; Amendments; Termination".
PROCEDURES FOR TENDERING
Each Holder of Depositary Shares wishing to participate in the Offer must
(i)(a) properly complete and sign the Letter of Transmittal or a facsimile
thereof (all references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) in accordance with the instructions
contained herein and in the Letter of Transmittal, together with any required
signature guarantees, and deliver the same to First Chicago Trust Company of New
York as Exchange Agent, at one of its addresses set forth on the back cover page
hereof, prior to the Expiration Date and certificates for the Depositary Shares
must be received by the Exchange Agent at such address or (b) such Depositary
Shares must be transferred pursuant to the procedures for book-entry transfer
described herein and a confirmation of such book-entry transfer must be received
by the Exchange Agent, in each case prior to the Expiration Date, or (ii) comply
with the guaranteed delivery procedures described herein.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF DEPOSITARY SHARES MUST
SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR
TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER
OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE.
LETTERS OF TRANSMITTAL, DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO HOLDINGS, THE TRUST, THE
DEALER MANAGERS OR THE INFORMATION AGENT.
SPECIAL PROCEDURE FOR BENEFICIAL OWNERS
Any beneficial owner whose Depositary Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Depositary Shares should contact such registered Holder promptly
and instruct such registered Holder to tender on such beneficial owner's behalf.
If such beneficial owner wishes to tender on its own behalf, such owner must,
prior to completing and executing a Letter of Transmittal and delivering its
Depositary Shares, either make appropriate arrangements to register ownership of
the Depositary Shares in such owner's name or obtain a properly completed stock
power from the registered Holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date. See "The Offer--Procedures for Tendering--Special Procedure for Beneficial
Owners".
GUARANTEED DELIVERY PROCEDURES
If a Holder desires to accept the Offer and time will not permit a Letter of
Transmittal or Depositary Shares to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected in accordance with the guaranteed
delivery procedures set forth in "The Offer--Procedures for
Tendering--Guaranteed Delivery".
ACCEPTANCE OF SHARES AND PRORATION
Upon the terms and subject to the conditions of the Offer, if 49,000,000 or
fewer Depositary Shares have been validly tendered and not withdrawn prior to
the Expiration Date, the Trust will accept for exchange all such Depositary
Shares. Upon the terms and subject to the conditions of the Offer, if more than
49,000,000 Depositary Shares (or, if decreased as described herein, such lesser
number as the Trust may elect to purchase pursuant to the Offer) have been
validly tendered and not withdrawn prior to the Expiration Date, the Trust will
accept for exchange Depositary Shares from each tendering
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Holder on a pro rata basis, subject to adjustment to avoid the acceptance for
exchange of fractional shares.
If the Trust decides, in its sole discretion, to increase or decrease the
number of Depositary Shares sought in the Offer or to increase or decrease the
consideration offered to holders of Depositary Shares, and if the Offer is
scheduled to expire less than ten Business Days from and including the date that
notice of such decrease is first published, sent or given in the manner
specified in "The Offer--Terms of the Offer" and "--Expiration Date; Extensions;
Amendments; Termination", then the Offer will remain open for a minimum of ten
Business Days from and including the date of such notice.
All Depositary Shares not accepted pursuant to the Offer, including shares
not purchased because of proration, will be returned to the tendering Holders at
the Trust's expense as promptly as practicable following the Expiration Date.
DELIVERY OF PREFERRED SECURITIES
Subject to the terms and conditions of the Offer, the delivery of the
Preferred Securities to be issued pursuant to the Offer will occur as promptly
as practicable following the Expiration Date. See "The Offer--Terms of the
Offer" and "--Expiration Date; Extensions; Amendments; Termination".
If proration of tendered Depositary Shares is required, because of the
difficulty in determining the number of Depositary Shares validly tendered
(including shares tendered by the guaranteed delivery procedures described in
"The Offer--Procedures for Tendering"), the Trust does not expect that it would
be able to announce the final proration factor or to commence the exchange for
any shares of Depositary Shares pursuant to the Offer until approximately five
Business Days after the Expiration Date. Preliminary results of the proration
will be announced by press release as promptly as practicable after the
Expiration Date. Holders of Depositary Shares may obtain such preliminary
information from the Dealer Managers or the Information Agent and may also be
able to obtain such information from their brokers.
Until the final proration factors are known, the Trust will not issue any
Preferred Securities in exchange for any Depositary Shares accepted for exchange
pursuant to the Offer or return Depositary Shares delivered to the Exchange
Agent but not tendered or return Depositary Shares tendered but not accepted for
exchange because of proration.
DESCRIPTION OF PREFERRED SECURITIES AND JUNIOR SUBORDINATED DEBENTURES
The Preferred Securities evidence preferred undivided beneficial interests
in the assets of the Trust and will have terms equivalent to the Common
Securities; provided that (i) if an Event of Default under the Declaration
occurs and is continuing, the holders of Preferred Securities will have a
priority over holders of the Common Securities with respect to payments in
respect of distributions and payments upon liquidation, redemption or otherwise
and (ii) holders of Common Securities have the exclusive right (subject to the
terms of the Declaration) to appoint, remove and replace Trustees (other than
the Special Regular Trustee) and to increase or decrease the number of Trustees,
subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment Event. The Declaration
does not permit the issuance by the Trust of any securities or beneficial
interests in the assets of the Trust other than the Preferred Securities and the
Common Securities, the incurrence of any indebtedness for borrowed money by the
Trust or the making of any investments other than in the Junior Subordinated
Debentures. The Declaration defines an event of default with respect to the
Trust Securities (an "Event of Default") as, among other things, the occurrence
and continuance of an "event of default" under the Indenture with respect to the
Junior Subordinated Debentures (an "Indenture Event of Default").
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Periodic cash distributions on each Preferred Security will be fixed at a
rate per annum of % of the stated liquidation amount of $25 per Preferred
Security. Distributions in arrears for more than one quarter will bear interest
thereon at the rate per annum of % of the stated liquidation amount of $25
per Preferred Security, compounded quarterly to the extent permitted by law.
Distributions on the Preferred Securities will be cumulative, will accrue from
the Accrual Date and, except as otherwise described herein, will be made
quarterly in arrears, on the last day of March, June, September and December of
each year, commencing on September 30, 1995, but only if and to the extent that
interest payments are made in respect of the Junior Subordinated Debentures held
by the Trust. In addition, holders of Preferred Securities will be entitled to
an additional cash distribution at the rate of 9.25% per annum of the
liquidation amount thereof from June 1, 1995 through the Expiration Date in lieu
of dividends accumulating and unpaid after June 1, 1995 on their Depositary
Shares accepted for exchange, such additional distribution to be made on
September 30, 1995 to holders of the Preferred Securities on the record date for
such distribution.
The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and the interest and
other payment dates on the Junior Subordinated Debentures deposited in the Trust
as trust assets. As a result, if principal or interest is not paid on the Junior
Subordinated Debentures, including as a result of Holdings' election to extend
the interest payment period on the Junior Subordinated Debentures as described
below, the Trust will not make payments on the Trust Securities. The Junior
Subordinated Debentures provide that, so long as Holdings shall not be in
default in the payment of interest on the Junior Subordinated Debentures,
Holdings has the right under the Indenture to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period from
time to time on the Junior Subordinated Debentures for an Extension Period and,
as a consequence, quarterly distributions on the Preferred Securities would not
be made (but would continue to accrue with interest thereon at the rate of
% per annum, compounded quarterly to the extent permitted by applicable
law) by the Trust during any such Extension Period. During an Extension Period,
Holdings may not declare or pay dividends on, or redeem, purchase, acquire or
make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock or make any guarantee payments with respect thereto
during such Extension Period; provided that Holdings will be permitted to pay
accrued dividends (and cash in lieu of fractional shares) upon the conversion,
other than at the option of Holdings, of any of its preferred stock, including
Series C Conversion Preferred Stock and ESOP Convertible Preferred Stock, in
accordance with the terms of such stock. Prior to the termination of any such
Extension Period, Holdings may further extend such Extension Period; provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarterly interest periods.
Upon the termination of any Extension Period and the payment of all amounts then
due, Holdings may commence a new Extension Period, subject to the above
requirements. Holdings may also prepay at any time all or any portion of the
interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to nine Extension Periods of
20 consecutive quarterly interest periods each or more numerous shorter
Extension Periods) throughout the term of the Junior Subordinated Debentures,
provided that no Extension Period may extend beyond the maturity of the Junior
Subordinated Debentures. See "Risk Factors", "Description of the Junior
Subordinated Debentures--Interest" and "--Option to Extend Interest Payment
Period".
Holdings shall give the Institutional Trustee notice of its selection of
such Extension Period one Business Day prior to the earlier of (i) the date the
distributions on the Preferred Securities are payable or (ii) the date the Trust
is required to give notice to the NYSE or other applicable self-regulatory
organization or to holders of the Preferred Securities of the record date or the
date such distribution is payable, but in any event not less than one Business
Day prior to such record date. The Trust shall give notice of Holdings'
selection of such Extension Period to the holders of the Preferred Securities.
See "Description of the Junior Subordinated Debentures--Option to Extend
Interest Payment Period".
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There will be deposited in the Trust as trust assets (i) Junior Subordinated
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities issued by the Trust in exchange
for the Depositary Shares accepted in the Offer and (ii) Junior Subordinated
Debentures having an aggregate principal amount equal to the amount of proceeds
received by the Trust from the sale of the Common Securities to Holdings. Under
the Declaration, if and to the extent Holdings does make interest payments on
the Junior Subordinated Debentures deposited in the Trust as trust assets, the
Institutional Trustee is obligated to make distributions promptly on the
Preferred Securities. The payment of distributions on the Preferred Securities
and payments on liquidation of the Trust and the redemption of Preferred
Securities, as set forth below, in each case out of moneys held by the Trust,
are guaranteed by Holdings on a subordinated basis as and to the extent set
forth under "Description of the Preferred Securities Guarantee". The Preferred
Securities Guarantee is a full and unconditional guarantee from the time of
issuance of the Preferred Securities, but the Preferred Securities Guarantee
covers distributions and other payments on the Preferred Securities only if and
to the extent that Holdings has made a payment to the Trust of interest or
principal on the Junior Subordinated Debentures deposited in the Trust as trust
assets.
The Preferred Securities and Common Securities are redeemable on a Pro Rata
Basis (as defined below) from time to time, in whole or in part, to the same
extent as the Junior Subordinated Debentures are redeemed by Holdings, at any
time on or after August 19, 1998, upon not less than 30 nor more than 60 days'
notice, at $25 per Preferred Security plus accrued and unpaid distributions
thereon to the date of redemption (the "Redemption Price"), including
distributions accrued as a result of Holdings' election to defer payments of
interest on the Junior Subordinated Debentures, payable in cash. The Preferred
Securities will be redeemed upon the maturity or earlier redemption of the
Junior Subordinated Debentures. See "Description of the Preferred
Securities--Mandatory Redemption". As used in this Prospectus the term "Pro Rata
Basis" shall mean pro rata to each holder of Trust Securities according to the
aggregate liquidation amount of the Trust Securities held by the relevant holder
in relation to the aggregate liquidation amount of all Trust Securities
outstanding unless, in relation to a payment, an Event of Default under the
Declaration has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each holder of the Preferred Securities
pro rata according to the aggregate liquidation amount of the Preferred
Securities held by the relevant holder in relation to the aggregate liquidation
amount of all Preferred Securities outstanding, and, only after satisfaction of
all amounts owed to the holders of the Preferred Securities, to each holder of
Common Securities pro rata according to the aggregate liquidation amount of the
Common Securities held by the relevant holder in relation to the aggregate
liquidation amount of all the Common Securities outstanding.
In addition, upon the occurrence and during the continuation of a Tax Event
or an Investment Company Event (each as hereinafter defined) arising from a
change in law or a change in legal interpretation or other specified
circumstances, the Trust shall, unless the Junior Subordinated Debentures are
redeemed in the limited circumstances described below and subject to certain
other limited exceptions, be dissolved, with the result that the Junior
Subordinated Debentures will be distributed to the holders of the Preferred
Securities and the Common Securities on a Pro Rata Basis, in lieu of any cash
distribution. In the case of a Tax Event, Holdings will have the right in
certain circumstances to redeem the Junior Subordinated Debentures at any time,
in which event the Trust will redeem the Trust Securities on a Pro Rata Basis to
the same extent as the Junior Subordinated Debentures are redeemed. If the
Junior Subordinated Debentures are distributed to the holders of the Preferred
Securities, Holdings will use its best efforts to have the Junior Subordinated
Debentures listed on the New York Stock Exchange or on such other exchange as
the Preferred Securities are then listed. See "Description of the Preferred
Securities--Special Event Redemption or Distribution".
The Junior Subordinated Debentures will be issued pursuant to an indenture,
to be dated as of , 1995 (as supplemented by the First Supplemental
Indenture (the "First Supplemental Indenture") to be dated as of , 1995,
the "Indenture") between Holdings and The Bank of New York,
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as trustee (the "Indenture Trustee"). See "Description of the Junior
Subordinated Debentures". The Junior Subordinated Debentures will mature on
December 31, 2044 and will bear interest at an annual rate of % from the
Accrual Date. Interest will be payable quarterly in arrears on the last day of
March, June, September and December of each year, commencing on September 30,
1995; provided that, as described above, so long as Holdings shall not be in
default in the payment of interest on the Junior Subordinated Debentures,
Holdings shall have the right to extend the interest payment period from time to
time for a period not exceeding 20 consecutive quarterly interest periods.
Holdings has no current intention of exercising its right to extend an interest
payment period. However, should Holdings determine to exercise such right in the
future, the market price of the Preferred Securities is likely to be affected.
See "Risk Factors" and "Description of the Junior Subordinated
Debentures--Option to Extend Interest Payment Period".
The Junior Subordinated Debentures will also accrue interest at the rate of
9.25% per annum of the principal amount thereof from June 1, 1995 through the
Expiration Date, payable at the time of the first interest payment on the Junior
Subordinated Debentures to holders of the Junior Subordinated Debentures on the
record date for such distribution. No extension of interest will be permitted
with respect to interest accruing from June 1, 1995 through the Expiration Date.
Holdings shall have the right to redeem the Junior Subordinated Debentures,
in whole or in part, from time to time, on or after August 19, 1998, upon not
less than 30 nor more than 60 days' notice, at a redemption price equal to 100%
of the principal amount to be redeemed, plus any accrued and unpaid interest to
the redemption date, including interest accrued as a result of Holdings'
election to defer payments of interest on the Junior Subordinated Debentures,
payable in cash. In addition, upon the occurrence of a Tax Event, Holdings will
also have the right if certain conditions are met to redeem the Junior
Subordinated Debentures at any time. If Holdings redeems the Junior Subordinated
Debentures, then the Trust will redeem the Trust Securities on a Pro Rata Basis
to the same extent as the Junior Subordinated Debentures are redeemed.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Depositary Shares for Preferred Securities pursuant to the
Offer will be a taxable event. Gain or loss generally will be recognized in an
amount equal to the difference between the fair market value on the Expiration
Date of the holder's pro rata share of the Junior Subordinated Debentures
represented by the Preferred Securities received in the exchange and the
exchanging Holder's tax basis in the Depositary Shares surrendered. For this
purpose, the fair market value of the Junior Subordinated Debentures deemed
issued in exchange for Depositary Shares on the Expiration Date will equal the
fair market value of the Preferred Securities on that date. See "Taxation--
Exchange of Depositary Shares for Preferred Securities".
The Junior Subordinated Debentures will be treated as issued with "original
issue discount" for United States federal income tax purposes. Holders of
Preferred Securities (each a "Securityholder") will be required to include their
pro rata share of original issue discount in gross income as it accrues on the
Junior Subordinated Debentures in advance of the receipt of cash. Generally, all
of a Securityholder's taxable interest income with respect to the Junior
Subordinated Debentures will be accounted for as "original issue discount" and
actual distributions of stated interest will not be separately reported as
taxable income. See "Taxation--Accrual of Original Issue Discount and Premium"
and "--Potential Extension of Payment Period on the Junior Subordinated
Debentures".
While dividends on the Series B Preferred are eligible for the dividends
received deduction for corporate holders, distributions on the Preferred
Securities are not eligible for the dividends received deduction for corporate
holders.
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ACCOUNTING FOR EXCHANGE
The refinancing of the Series B Preferred with the Preferred Securities may
increase or decrease income applicable to common stockholders depending upon the
difference between the fair market value of the Series B Preferred represented
by the Depositary Shares and the liquidation price of the Series B Preferred at
the time of the exchange.
UNTENDERED SHARES
Holders of Depositary Shares who do not tender their Depositary Shares in
the Offer or whose Depositary Shares are not accepted for exchange will continue
to hold such Depositary Shares and will be entitled to all the rights and
preferences, and will be subject to all of the limitations, applicable thereto.
To the extent that Depositary Shares are tendered and accepted in the Offer,
the terms on which untendered Depositary Shares could subsequently be sold could
be adversely affected. See "Risk Factors--Listing and Trading of Preferred
Securities and Depositary Shares".
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange Agent
in connection with the Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to MacKenzie
Partners, Inc. which has been retained by Holdings and the Trust to act as
Information Agent for the Offer. The addresses and telephone numbers of the
Exchange Agent and the Information Agent are set forth in "The Offer--Exchange
Agent and Information Agent" and on the outside back cover of this Prospectus.
DEALER MANAGERS
Merrill Lynch & Co., Lehman Brothers, Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated and Smith Barney Inc. have been retained as Dealer
Managers in connection with the Offer. For information regarding fees payable to
the Dealer Managers and Soliciting Dealers (as defined herein), see "The
Offer--Dealer Managers; Soliciting Dealers".
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RISK FACTORS
Prospective exchanging holders of Depositary Shares who plan to participate
in the Offer should carefully consider, in addition to the other information set
forth elsewhere in this Prospectus, the following:
EXCHANGE OF DEPOSITARY SHARES FOR PREFERRED SECURITIES IS A TAXABLE EVENT
The exchange of Depositary Shares for Preferred Securities pursuant to the
Offer will be a taxable event. Generally, gain or loss will be recognized in an
amount equal to the difference between the fair market value on the Expiration
Date of the holder's pro rata share of the Junior Subordinated Debentures
represented by the Preferred Securities received in the exchange and the
exchanging Holder's tax basis in the Depositary Shares exchanged therefor. See
"Taxation--Exchange of Depositary Shares for Preferred Securities". All Holders
of Depositary Shares are advised to consult their tax advisors regarding the
United States federal, state, local and foreign tax consequences of the exchange
of Depositary Shares and the issuance of Preferred Securities.
CORPORATE HOLDERS OF PREFERRED SECURITIES NOT ENTITLED TO DIVIDENDS RECEIVED
DEDUCTION
While dividends with respect to the Depositary Shares are eligible for the
dividends received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends received deduction for
corporate holders.
RANKING OF SUBORDINATED OBLIGATIONS UNDER PREFERRED SECURITIES GUARANTEE AND
JUNIOR SUBORDINATED DEBENTURES
The obligations of Holdings under the Junior Subordinated Debentures are
unsecured obligations of Holdings and will be subordinate and junior in right of
payment, to the extent set forth herein, to all Senior Indebtedness (as defined
herein) of Holdings, except obligations and securities made pari passu or
subordinate by their terms, but senior to all capital stock now or hereafter
issued by Holdings and to any guarantee now or hereafter entered into by
Holdings in respect of its capital stock. Holdings' obligations under the
Preferred Securities Guarantee are unsecured and will rank (i) subordinate and
junior in right of payment to all Senior Indebtedness of Holdings and to the
Junior Subordinated Debentures, and (ii) senior to all capital stock now or
hereafter issued by Holdings and to any guarantee now or hereafter entered into
by Holdings in respect of its capital stock. At June 30, 1995, Holdings (on an
unconsolidated basis) had no Senior Indebtedness other than its guarantees of
RJRN's obligations under the New Credit Agreements (as defined herein), under
which RJRN has the right to borrow up to $3.5 billion (the "Credit Agreement
Guarantees"). Because Holdings is a holding company, the Junior Subordinated
Debentures (and Holdings' obligations under the Preferred Securities Guarantee)
are also effectively subordinated to all existing and future liabilities,
including trade payables, of Holdings' subsidiaries, except to the extent that
Holdings is a creditor of the subsidiaries recognized as such. Claims on
Holdings' subsidiaries by creditors other than Holdings include liabilities
incurred in the ordinary course of business. At June 30, 1995, Holdings'
subsidiaries had outstanding approximately $10.6 billion of debt, $3.0 billion
of current liabilities and $6.4 billion of other liabilities (excluding
intercompany liabilities). The terms of the Preferred Securities, the Junior
Subordinated Debentures or the Preferred Securities Guarantee do not limit
Holdings' ability to incur additional indebtedness, including indebtedness that
ranks senior to or pari passu with the Junior Subordinated Debentures and the
Preferred Securities Guarantee, or the ability of its subsidiaries to incur
additional indebtedness or other liabilities. See "Description of the Preferred
Securities Guarantee--Status of the Preferred Securities Guarantee" and
"Description of the Junior Subordinated Debentures--Subordination".
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TRUST DISTRIBUTIONS DEPENDENT ON HOLDINGS' PAYMENTS ON JUNIOR SUBORDINATED
DEBENTURES
The Trust's ability to make distributions and other payments on the
Preferred Securities is solely dependent upon Holdings making interest and other
payments on the Junior Subordinated Debentures deposited as trust assets as and
when required. If Holdings were not to make distributions or other payments on
the Junior Subordinated Debentures for any reason, including as a result of
Holdings' election to defer the payment of interest on the Junior Subordinated
Debentures by extending the interest period on the Junior Subordinated
Debentures, the Trust will not make payments on the Trust Securities. In such an
event, holders of the Preferred Securities would not be able to rely on the
Preferred Securities Guarantee since distributions and other payments on the
Preferred Securities are subject to such Guarantee only if and to the extent
that Holdings has made a payment to the Trust of interest or principal on the
Junior Subordinated Debentures deposited in the Trust as trust assets. Instead,
holders of Preferred Securities would rely on the enforcement by the
Institutional Trustee of its rights against Holdings pursuant to the terms of
the Indenture and may vote to appoint a Special Regular Trustee. However, if the
Trust's failure to make distributions on the Preferred Securities is a
consequence of Holdings' exercise of its right to extend the interest payment
period for the Junior Subordinated Debentures, the Institutional Trustee will
have no right to enforce the payment of distributions on the Preferred
Securities until an Event of Default under the Declaration shall have occurred;
provided that to the extent the extension is for more than six regularly
scheduled dividend periods, holders of Preferred Securities may vote to appoint
a Special Regular Trustee.
The Declaration provides that Holdings shall pay for all debts and
obligations (other than with respect to the Trust Securities) and all costs and
expenses of the Trust, including any taxes and all costs and expenses with
respect thereto, to which the Trust may become subject, except for United States
withholding taxes. No assurance can be given that Holdings will have sufficient
resources to enable it to pay such debts, obligations, costs and expenses on
behalf of the Trust.
For a discussion of the ranking of the Junior Subordinated Debentures, see
"--Ranking of Subordinated Obligations under Preferred Securities Guarantee and
Junior Subordinated Debentures".
HOLDINGS MAY DEFER INTEREST PAYMENTS ON JUNIOR SUBORDINATED DEBENTURES
So long as Holdings shall not be in default in the payment of interest on
the Junior Subordinated Debentures, Holdings has the right under the Indenture
to defer payments of interest on the Junior Subordinated Debentures by extending
the interest payment period from time to time on the Junior Subordinated
Debentures for an Extension Period not exceeding 20 consecutive quarterly
interest periods, during which no interest shall be due and payable, provided
that no Extension Period may extend beyond the maturity of the Junior
Subordinated Debentures. In such an event, quarterly distributions on the
Preferred Securities would not be made (but would continue to accrue with
interest thereon at the rate of % per annum, compounded quarterly to the
extent permitted by applicable law) by the Trust during any such Extension
Period. If Holdings exercises the right to extend an interest payment period,
Holdings may not during such Extension Period declare or pay dividends on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock; provided that Holdings
will be permitted to pay accrued dividends (and cash in lieu of fractional
shares) upon the conversion, other than at the option of Holdings, of any of its
preferred stock, including its Series C Conversion Preferred Stock and ESOP
Convertible Preferred Stock, in accordance with the terms of such stock.
Prior to the termination of any Extension Period, Holdings may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods. Upon the termination of any Extension Period and the
payment of all amounts then due, Holdings may commence a new Extension Period,
subject to the above requirements. Holdings may also prepay at any time all or
any portion of
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the interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to nine Extension Periods of
20 consecutive quarterly interest periods each or more numerous shorter
Extension Periods) throughout the term of the Junior Subordinated Debentures.
See "Description of the Preferred Securities--Distributions" and "Description of
the Junior Subordinated Debentures--Option to Extend Interest Payment Period".
TAX CONSEQUENCES OF EXTENSION OF INTEREST PAYMENT PERIODS
Because Holdings has the right to extend the interest payment period up to
20 consecutive quarterly interest periods on various occasions, the Junior
Subordinated Debentures will be treated as issued with "original issue discount"
for United States federal income tax purposes. As a result, holders of Preferred
Securities will be required to include their pro rata share of original issue
discount in gross income as it accrues for United States federal income tax
purposes in advance of the receipt of cash. Generally, all of a Securityholder's
taxable interest income with respect to the Junior Subordinated Debentures will
be accounted for as "original issue discount" and actual distributions of stated
interest will not be separately reported as taxable income. See
"Taxation--Accrual of Original Issue Discount and Premium" and "--Potential
Extension of Payment Period on the Junior Subordinated Debentures".
POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD
As described above, Holdings has the right to extend an interest payment
period on the Junior Subordinated Debentures from time to time for periods not
exceeding 20 consecutive quarterly interest periods. If Holdings determines to
extend an interest payment period, or if Holdings thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the Preferred Securities is likely to be
adversely affected. In addition, as a result of such rights, the market price of
the Preferred Securities (which represent an undivided interest in Junior
Subordinated Debentures) may be more volatile than other securities on which
original issue discount accrues that do not have such rights. A holder that
disposes of its Preferred Securities during an Extension Period, therefore, may
not receive the same return on its investment as a holder that continues to hold
its Preferred Securities. See "Description of the Junior Subordinated
Debentures-- Option to Extend Interest Payment Period".
LACK OF ESTABLISHED TRADING MARKET FOR PREFERRED SECURITIES
The Preferred Securities constitute a new issue of securities of the Trust
with no established trading market. While application will be made to list the
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Preferred Securities will develop or be sustained in the future
on such exchange. Although the Dealer Managers have indicated to Holdings and
the Trust that they intend to make a market in the Preferred Securities
following the Expiration Date, as permitted by applicable laws and regulations
prior to the commencement of trading on the NYSE, they are not obligated to do
so and may discontinue any such market-making at any time without notice.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Preferred Securities. In order to satisfy the NYSE listing
requirements, acceptance of Depositary Shares validly tendered in the Offer is
subject to the condition that as of the Expiration Date there be at least 400
record or beneficial holders of Preferred Securities in exchange for such
Depositary Shares, which condition may not be waived by Holdings or the Trust.
REDUCED TRADING MARKET FOR DEPOSITARY SHARES
To the extent Depositary Shares are tendered and accepted in the Offer, the
liquidity and trading market for the Depositary Shares to be outstanding
following the Offer, and the terms upon which such
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Depositary Shares could be sold, could be adversely affected. In addition, if
the Offer is substantially subscribed or oversubscribed, there would be a
significant risk that round lot holdings of Depositary Shares outstanding
following the Offer would be limited. See "Listing and Trading of Preferred
Securities and Depositary Shares".
The Offer is for up to 49,000,000 Depositary Shares (or 98% of the
50,000,000 Depositary Shares outstanding), rather than for all the outstanding
Depositary Shares, to reduce the risk that the Depositary Shares would be
subject to delisting following consummation of the Offer.
Under the rules of the NYSE, preferred securities such as the Depositary
Shares are subject to delisting if (i) the aggregate value of publicly-held
shares is less than $2 million and (ii) the number of publicly-held shares is
less than 100,000. Since at least 1,000,000 Depositary Shares will remain
outstanding following consummation of the Offer, the number of outstanding
Depositary Shares will exceed the delisting criteria set forth in clause (ii)
above. In addition, based on the market price of the Depositary Shares on the
NYSE ($24.875 on June 19, 1995, the closing sales price of the Depositary Shares
on the NYSE on the last full trading day immediately prior to Holdings' first
public announcement of the Offer, and $ on , 1995), the Company
believes that the aggregate value of the minimum number (1,000,000) of
Depositary Shares which will be outstanding following consummation of the Offer
should exceed the delisting criteria set forth in clause (i) above. See "Price
Range of Depositary Shares". If less than 49,000,000 Depositary Shares are
validly tendered, then the number of Depositary Shares remaining outstanding,
and the market value thereof, will be even greater.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence and during the continuation of a Tax Event or Investment
Company Event (each as defined herein), which may occur at any time, the Trust
shall, unless the Junior Subordinated Debentures are redeemed in the limited
circumstances described below, be dissolved, with the result that, in the manner
described in "Description of the Preferred Securities--Liquidation Distribution
Upon Dissolution", Junior Subordinated Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid distributions on, the Preferred
Securities and Common Securities would be distributed on a Pro Rata Basis to the
holders of the Preferred Securities and Common Securities in liquidation of the
Trust. In the case of a Tax Event, in certain circumstances, Holdings shall have
the right to redeem at any time the Junior Subordinated Debentures, in whole or
in part, in which event the Trust will redeem Preferred Securities and Common
Securities on a Pro Rata Basis to the same extent as the Junior Subordinated
Debentures are redeemed. There can be no assurance as to the market prices for
Preferred Securities or the Junior Subordinated Debentures which may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Junior Subordinated
Debentures which the investor may receive on dissolution and liquidation of the
Trust, may trade at a discount to the price of the Depositary Shares exchanged.
See "Description of the Preferred Securities--Special Event Redemption or
Distribution" and "Description of the Junior Subordinated Debentures-- General".
Under current United States federal income tax law, a distribution of the
Junior Subordinated Debentures upon a Tax Event or Investment Company Event
would not be a taxable event to holders of the Preferred Securities. See
"Taxation--Distribution of Junior Subordinated Debentures to Holders of
Preferred Securities".
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, subject
to the rights of holders of Preferred Securities to appoint a Special Regular
Trustee upon the occurrence of an Appointment Event, will not be able to
appoint, remove or replace, or to increase or decrease the number of, Trustees,
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which rights are vested exclusively in the Common Securities. See "Description
of the Preferred Securities--Voting Rights". Holders of Depositary Shares also
have limited voting rights. However, in the event that dividends on all series
of Preferred Stock, including the Series B Preferred, are in arrears and unpaid
for six quarterly periods, the Board of Directors shall be increased by two
directors and the holders of Series B Preferred, together with the holders of
all other series of Preferred Stock then entitled to vote thereon shall be
entitled to elect two directors of the expanded Board of Directors with certain
exceptions. See "Description of Series B Preferred and Depositary
Shares--Voting".
EXPOSURE TO TOBACCO-RELATED LITIGATION
Various legal actions, proceedings and claims are pending or may be
instituted against RJRT or its affiliates or indemnitees, including those
claiming that lung cancer and other diseases have resulted from the use of or
exposure to RJRT's tobacco products. The plaintiffs in these actions seek
recovery on a variety of legal theories, including strict liability in tort,
design defect, negligence, breach of warranty, failure to warn, fraud,
misrepresentation, unfair trade practices, conspiracy, unjust enrichment,
indemnity and common law public nuisance. Six of these cases purport to be class
actions brought on behalf of thousands of individuals. Purported classes include
individuals claiming to be addicted to cigarettes and flight attendants alleging
personal injury from exposure to environmental tobacco smoke in their workplace.
In two such cases, Florida state court judges granted plaintiffs' motions to
certify a class. Defendants have appealed both of these rulings to the Florida
District Court of Appeals. In another such case, a United States District Court
judge has granted plaintiffs' motion to certify a class, and defendants are
seeking appellate review. In addition, four states, including Florida, have sued
RJRT (and in two cases, RJRN) and other industry members on various theories to
recoup expenses incurred by the states in the treatment of diseases purportedly
associated with cigarette smoking and to enjoin certain marketing practices.
Litigation is subject to many uncertainties, and it is possible that some of the
tobacco-related legal actions, proceedings or claims could be decided against
RJRT or its affiliates or indemnitees. Determinations of liability or adverse
rulings against other cigarette manufacturers that are defendants in similar
actions, even if such rulings are not final, could adversely affect the
litigation against RJRT or its affiliates or indemnitees and increase the number
of such claims. Although it is impossible to predict the outcome of such events
or their effect on RJRT, a significant increase in litigation activities could
have an adverse effect on RJRT. RJRT believes that it has a number of valid
defenses to any such actions, and intends to defend vigorously all such actions.
Holdings believes that the ultimate outcome of all pending tobacco litigation
matters should not have a material adverse effect on the financial position of
RJRN; however, it is possible that the results of operations or cash flows of
RJRN in particular quarterly or annual periods or the financial condition of
RJRN could be materially affected by the ultimate outcome of certain pending
litigation matters.
In July 1995, it was reported in the press that the Commissioner of the U.S.
Food and Drug Administration ("FDA"), which historically has asserted that it
has no jurisdiction over cigarette products, believes that the FDA has
regulatory jurisdiction over cigarettes and that the FDA has recommended to the
Clinton Administration that further steps be taken to limit access to cigarettes
by minors in addition to those mandated by existing federal, state and local
laws or voluntarily implemented by RJRT and other tobacco companies. The FDA
findings and recommendations have not been made public. It is not possible to
predict what actions, if any, will result from the reported FDA findings and
recommendations or the effect thereof, if any, on RJRT or the cigarette industry
generally.
For additional information on legislation and litigation relating to the
cigarette industry and RJRT, see the Holdings 10-K under
"Business--Tobacco--Legislation and Other Matters Affecting the Cigarette
Industry" and "--Litigation Affecting the Cigarette Industry" and Holdings 10-Q
under Part II. Item 1. "Legal Proceedings", Part I. Item 1 "Note 7 to the
Consolidated Condensed Financial Statements" and Part I. Item 2 "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Tobacco" incorporated herein by reference.
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LEVERAGE AND DEBT SERVICE
Holdings, together with its subsidiaries, had, at March 31, 1995, a ratio of
consolidated total debt to total stockholders' equity of .90 to 1.
Although Holdings has significantly reduced its consolidated indebtedness
and improved its consolidated debt-to-equity ratios, the indebtedness and
debt-to-equity ratio of Holdings and its subsidiaries continue to have the
effect, generally, of restricting the flexibility of Holdings and its
subsidiaries in responding to changing business and economic conditions insofar
as they affect the financial condition and financing requirements of Holdings
and its subsidiaries. Moreover, the New Credit Agreements (as defined herein)
and the terms governing certain other indebtedness (including indebtedness of
its subsidiaries) impose significant operating and financial restrictions on
Holdings and its subsidiaries. These restrictions limit the ability of Holdings
and its subsidiaries to incur indebtedness, pay dividends, engage in
transactions with stockholders and affiliates, create liens, sell or dispose of
certain assets and certain subsidiaries' stock and engage in certain mergers or
consolidations.
HOLDING COMPANY STRUCTURE
Holdings' cash flow and consequent ability to meet its obligations under its
indebtedness, including the Junior Subordinated Debentures, are substantially
dependent upon the earnings and cash flow available after debt service of RJRN
and the availability of such earnings and cash flows to Holdings by way of
dividends, distributions, loans and other advances.
The Board of Directors of Holdings has adopted a policy stating that
Holdings will limit, until December 31, 1998, the aggregate amount of cash
dividends on its capital stock. Under this policy, during that period, Holdings
will not pay any extraordinary cash dividends and will limit the aggregate
amount of its cash dividends, cash distributions and repurchases for cash of
capital stock and subordinated debt to an amount equal to the sum of $500
million plus (i) 65% of Holdings' cumulative consolidated net income before
extraordinary gains or losses and restructuring charges subsequent to December
31, 1994 and (ii) net cash proceeds of up to $250 million in any year from the
sale of capital stock of Holdings or its subsidiaries (other than proceeds from
the offering of Nabisco Holdings common stock) to the extent used to repay,
purchase or redeem debt or preferred stock.
The Board of Directors of Holdings has also adopted an additional policy
providing that Holdings will not declare a dividend or distribution to its
stockholders of the shares of capital stock of a subsidiary before December 31,
1996. Holdings has also adopted a policy setting forth its intention not to make
such a distribution of the shares of capital stock of a subsidiary prior to
December 31, 1998 if that distribution would cause the ratings of the senior
indebtedness of RJRN to be reduced from investment grade to non-investment grade
or if, after giving effect to such distribution, any publicly-held senior
indebtedness of the distributed company would not be rated investment grade.
Additional policies provide that an amount equal to the net cash proceeds from
any issuance and sale of equity by Holdings or from any sale outside the
ordinary course of business of material assets owned or used by subsidiaries in
the tobacco business, in each case before December 31, 1998, will be used either
to repay, purchase or redeem consolidated indebtedness or to acquire properties,
assets or businesses to be used in existing or new lines of business and that an
amount equal to the net cash proceeds of any secondary sale of shares of Nabisco
Holdings before December 31, 1998 will be used to repay, purchase or redeem
consolidated debt. No assurance can be given that Holdings will issue or sell
any equity or any material assets outside the ordinary course of business.
Holdings has indicated that, under normal circumstances, it does not plan to
issue additional equity securities for purposes of balance sheet improvements
other than the transactions contemplated herein.
21
<PAGE>
TOBACCO INDUSTRY COMPETITION
Tobacco Industry Competition
RJRT is the second largest cigarette manufacturer in the United
States, and Tobacco International is the second largest of the two
international cigarette producers with significant positions in the American
Blend segment.
In recent years, Philip Morris U.S.A., the largest U.S. cigarette
manufacturer, has increased its market share while RJRT's market share has
decreased, particularly in the full price segment. This trend reflects declines
in RJRT's WINSTON and SALEM brands, its two leading full price brands in 1994
and the growth of its principal competitor's largest-selling brand. Based on
data collected for RJRT by an independent market research firm, RJRT's retail
market share declined from 29.9% in 1993 to 27.8% in 1994 while its principal
competitor's share increased from 44.1% to 45.1%. In May 1995, RJRT estimated
that its retail market share was approximately 26.7% and that its principal
competitor's share was approximately 45.6%. RJRT is pursuing a variety of
strategies to stabilize its market share, but no assurances can be given that
these initiatives will be successful.
Outside the United States, Tobacco International estimates that its
share of the American Blend segment in 1994 was approximately one-third the
share of Philip Morris International Inc., the largest international cigarette
producer with a significant position in the American Blend segment.
22
<PAGE>
COMPARISON OF PREFERRED SECURITIES AND DEPOSITARY SHARES
The following is a brief summary of certain terms of the Preferred
Securities and the Depositary Shares. For a more complete description of the
Preferred Securities, see "Description of the Preferred Securities". For a
complete description of the Junior Subordinated Debentures which will be
deposited in the Trust as trust assets and will represent the sole source for
the payment of distributions and other payments on the Preferred Securities, see
"Description of the Junior Subordinated Debentures".
<TABLE>
<CAPTION>
PREFERRED SECURITIES DEPOSITARY SHARES
---------------------------------- ----------------------------------
<S> <C> <C>
Issuer The Trust. Payment of Holdings.
distributions and on liquidation
or redemption is guaranteed on a
subordinated basis, as and to the
extent described herein, by
Holdings.
Distribution/Dividend
Rate % per annum distribution payable 9.25% per annum dividend payable
quarterly in arrears on the last on the 1st business day of March,
day of March, June, September and June, September and December of
December of each year, commencing each year, out of funds legally
September 30, 1995, from and available therefor, when, as and
including the Accrual Date, but if declared by Holdings' Board of
only if, and to the extent that, Directors. Dividends are
interest payments are made in cumulative. Accrued but unpaid
respect of the Junior Subordinated dividends do not bear interest.
Debentures held by the Trust. Dividends accrue whether or not
During any Extension Period on the Holdings has earnings, whether or
Junior Subordinated Debentures, not there are funds legally
distribution payments on the available for the payment of such
Preferred Securities will not be dividends and whether or not such
made but would continue to accrue, dividends are declared. To date,
and, in the case of distributions Holdings has made each quarterly
in arrears for more than one dividend payment with respect to
quarter, would bear interest at the Depositary Shares on the
the rate of % per annum, scheduled dividend payment date.
compounded quarterly to the extent
permitted by applicable law.
Maturity/Mandatory and
Optional Redemption The Preferred Securities will be No maturity or mandatory
redeemed upon the maturity or redemption. The Depositary Shares
earlier redemption of the Junior are redeemable at the option of
Subordinated Debentures, at a Holdings on and after August 19,
redemption price equal to 100% of 1998, in whole or in part, at a
the liquidation amount of the redemption price equivalent to $25
Preferred Securities to be per Depositary Share to be
redeemed, plus accrued and unpaid redeemed, plus accrued and unpaid
distributions, if any, to the dividends thereon, to the
redemption date, including redemption date. Holders of
distributions accrued as a result Depositary Shares have no right to
of Holdings' election to defer require Holdings to redeem the
payments of interest on the Junior Depositary Shares at the option of
Subordinated Debentures. The the holders.
Junior Subordinated Debentures
have a final maturity of December
31, 2044. The Junior Subordinated
Debentures are redeemable at the
option of Holdings, in whole or in
part, on or after August 19, 1998,
at a redemption price equivalent
to $25 per Junior Subordinated
Debenture to be redeemed, plus
accrued and unpaid
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
PREFERRED SECURITIES DEPOSITARY SHARES
---------------------------------- ----------------------------------
interest thereon, to the
redemption date. Upon the
repayment of the Junior
Subordinated Debentures, whether
at maturity, upon redemption or
otherwise, the proceeds thereof
will be promptly applied to redeem
the Preferred Securities and the
Common Securities. See
"Description of the Preferred
Securities--Special Event
Redemption or Distribution" and
"--Mandatory Redemption". Holders
of Preferred Securities and Junior
Subordinated Debentures have no
right to require the Trust to
redeem the Preferred Securities at
the option of the holders.
<S> <C> <C>
Subordination Subordinated to claims of Subordinated to claims of
creditors of the Trust, if any. creditors of Holdings, including
The Preferred Securities and the the Junior Subordinated
Common Securities will have Debentures, and effectively
equivalent terms; provided that subordinated to all obligations of
(i) if an Event of Default under Holdings' subsidiaries, but senior
the Declaration occurs and is to the common stock of Holdings
continuing, the holders of and pari passu with all other
Preferred Securities will have a outstanding series of preferred
priority over holders of the stock of Holdings. As capital
Common Securities with respect to stock, the Depositary Shares are
payments in respect of junior to all of the debt of
distributions and payments upon Holdings, including the Junior
liquidation, redemption or Subordinated Debentures.
otherwise and (ii) holders of
Common Securities have the
exclusive right (subject to the
terms of the Declaration) to
appoint, remove or replace
Trustees and to increase or
decrease the number of Trustees,
subject to the right of holders of
Preferred Securities to appoint a
Special Regular Trustee upon the
occurrence of an Appointment
Event.
The Trust is not permitted to
incur any indebtedness for
borrowed money. The Declaration
provides that Holdings shall pay
for all debts and obligations
(other than with respect to the
Trust Securities) and all costs
and expenses of the Trust,
including any income taxes, duties
and other governmental charges,
and all costs and expenses with
respect thereto, to which the
Trust may become subject, except
for United States withholding
taxes.
The Junior Subordinated Debentures
will rank subordinate and junior
to all Senior Indebtedness of
Holdings, except obligations and
securities made pari passu or
subordinate by their terms, and
will be effectively subordinated
to all obligations of Holdings'
subsidiaries, and senior to all
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
PREFERRED SECURITIES DEPOSITARY SHARES
---------------------------------- ----------------------------------
capital stock now or hereafter
issued by Holdings and to any
guarantee now or hereafter entered
into by Holdings in respect of any
of its capital stock (including
the Depositary Shares). Holdings'
obligations under the Preferred
Securities Guarantee will rank
subordinate and junior to all
Senior Indebtedness of Holdings,
except obligations and securities
made pari passu or subordinate by
their terms, and to the Junior
Subordinated Debentures, and will
be effectively subordinated to all
obligations of Holdings'
subsidiaries, and senior to all
capital stock now or hereafter
issued by Holdings and to any
guarantee now or hereafter entered
into by Holdings in respect of any
of its capital stock.
<S> <C> <C>
As of June 30, 1995 Holdings (on
an unconsolidated basis) had no
Senior Indebtedness other than the
Credit Agreement Guarantees. At
the same date, subsidiaries of
Holdings had approximately $10.6
billion of debt, $3.0 billion of
current liabilities and $6.4
billion of other liabilities
(excluding intercompany
liabilities). Because Holdings is
a holding company, the Junior
Subordinated Debentures (and
Holdings' obligations under the
Preferred Securities Guarantee)
are also effectively subordinated
to all existing and future
liabilities, including trade
payables, of Holdings'
subsidiaries, except to the extent
that Holdings is a creditor of the
subsidiaries recognized as such.
In addition, the Preferred
Securities Guarantee ranks junior
to the Junior Subordinated
Debentures. Assuming 49,000,000
Depositary Shares are tendered,
there will be $1.225 billion in
Junior Subordinated Debentures
senior to the Preferred Securities
Guarantee in addition to the other
obligations of Holdings set forth
above.
Listing Application has been made to list The Depositary Shares are listed
the Preferred Securities on the on the NYSE.
NYSE. In order to satisfy the NYSE
listing requirements, acceptance
of Depositary Shares validly
tendered in the Offer is subject
to the condition that as of the
Expiration Date there be at least
400 record or beneficial holders
of Preferred Securities in
exchange for
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
PREFERRED SECURITIES DEPOSITARY SHARES
---------------------------------- ----------------------------------
<S> <C> <C>
such Depositary Shares, which
condition may not be waived.
Dividends Received
Deduction Distributions on the Preferred Dividends are eligible for the
Securities are not elibible for dividends received deduction for
the dividends received deduction corporate holders.
for corporate holders.
Voting Rights/
Enforcement Holders of Preferred Securities If dividends shall be in arrears
have no voting rights other than in an aggregate amount equivalent
as provided under the Business to six quarterly dividend periods,
Trust Act or the Trust Indenture the Holders have the right
Act unless either (i) (together with other classes of
distributions on the Preferred preferred stock ranking on a
Securities shall be in arrears for parity with the Series B Preferred
six consecutive regularly either as to dividends or on the
scheduled quarterly distribution distribution of assets upon
periods; or (ii) an Event of liquidation) to elect two
Default under the Declaration directors.
occurs and is continuing with
respect to the Junior Subordinated
Debentures, in which case holders
have the right to appoint a
Special Regular Trustee. The
Institutional Trustee has the
power to exercise all rights under
the Indenture with respect to the
Junior Subordinated Debentures and
is also authorized to enforce the
Preferred Securities Guarantee on
behalf of holders of the Preferred
Securities. If the Trust's failure
to make distributions is a
consequence of Holdings' exercise
of its right to extend the
interest payment period for the
Junior Subordinated Debentures as
described under
"Distribution/Dividend Rate", the
Institutional Trustee will have no
right to enforce the payment of
distributions until an Event of
Default under the Declaration
shall have occurred. The holders
of the Preferred Securities will
have certain rights to direct the
Institutional Trustee with respect
to certain matters under the
Declaration and the Preferred
Securities Guarantee. If the
Institutional Trustee fails to
enforce its rights under the
Indenture or fails to enforce the
Preferred Securities Guarantee,
any holder of Preferred Securities
may, after a period of 90 days has
elapsed from such holder's written
request to the Institutional
Trustee to enforce such rights or
the Preferred Securities
Guarantee, institute a legal
proceeding against Holdings to
enforce such rights or the
Preferred Securities Guarantee, as
the case may be.
</TABLE>
26
<PAGE>
RJR NABISCO HOLDINGS CORP.
The operating subsidiaries of Holdings owned through RJRN, comprise one of
the largest tobacco and food companies in the world. In the United States, the
tobacco business is conducted by RJRT, the second largest manufacturer of
cigarettes, and the packaged foods business is conducted by Nabisco Holdings
through its wholly-owned subsidiary, Nabisco, the largest manufacturer and
marketer of cookies and crackers. RJRN owns approximately 80.5% of the economic
interest and approximately 97.6% of the voting power of Nabisco Holdings.
Tobacco operations outside the United States are conducted by Tobacco
International and packaged food operations outside the United States are
conducted by Nabisco International and Nabisco Ltd., subsidiaries of Nabisco.
RJRT's and Tobacco International's tobacco products are sold around the world
under a variety of brand names. Food products are sold in the United States,
Canada, Latin America and certain other international markets.
TOBACCO
RJRT's largest selling cigarette brands in the United States include
WINSTON, DORAL, CAMEL, SALEM, VANTAGE and MONARCH. RJRT's other cigarette
brands, including NOW, MORE, BEST VALUE, STERLING, MAGNA and CENTURY, are
marketed to meet a variety of smoker preferences. All RJRT brands are marketed
in a variety of styles. Tobacco International operates in over 160 markets
around the world and is the second largest of two international cigarette
producers that have significant positions in the American Blend segment of the
international tobacco market.
FOOD
Nabisco's domestic operations represent one of the largest packaged food
businesses in the world. Through its domestic divisions, Nabisco manufactures
and markets cookies, crackers, snack foods, hard and bite-size candy, gum, nuts,
hot cereals, margarine, pet foods, dry-mix dessert products and other grocery
products under established and well-known trademarks, including OREO, CHIPS
AHOY!, NEWTONS, SNACKWELL'S, RITZ, PREMIUM, LIFE SAVERS, PLANTERS, A.1, GREY
POUPON, MILK-BONE, CREAM OF WHEAT, FLEISCHMANN'S and BLUE BONNET. Nabisco
International is also a leading producer of biscuits, baking powder, powdered
desserts, industrial yeasts and processed milk products in many of the 17 Latin
American countries in which it has operations. Nabisco Ltd. conducts Nabisco's
Canadian operations through a biscuit division and a grocery division. Excluding
private label brands, the biscuit division produced nine of the top ten cookies
and nine of the top ten crackers in Canada in 1994.
RECENT DEVELOPMENTS
On April 28, 1995, Holdings and RJRN entered into (a) a new $2.75 billion
three year revolving credit agreement with various financial institutions and
(b) a new $750 million 364 day credit agreement to support RJRN commercial paper
(collectively, the "New Credit Agreements"). Among other things, the New Credit
Agreements were designed to remove restrictions which limit the ability of
Nabisco to incur debt and to allow RJRN to reduce the aggregate amount of
commitments under its existing credit agreements (the "Old Credit Agreements")
from $6 billion to $3.5 billion.
On April 28, 1995, Nabisco Holdings and Nabisco entered into a credit
agreement (the "1995 Nabisco Credit Agreement") with various financial
institutions to replace the credit agreement (the "1994 Nabisco Credit
Agreement") dated December 6, 1994 between Nabisco and various other financial
institutions. Among other things, the 1995 Nabisco Credit Agreement was designed
to permit the prepayment of intercompany debt and the issuance of indebtedness
represented by the New Notes, to increase Nabisco's committed facility from $1.5
billion to $3.5 billion and to extend its term from 364 days to five years.
27
<PAGE>
On June 5, 1995 (the "Exchange Date"), RJRN and Nabisco consummated offers
to exchange notes and debentures (the "New Notes") of Nabisco for the same
amount of notes and debentures (the "Old Notes") issued by RJRN (the "Exchange
Offers") and solicitations of consents (the "Consent Solicitations") to certain
modifications of existing indentures from holders of the Old Notes. Nabisco
issued approximately $1.8 billion principal amount of New Notes in exchange for
a corresponding reduction in the amount of intercompany notes from Nabisco to
RJRN. Nabisco then borrowed approximately $2.5 billion under the 1995 Nabisco
Credit Agreement to (a) repay or purchase an additional $2.1 billion of
intercompany notes of Nabisco and its subsidiaries; (b) repay the approximately
$220 million of outstanding borrowings under the 1994 Nabisco Credit Agreement;
and (c) pay the approximately $90 million balance of a note and a $78 million
dividend to Nabisco Holdings. Nabisco Holdings used these payments to satisfy
the balance of a $168 million intercompany note to RJRN in full.
On June 5, 1995, RJRN applied the approximately $2.3 billion that it
received from Nabisco and Nabisco Holdings in repayment of the intercompany
notes to repay a portion of its borrowings under the Old Credit Agreements. RJRN
used an additional approximately $330 million of borrrowings under the New
Credit Agreements to repay the balance of its obligations under the Old Credit
Agreements and to pay certain expenses associated with the Exchange Offers, the
Consent Solicitations and the related transactions.
On June 28, 1995, Nabisco issued $400 million principal amount of 6.70%
Notes Due 2002, $400 million principal amount of 6.85% Notes Due 2005 and $400
million principal amount of 7.55% Debentures Due 2015 and on July 11, 1995,
Nabisco issued $400 million principal amount of 7.05% Notes due 2007. The net
proceeds from the issuance of such securities were used to repay borrowings
under the 1995 Nabisco Credit Agreement. On July 17, 1995, Nabisco redeemed all
of its approximately $409 million principal amount of 8 5/8% Sinking Fund
Debentures Due 2017 at a price of 1,051.75 for each $1,000 principal amount of
Debentures, plus accrued and unpaid interest thereon. The aggregate redemption
price and accrued interest on these debentures was approximately $442 million.
On June 29, 1995, H. John Greeniaus, President and Chief Executive Officer
of Nabisco Holdings and Nabisco, and James W. Johnston, Chairman of R.J.
Reynolds Tobacco Worldwide, each assumed the positions of Vice Chairman of RJRN
Holdings and of the Company and joined the offices of the chairman at each such
company. As Vice Chairman, Mr. Greeniaus has parent-company oversight of
domestic tobacco operations at RJRT. Mr. Greeniaus also continues his worldwide
Nabisco responsibilities as President and Chief Executive Officer of Nabisco
Holdings and Nabisco. Mr. Johnston, in addition to his responsibilities as Vice
Chairman, is responsible for Tobacco International and is managing public policy
initiatives for worldwide tobacco operations in his role as Chairman of R.J.
Reynolds Tobacco Worldwide. Andrew J. Schindler, President and Chief Operating
Officer of RJRT, has assumed the additional responsibility of Chief Executive
Officer of that company and reports to Mr. Greeniaus as Vice Chairman.
On July 24, 1995, RJRN issued $400 million principal amount of 8% Notes Due
2001 and $250 million principal amount of 8 3/4% Notes Due 2007. The net
proceeds from the issuance of such securities were used to repay borrowings
under the New Credit Agreements and for general corporate purposes.
Management of RJRN Holdings and its subsidiaries are continuing to review
various strategic transactions, including, but not limited to, acquisitions,
divestitures, mergers and joint ventures. No assurance may be given that any
such transactions will be announced or completed.
For a discussion of reports of possible regulatory activity concerning
tobacco, see "Risk Factors-- Exposure to Tobacco Related Litigation".
28
<PAGE>
RJR NABISCO HOLDINGS CAPITAL TRUST I
The Trust is a statutory business trust that was formed under the Business
Trust Act on June 20, 1995 pursuant to a declaration of trust dated June 19,
1995 among the Trustees and Holdings and the filing of a certificate of trust
with the Secretary of State of Delaware. Such declaration of trust will be
amended and restated in its entirety as of the date the Trust accepts Depositary
Shares in the Offer (see "The Offer--Terms of the Offer") substantially in the
form filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. The Declaration is qualified under the Trust Indenture Act. Upon
issuance of the Preferred Securities, the holders thereof will own all of the
issued and outstanding Preferred Securities. Holdings has agreed to acquire
Common Securities in an amount equal to at least 3% of the total capital of the
Trust and will own, directly or indirectly, all of the issued and outstanding
Common Securities. The Preferred Securities and the Common Securities will have
equivalent terms; provided that (i) if an Event of Default under the Declaration
occurs and is continuing, the holders of Preferred Securities will have a
priority over holders of the Common Securities with respect to payments in
respect of distributions and payments upon liquidation, redemption or otherwise
and (ii) holders of Common Securities have the exclusive right (subject to the
terms of the Declaration) to appoint, remove or replace Trustees (other than the
Special Regular Trustee) and to increase or decrease the number of Trustees,
subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment Event.
The number of Trustees of the Trust shall initially be five. Three of the
Trustees will be the Regular Trustees. The fourth trustee is The Bank of New
York, which will act as the indenture trustee for purposes of the Trust
Indenture Act under the Declaration and will serve as the Indenture Trustee for
the Junior Subordinated Debentures. The fifth trustee is The Bank of New York
(Delaware) which will serve as the Delaware Trustee. Pursuant to the
Declaration, the Institutional Trustee will have the power to exercise all
rights, powers and privileges under the Indenture with respect to the Junior
Subordinated Debentures. The Institutional Trustee will promptly make
distributions to the holders of the Trust Securities, out of any funds in the
Trust. The Preferred Securities Guarantee will be separately qualified under the
Trust Indenture Act and will be held by The Bank of New York, acting in its
separate capacity as indenture trustee with respect to the Preferred Securities
Guarantee for the benefit of the holders of the Preferred Securities.
The Trust exists for the purpose of (a) issuing (i) its Preferred Securities
in exchange for Depositary Shares validly tendered in the Offer and delivering
such Depositary Shares to Holdings in consideration of the deposit by Holdings
of Junior Subordinated Debentures having an aggregate stated principal amount
equal to the aggregate stated liquidation amount of such Preferred Securities in
the Trust as trust assets, and (ii) its Common Securities to Holdings in
exchange for cash and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures and (b) engaging in such other activities as are
necessary or incidental thereto. The rights of the holders of the Preferred
Securities, including economic rights, rights to information and voting rights,
are set forth in the Declaration, the Business Trust Act and the Trust Indenture
Act.
Under the Declaration, the Trust shall not, and the Trustees (including the
Institutional Trustee) shall cause the Trust not to, engage in any activity
other than in connection with the purposes of the Trust or other than as
required or authorized by the Declaration. In particular, the Trust shall not
and the Trustees (including the Institutional Trustee) shall not (a) invest any
proceeds received by the Trust from holding the Junior Subordinated Debentures
but shall promptly distribute all such proceeds to holders of Trust Securities
pursuant to the terms of the Declaration and of the Trust Securities; (b)
acquire any assets other than as expressly provided in the Declaration; (c)
possess Trust property for other than a Trust purpose; (d) make any investments,
other than investments represented by the Junior Subordinated Debentures; (e)
possess any power or otherwise act in such a way as to vary the Trust assets or
the terms of the Trust Securities in any way whatsoever; (f) issue any
securities or other evidences of beneficial ownership of, or beneficial
interests in, the Trust other than the Trust Securities;
29
<PAGE>
(g) incur any indebtedness for borrowed money or (h)(i) direct the time, method
and place of exercising any trust or power conferred upon the Indenture Trustee
with respect to the Junior Subordinated Debentures or the Institutional Trustee
with respect to the Preferred Securities, (ii) waive any past default that is
waivable under the Indenture or the Declaration, (iii) exercise any right to
rescind or annul any declaration that the principal of all of the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures or the Declaration, in each case where such consent
shall be required, unless in the case of this clause (h), the Institutional
Trustee shall have received an unqualified opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
such action will not cause the Trust to be classified for United States federal
income tax purposes as an association taxable as a corporation or a partnership
and that the Trust will continue to be classified as a grantor trust for United
States federal income tax purposes.
The books and records of the Trust will be maintained at the principal
office of the Trust and will be open for inspection by a holder of Preferred
Securities or the duly authorized representative of such holder for any purpose
reasonably related to its interest in the Trust during normal business hours.
The Trust anticipates that it will not be required to file with the Commission
or distribute to holders of Preferred Securities periodic reports regarding the
Trust.
Except as provided below or under the Business Trust Act and the Trust
Indenture Act, holders of Preferred Securities will have no voting rights. If
(i) distributions on the Preferred Securities are in arrears for six consecutive
regularly scheduled quarterly distribution periods or (ii) an Event of Default
under the Declaration occurs and is continuing, holders of Preferred Securities
shall have the right to vote, as a single class, for the appointment of a
Special Regular Trustee who need not be an employee or officer of or otherwise
affiliated with Holdings. The Special Regular Trustee shall have the same
rights, powers and privileges under the Declaration as a Regular Trustee. See
"Description of the Preferred Securities--Voting Rights".
The Institutional Trustee, for the benefit of the holders of the Trust
Securities, is authorized under the Declaration to exercise all rights under the
Indenture with respect to the Junior Subordinated Debentures and to enforce
Holdings' obligations under the Junior Subordinated Debentures upon the
occurrence of an Indenture Event of Default. The Institutional Trustee shall
also be authorized to enforce the rights of holders of Preferred Securities
under the Preferred Securities Guarantee. If the Trust's failure to make
distributions on the Preferred Securities is a consequence of Holdings' exercise
of its right to extend the interest payment period for the Junior Subordinated
Debentures, the Institutional Trustee will have no right to enforce the payment
of distributions on the Preferred Securities until an Event of Default shall
have occurred. Holders of at least a majority in liquidation amount of the
Preferred Securities will have the right to direct the Institutional Trustee
with respect to certain matters under the Declaration and the Preferred
Securities Guarantee. If the Institutional Trustee fails to enforce its rights
under the Indenture or fails to enforce the Preferred Securities Guarantee, any
holder of Preferred Securities may, after a period of 90 days has elapsed from
such holder's written request to the Institutional Trustee to enforce such
rights or the Preferred Securities Guarantee, institute a legal proceeding
against Holdings to enforce such rights or the Preferred Securities Guarantee,
as the case may be. See "Description of the Preferred Securities--Voting
Rights".
If an Indenture Event of Default occurs and is continuing with respect to
Junior Subordinated Debentures, an Event of Default under the Declaration will
occur and be continuing with respect to the Trust Securities. In such event, the
Declaration provides that the holders of Common Securities will be deemed to
have waived any such Event of Default with respect to the Common Securities
until all Events of Default with respect to the Preferred Securities have been
cured or waived. Until all such Events of Default with respect to the Preferred
Securities have been so cured or waived, the Institutional Trustee will be
deemed to be acting solely on behalf of the holders of the Preferred Securities
and
30
<PAGE>
only the holders of the Preferred Securities will have the right to direct the
Institutional Trustee with respect to certain matters under the Declaration and
consequently under the Indenture. If any Event of Default with respect to the
Preferred Securities is waived by the holders of the Preferred Securities as
provided in the Declaration, the holders of Common Securities pursuant to the
Declaration have agreed that such waiver also constitutes a waiver of such Event
of Default with respect to the Common Securities for all purposes under the
Declaration without any further act, vote or consent of the holders of the
Common Securities. See "Description of the Preferred Securities".
The Declaration provides that the Trustees may treat the person in whose
name a Preferred Security is registered on the books and records of the Trust as
the sole holder thereof and of the Preferred Securities represented thereby for
purposes of receiving distributions and for all other purposes and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such certificate or in the Preferred Securities represented thereby on the part
of any person, whether or not the Trust shall have actual or other notice
thereof. Preferred Securities will be issued in fully registered form. Investors
may elect to hold their Preferred Securities directly or, subject to the rules
and procedures of The Depository Trust Company, Midwest Securities Trust Company
and Philadelphia Depository Trust Company (the "Depository Institutions")
described under "Description of the Preferred Securities--Book-Entry; Delivery
and Form", hold interests in a global certificate registered on the books and
records of the Trust in the name of a Depository Institution or its nominee.
Under the Declaration:
(i) the Trust and the Trustees shall be entitled to deal with a
Depository Institution (or any successor depositary) for all purposes,
including the payment of distributions and receiving approvals, votes or
consents under the Declaration, and except as set forth in the Declaration,
shall have no obligation to persons beneficially owning Preferred Securities
("Preferred Security Beneficial Owners") registered in the name of and held
by a Depository Institution or its nominee; and
(ii) the rights of Preferred Security Beneficial Owners shall be
exercised only through a Depository Institution (or any successor
depository) and shall be limited to those established by law and agreements
between such Preferred Security Beneficial Owners and a Depository
Institution and/or its participants. See "Description of the Preferred
Securities--Book-Entry; Delivery and Form". With respect to Preferred
Securities registered in the name of and held by a Depository Institution or
its nominee, all notices and other communications required under the
Declaration shall be given to, and all distributions on such Preferred
Securities shall be given or made to, a Depository Institution (or its
successor).
In the Declaration, Holdings has agreed to pay for all debts and obligations
(other than with respect to the Trust Securities) and all costs and expenses of
the Trust, including the fees and expenses of the Trustees and any taxes and all
costs and expenses with respect thereto, to which the Trust may become subject,
except for United States withholding taxes. See "Risk Factors" and "Description
of the Preferred Securities". The foregoing obligations of Holdings under the
Declaration are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of Holdings directly against Holdings and
Holdings has irrevocably waived any right or remedy to require that any such
Creditor take any action against the Trust or any other person before proceeding
against Holdings. Holdings has agreed in the Declaration to execute such
additional agreements as may be necessary or desirable in order to give full
effect to the foregoing.
The foregoing summary of certain provisions of the Declaration summarizes
the material terms thereof. Reference is made and such summary is qualified in
all respects by such reference to the Declaration which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
The business address of the Trust is c/o RJR Nabisco Holdings Corp., 1301
Avenue of the Americas, New York, New York 10019, telephone number (212)
258-5600.
31
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of March 31,
1995 and for the three months ended March 31, 1995 and 1994 was derived from the
unaudited consolidated condensed financial statements of Holdings (the
"Consolidated Condensed Financial Statements") incorporated herein by reference.
The summary consolidated financial data presented below as of December 31, 1994
and 1993 and for each of the years in the three-year period ended December 31,
1994 was derived from the consolidated financial statements of Holdings (the
"Consolidated Financial Statements") incorporated herein by reference, which
have been audited by Deloitte & Touche LLP, independent auditors. In addition,
the consolidated financial data presented below as of December 31, 1992, 1991
and 1990 and for each of the years in the two-year period ended December 31,
1991 was derived from the audited consolidated financial statements of Holdings
as of December 31, 1992, 1991 and 1990 and for the years ended December 31, 1991
and 1990, not incorporated herein by reference. The data should be read in
conjunction with the Consolidated Condensed Financial Statements and the
Consolidated Financial Statements incorporated herein by reference.
<TABLE><CAPTION>
THREE MONTHS
ENDED MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
-------------------- -------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- --------- ------- ------- ------- -------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net sales........................... $ 3,540 $ 3,572 $ 15,366 $15,104 $15,734 $14,989 $13,879
-------- -------- --------- ------- ------- ------- -------
Cost of products sold............... 1,625 1,572 6,977 6,640 6,326 6,088 5,652
Selling, advertising, administrative
and general expenses.............. 1,136 1,212 5,210 5,731 5,788 5,358 4,801
Amortization of trademarks and
goodwill.......................... 159 156 629 625 616 609 608
Restructuring expense............... -- -- -- 730 106 -- --
-------- -------- --------- ------- ------- ------- -------
Operating income(1)............... 620 632 2,550 1,378 2,898 2,934 2,818
Interest and debt expense........... (220) (291) (1,065) (1,209) (1,449) (2,217) (3,176)
Other income (expense), net......... (36) (12) (110) (58) 7 (69) (44)
-------- -------- --------- ------- ------- ------- -------
Income (loss) before income
taxes........................... 364 329 1,375 111 1,456 648 (402)
Provision for income taxes.......... 159 135 611 114 680 280 60
-------- -------- --------- ------- ------- ------- -------
Income (loss) before minority
interest in income of Nabisco... 205 194 764 (3) 776 368 (462)
Minority interest in income of
Nabisco......................... 7 -- -- -- -- -- --
-------- -------- --------- ------- ------- ------- -------
Income (loss) before extraordinary
item............................ 198 194 764 (3) 776 368 (462)
Extraordinary item--(loss) gain on
early extinguishments of debt, net
of income taxes................... -- 1 (245) (142) (477) -- 33
-------- -------- --------- ------- ------- ------- -------
Net income (loss)................... 198 195 519 (145) 299 368 (429)
Preferred stock dividends........... 33 33 131 68 31 173 50
-------- -------- --------- ------- ------- ------- -------
Net income (loss) applicable to
common stock...................... $ 165 $ 162 $ 388 $ (213) $ 268 $ 195 $ (479)
-------- -------- --------- ------- ------- ------- -------
-------- -------- --------- ------- ------- ------- -------
PER SHARE DATA
Income (loss) before extraordinary
item per common and common
equivalent share(2)(3)............ $ 0.51 $ 0.59 $ 2.06 $ (0.26) $ 2.73 $ 1.10 $ (5.93)
-------- -------- --------- ------- ------- ------- -------
-------- -------- --------- ------- ------- ------- -------
Dividends per share of Series A
Preferred Stock(4)................ -- $ .835 $ 2.92 $ 3.34 $ 3.34 $ 0.49 --
Dividends per share of Series B
Preferred......................... $578.125 $578.125 $2,312.50 $661.63 -- -- --
Dividends per share of Series C
Preferred Stock(4)................ $ 1.503 $ 3.94 -- -- -- --
Dividends Per Share of Common
Stock(5).......................... $ .375 -- -- -- -- --
OTHER DATA
Ratio of earnings to fixed charges
and preferred stock
dividends(6)...................... 1.70 1.45 1.60 1.10
Deficiency in the coverage of fixed
charges and preferred stock
dividends by earnings before fixed
charges(6)........................ $ 264 $ 490
BALANCE SHEET DATA (AT END OF
PERIODS)
Working capital (deficiency)(7)..... $ 427 $ (1,231) $ 202 $ 730 $ 165 $(1,089)
Total assets........................ 31,551 31,408 31,295 32,041 32,131 32,915
Total debt(7)....................... 10,242 11,149 12,448 14,218 14,531 18,918
Redeemable preferred stock(8)....... -- -- -- -- -- 1,795
Stockholders' equity(9)............. 11,321 10,908 9,070 8,376 8,419 2,494
</TABLE>
(Footnotes on following page)
32
<PAGE>
(Footnotes for preceding page)
- ------------
(1) The 1992 amount includes a gain of $98 million on the sale of the
ready-to-eat cold cereal business.
(2) The loss before extraordinary item per common equivalent share reported for
the year ended December 31, 1993 would have increased by $.17 per share if
the weighted average number of shares of Series A Depositary Shares (as
defined below) outstanding during the period had been excluded from the
earnings per share calculation.
(3) Amounts reflect a one-for-five reverse split approved by Holdings'
stockholders on April 12, 1995.
(4) On November 8, 1991, Holdings issued 52,500,000 shares of Series A
Conversion Preferred Stock, par value $.01 per share ("Series A Preferred
Stock"), and sold 210,000,000 $.835 depositary shares (the "Series A
Depositary Shares"), each of which represented one-quarter of a share of
Series A Preferred Stock. On May 6, 1994, Holdings issued 26,675,000 shares
of Series C Conversion Preferred Stock, par value $.01 per share (the
"Series C Conversion Preferred Stock"), and sold 266,750,000 Series C
Depositary Shares (the "Series C Depositary Shares"), each of which
represented one-tenth of a share of Series C Conversion Preferred Stock. On
November 15, 1994, each outstanding Series A Depositary Share converted into
one share of Holdings Common Stock.
(5) The Board of Directors of Holdings declared an initial quarterly dividend of
$.375 per share (or $1.50 per annum) which was paid on April 1, 1995 to
stockholders of record on March 10, 1995.
(6) For purposes of these computations, earnings before fixed charges consist of
income (loss) before extraordinary item before provision (benefit) for
income taxes plus fixed charges. Income (loss) before extraordinary item
before provision (benefit) for income taxes includes amortization of
trademarks and goodwill and depreciation expense. Fixed charges consist of
interest on indebtedness, amortization of debt issuance costs and that
portion of operating rental expense representative of the interest factor.
Also, for purposes of these computations, preferred stock dividends have
been increased to present the equivalent pre-tax amount, as applicable.
(7) Working capital (deficiency) at December 31, 1994 included $1.35 billion of
borrowings under the Nabisco 1994 Credit Agreement, a substantial portion of
which was used in connection with the refinancing of certain debt. On
January 26, 1995, such borrowings were substantially reduced through the
application of approximately $1.2 billion of net proceeds received from the
initial public offering of 51,750,000 shares of Nabisco's Class A Common
Stock.
(8) On December 16, 1991, an amendment to the Amended and Restated Certificate
of Incorporation of Holdings was filed which deleted the provisions
providing for the mandatory redemption of the redeemable preferred stock of
Holdings on November 1, 2015. Accordingly, such securities were presented as
a component of Holdings' stockholders' equity as of December 31, 1992 and
1991. Such securities were redeemed on December 6, 1993.
(9) Holdings' stockholders' equity at March 31, 1995 and 1994, and December 31
of each year from 1994 to 1990 includes non-cash expenses related to
accumulated trademarks and goodwill amortization of $3.803 billion, $3.171
billion, $3.644 billion, $3.015 billion, $2.390 billion, $1.774 billion and
$1.165 billion, respectively.
See Notes to Consolidated Financial Statements.
33
<PAGE>
CAPITALIZATION
The following table sets forth the historical capitalization of Holdings at
March 31, 1995 and as adjusted to give effect to the issuance of Preferred
Securities in exchange for the Depositary Shares. This table does not reflect
the Exchange Offers, the Consent Solicitations, and related fees. The "As
Adjusted" capitalization described in the table below assumes that holders of
49,000,000 Depositary Shares elect to participate in the Offer. To the extent
holders of Depositary Shares elect not to participate in the Offer, Preferred
Securities of the Trust would be reduced and Series B Preferred would be
increased by an equal amount.
<TABLE><CAPTION>
MARCH 31,1995
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN MILLIONS)
<S> <C> <C>
Current debt:
Notes payable........................................................ $ 365 $ 365
Current maturities of long-term debt:
Debentures......................................................... 300 300
Notes.............................................................. 136 136
Other indebtedness................................................. 241 241
---------- -----------
Total current debt............................................... 1,042 1,042
---------- -----------
Long-term debt:
Debentures........................................................... 634 634
Notes................................................................ 4,916 4,916
1991 Credit Agreement................................................ 2,000 2,000
1994 Nabisco Credit Agreement........................................ 220 220
Commercial paper..................................................... 836 836
Other indebtedness................................................... 594 594
---------- -----------
Total long-term debt............................................. 9,200 9,200
---------- -----------
Total debt..................................................... 10,242 10,242
---------- -----------
Holdings-guaranteed preferred securities of subsidiary Trust(1)........ -- 1,225
---------- -----------
Stockholders' equity:
ESOP convertible preferred stock..................................... 244 244
Series B Preferred................................................... 1,250 25
Series C conversion preferred stock.................................. 3 3
Common stock......................................................... 3 3
Paid-in capital...................................................... 10,394 10,394
Retained earnings (accumulated deficit).............................. (166) (166)
Receivable from ESOP................................................. (176) (176)
Other stockholders' equity........................................... (231) (231)
---------- -----------
Total stockholders' equity....................................... 11,321 10,096
---------- -----------
Total capitalization........................................... $ 21,563 $21,563
---------- -----------
---------- -----------
</TABLE>
- ------------
(1) The sole asset of the Trust will be the Junior Subordinated Debentures of
Holdings with a final maturity of December 31, 2044. Upon redemption of the
Junior Subordinated Debentures, the Holdings-guaranteed preferred securities
of the Trust will be mandatorily redeemable. The Junior Subordinated
Debentures are limited to an aggregate principal amount of $1.225 billion
and will bear interest at a rate of % from their Accrual Date. The
payment of distributions out of moneys held by the Trust and payments on
liquidation of the Trust and the redemption of Preferred Securities are
guaranteed by Holdings' Preferred Securities Guarantee. See "Description of
the Preferred Securities Guarantee". The Preferred Securities Guarantee is a
full and unconditional guarantee from the time of issuance of the Preferred
Securities, but the Preferred Securities Guarantee covers distributions and
other payments on the Preferred Securities only if and to the extent that
Holdings has made a payment of interest or principal on the Junior
Subordinated Debentures deposited in the Trust as trust assets.
34
<PAGE>
THE OFFER
PURPOSE OF THE OFFER
The purpose of the Offer is to refinance the Depositary Shares with the
Preferred Securities and to achieve certain tax efficiencies while preserving
Holdings' flexibility with respect to future financings. This refinancing will
permit Holdings to deduct interest payable on the Junior Subordinated Debentures
for United States federal income tax purposes; dividends payable with regard to
the Depositary Shares are not deductible.
GENERAL
PARTICIPATION IN THE OFFER IS VOLUNTARY AND HOLDERS OF DEPOSITARY SHARES
SHOULD CAREFULLY CONSIDER WHETHER TO ACCEPT. NEITHER THE BOARD OF DIRECTORS OF
HOLDINGS NOR HOLDINGS NOR THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO
HOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS
OF DEPOSITARY SHARES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN
MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
Unless the context requires otherwise, the term "Holder" with respect to the
Offer means (i) any person in whose name any Depositary Shares are registered on
the books of Holdings or (ii) any other person who has obtained a properly
completed stock power from the registered holder, or (iii) any person whose
Depositary Shares are held of record by a Depository Institution.
TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Trust will exchange its Preferred Securities for up
to 49,000,000 of the outstanding Depositary Shares. The Offer will be effected
on a basis of one Preferred Security for each Depositary Share validly tendered
and accepted for exchange. See "--Procedures for Tendering". Upon the terms and
subject to the conditions set forth herein and in the Letter of Transmittal, the
Trust will accept up to 49,000,000 Depositary Shares validly tendered and not
withdrawn prior to the Expiration Date and, unless the Offer has been withdrawn
or terminated, will deliver Preferred Securities in exchange therefor to
tendering Holders of Depositary Shares as promptly as practicable following the
Expiration Date. The Trust expressly reserves the right, in its sole discretion,
to delay acceptance for exchange of Depositary Shares tendered under the Offer
and the delivery of the Preferred Securities with respect to the Depositary
Shares accepted for exchange (subject to Rules 13e-4 and 14e-1 under the
Exchange Act, which require that the Trust consummate the Offer or return the
Depositary Shares deposited by or on behalf of the Holders thereof promptly
after the termination or withdrawal of the Offer), or to amend, withdraw or
terminate the Offer at any time prior to the Expiration Date for any of the
reasons set forth in "--Conditions to the Offer" and "--Expiration Date;
Extensions; Amendments; Termination.".
In all cases, except to the extent waived by the Trust, delivery of
Preferred Securities issued with respect to the Depositary Shares accepted for
exchange pursuant to the Offer will be made only after timely receipt by the
Exchange Agent of Depositary Shares (or confirmation of book-entry transfer
thereof), a properly completed and duly executed Letter of Transmittal and any
other documents required thereby.
As of the date of this Prospectus, there are 50,000,000 Depositary Shares
outstanding. This Prospectus, together with the Letter of Transmittal, is being
sent to all registered Holders as of , 1995.
The Trust shall be deemed to have accepted validly tendered Depositary
Shares (or defectively tendered Depositary Shares with respect to which the
Trust has waived such defect) when, as and if the Trust has given oral or
written notice thereof to the Exchange Agent. The Exchange Agent will act as
35
<PAGE>
agent for the tendering Holders for the purpose of receiving Depositary Shares
from, and remitting Preferred Securities to, tendering Holders who are
participating in the Offer. Upon the terms and subject to the conditions of the
Offer, delivery of Preferred Securities to tendering Holders will be made as
promptly as practicable following the Expiration Date.
If proration of tendered Depositary Shares is required, because of the
difficulty in determining the number of Depositary Shares validly tendered
(including shares tendered by the guaranteed delivery procedures described in
"--Procedures for Tendering"), the Trust does not expect that it would be able
to announce the final proration factor or to commence the exchange for any
Depositary Shares pursuant to the Offer until approximately five Business Days
after the Expiration Date. Preliminary results of the proration will be
announced by press release as promptly as practicable after the Expiration Date.
Holders of Depositary Shares may obtain such preliminary information from the
Dealer Managers, the Information Agent or the Exchange Agent and may also be
able to obtain such information from their brokers.
Until the final proration factors are known, the Trust will not issue any
Preferred Securities in exchange for any Depositary Shares accepted for exchange
pursuant to the Offer or return Depositary Shares delivered to the Exchange
Agent but not tendered or return Depositary Shares tendered but not accepted for
exchange because of proration.
If any tendered Depositary Shares are not accepted for exchange because of
an invalid tender, proration, the occurrence of certain other events set forth
herein or otherwise, unless otherwise requested by the Holder under "Special
Delivery Instructions" in the Letter of Transmittal, such Depositary Shares will
be returned, without expense, to the tendering Holder thereof (or in the case of
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at a Depository Institution, such Depositary Shares will be credited to
an account maintained at the Depository Institution designated by the
participant therein who so delivered such Depositary Shares), as promptly as
practicable after the Expiration Date or the withdrawal or termination of the
Offer.
Holders of Depositary Shares will not have any appraisal or dissenters'
rights under the Delaware General Corporation Law in connection with the Offer.
The Trust intends to conduct the Offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.
Holders who tender Depositary Shares in the Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Depositary Shares
pursuant to the Offer. See "Fees and Expenses; Transfer Taxes".
Holders tendering Depositary Shares held in global form shall receive
Preferred Securities in global form and holders tendering Depositary Shares held
directly in certificated form shall receive Preferred Securities in certificated
form, in each case unless otherwise specified in the Letter of Transmittal. See
"--Procedures for Tendering".
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, or any extension of the
Offer, the Trust will not be required to deliver Preferred Securities in respect
of any properly tendered Depositary Shares and may terminate the Offer by oral
or written notice to the Exchange Agent and the holders of Depositary Shares,
or, at its option, may modify or otherwise amend the Offer with respect to such
Depositary Shares if any of the following conditions are not satisfied at or
prior to the Expiration Date in the case of clauses (a) and (b) below or if any
of the events specified in clauses (c) through (e) occurs at or prior to the
Expiration Date, whether prior to or simultaneously with the completion of the
Offer:
36
<PAGE>
(a) receipt of at least 15,000,000 validly tendered Depositary Shares in
the Offer;
(b) tenders by a sufficient number of holders of Depositary Shares such
that there will be at least 400 record or beneficial holders of Preferred
Securities in Exchange for such Depositary Shares (the "Minimum Distribution
Condition");
(c) there shall not have been any action taken or threatened, or any
statute, rule, regulation, judgment, order, stay, decree or injunction
promulgated, enacted, entered, enforced or deemed applicable to the Offer,
by or before any court or governmental regulatory or administrative agency
or authority or tribunal, domestic or foreign, which (i) challenges the
making of the Offer, or might directly or indirectly prohibit, prevent,
restrict or delay consummation of the Offer, or otherwise and adversely
affect in any material manner the Offer or (ii) could materially adversely
affect the business, condition (financial or otherwise), income, operations,
properties, assets, liabilities or prospects of Holdings and its
subsidiaries, taken as a whole or materially impair the contemplated
benefits of the Offer to Holdings:
(d) there shall not have occurred or be likely to occur any event
affecting the business or financial affairs of Holdings that would or might
prohibit, prevent, restrict or delay consummation of the Offer or that will,
or is reasonably likely to, materially impair the contemplated benefits of
the Offer or might be material to holders of Depositary Shares in deciding
whether to accept the Offer; and
(e) there shall not have occurred (i) any general suspension of or
limitation on trading in securities on the NYSE or in the over-the-counter
market (whether or not mandatory), (ii) any significant adverse change in
the price of the Depositary Shares or in the United States securities or
financial markets, (iii) a material impairment in the trading market for
debt or equity securities, (iv) a declaration of a banking moratorium or any
suspension of payments in respect of banks by federal or state authorities
in the United States (whether or not mandatory), (v) a commencement of a
war, armed hostilities or other national or international crisis directly or
indirectly relating to the United States, (vi) any limitation (whether or
not mandatory) by any governmental authority on, or other event having a
reasonable likelihood of affecting, the extension of credit by banks or
other lending institutions in the United States or (vii) any significant
adverse change in United States securities or financial markets generally or
in the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of the Trust and Holdings
and may be waived (except for the Minimum Distribution Condition) by the Trust
and Holdings, in whole or in part, in their sole discretion. Any determination
made by Holdings or the Trust concerning an event, development or circumstance
described or referred to above will be final and binding on all parties.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Offer will expire on the Expiration Date. The Trust expressly reserves
the right, in its sole discretion, subject to applicable law, to (i) terminate
the Offer, and not accept for exchange any Depositary Shares and promptly return
all Depositary Shares upon the failure of any of the conditions specified above
in "--Conditions to the Offer", (ii) waive any condition to the Offer (other
than the Minimum Distribution Condition) and accept all Depositary Shares
previously tendered pursuant to the Offer, (iii) extend the Expiration Date of
the Offer and retain all Depositary Shares tendered pursuant to such Exchange
Offer until the expiration date, subject, however, to all withdrawal rights of
holders, see "--Withdrawal of Tenders", (iv) amend the terms of the Offer or (v)
modify the form of the consideration to be paid pursuant to the Offer. Any
amendment applicable to the Offer will apply to all Depositary Shares tendered
pursuant to the Offer. During any extension of the Offer, all Depositary Shares
previously tendered pursuant to the Offer and not withdrawn will remain subject
to the Offer. See "--Expiration Date; Extensions; Amendments; Termination".
37
<PAGE>
If the Trust makes a material change in the terms of the Offer, the Trust
will extend the Offer. The minimum period for which the Offer will be extended
following a material change, other than a change in the amount of Depositary
Shares sought for exchange, will depend upon the facts and circumstances,
including the relative materiality of the change. With respect to an increase or
decrease in the number of Depositary Shares sought in the Offer or an increase
or decrease in the consideration offered to holders of Depositary Shares, if
required, the Offer will remain open for a minimum of ten Business Days
following public announcement of such change. In the case of any amendment,
withdrawal or termination of the Offer, a public announcement will be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date of the Offer subject to such extension. If
the Trust withdraws or terminates the Offer, it will give immediate notice to
the Exchange Agent, and all Depositary Shares theretofore tendered pursuant to
the Offer will be returned promptly to the tendering Holders thereof. See
"--Withdrawal of Tenders". In order to satisfy the NYSE listing requirements,
acceptance of Depositary Shares validly tendered in the Offer is subject to the
Minimum Distribution Condition, which condition may not be waived.
PROCEDURES FOR TENDERING
The tender of Depositary Shares by a Holder thereof pursuant to one of the
procedures set forth below will constitute an agreement between such Holder and
the Trust in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
Each Holder of Depositary Shares wishing to participate in the Offer must
(i)(a) properly complete and sign the Letter of Transmittal in accordance with
the instructions contained herein and in the Letter of Transmittal, together
with any required signature guarantees, and deliver the same to the Exchange
Agent, at one of its addresses set forth on the back cover page hereof prior to
the Expiration Date and certificates for the Depositary Shares must be received
by the Exchange Agent at such address or (b) such Depositary Shares must be
transferred pursuant to the procedures for book-entry transfer described below
and a confirmation of such book-entry transfer must be received by the Exchange
Agent, in each case prior to the Expiration Date, or (ii) comply with the
guaranteed delivery procedures described below.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF DEPOSITARY SHARES MUST
SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR
TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER
OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE.
LETTERS OF TRANSMITTAL, DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE TRUST, HOLDINGS, THE
DEALER MANAGERS OR THE INFORMATION AGENT.
Special Procedure for Beneficial Owners. Any beneficial owner whose
Depositary Shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender should contact
such registered Holder promptly and instruct such registered Holder to tender on
such beneficial owner's behalf. If such beneficial owner wishes to tender on its
own behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering its Depositary Shares, either make appropriate
arrangements to register ownership of the Depositary Shares in such owner's name
or obtain a properly completed stock power from the registered Holder. The
transfer of registered ownership may take considerable time and may not be able
to be completed prior to the Expiration Date.
THE METHOD OF DELIVERY OF DEPOSITARY SHARES AND ALL OTHER DOCUMENTS IS AT
THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, INSURANCE BE OBTAINED, AND
THE MAILING BE MADE SUFFICIENTLY IN
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ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR
BEFORE THE EXPIRATION DATE.
Signature Guarantees. If tendered Depositary Shares are registered in the
name of the signer of the Letter of Transmittal and the Preferred Securities to
be issued in exchange therefor are to be issued (and any untendered Depositary
Shares are to be reissued) in the name of the registered Holder, the signature
of such signer need not be guaranteed. If the tendered Depositary Shares are
registered in the name of someone other than the signer of the Letter of
Transmittal, or if Preferred Securities issued in exchange therefor are to be
issued in the name of any person other than the signer of the Letter of
Transmittal, such tendered Depositary Shares must be endorsed or accompanied by
written instruments of transfer in form satisfactory to the Trust and duly
executed by the registered Holder, and the signature on the endorsement or
instrument of transfer must be guaranteed by a financial institution (including
most banks, savings and loans associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program or the Stock
Exchange Medallion Program (any of the foregoing hereinafter referred to as an
"Eligible Institution"). If the Preferred Securities and/or the Depositary
Shares are not exchanged or are to be delivered to an address other than that of
the registered Holder appearing on the register for the Depositary Shares, the
signature in the Letter of Transmittal must be guaranteed by an Eligible
Institution.
Book-Entry Transfer. The Trust understands that the Exchange Agent will make
a request promptly after the date of this Prospectus to establish accounts with
respect to the Depositary Shares at a Depository Institution for the purpose of
facilitating the Offer, and subject to the establishment thereof, any financial
institution that is a participant in a Depository Institution's system may make
book-entry delivery of Depositary Shares by causing the Depository Institution
to transfer such Depositary Shares into the Exchange Agent's account with
respect to the Depositary Shares in accordance with such Depository
Institution's Automated Tender Offer Program ("ATOP") procedures for such
book-entry transfers. However, the exchange for the Depositary Shares so
tendered will only be made after timely confirmation (a "Book-Entry
Confirmation") of such Book-Entry Transfer of Depositary Shares into the
Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's
Message (as such term is defined in the next sentence) and any other documents
required by the Letter of Transmittal. The term "Agent's Message" means a
message, transmitted by a Depository Institution and received by the Exchange
Agent and forming a part of a Book-Entry Confirmation, which states that such
Depository Institution has received an express acknowledgment from a participant
tendering Depositary Shares that is the subject of such Book-Entry Confirmation
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal, and that the Trust may enforce such agreement against
such participant.
Guaranteed Delivery. If a Holder desires to participate in the Offer and
time will not permit a Letter of Transmittal or Depositary Shares to reach the
Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if the
Exchange Agent has received at one of its addresses on the back cover page
hereof prior to the Expiration Date, a letter, telegram or facsimile
transmission from an Eligible Institution setting forth the name and address of
the tendering Holder, the name(s) in which the Depositary Shares are registered
and, if the Depositary Shares are held in certificated form, the certificate
numbers of the Depositary Shares to be tendered, and stating that the tender is
being made thereby and guaranteeing that within three NYSE trading days after
the date of execution of such letter, telegram or facsimile transmission by the
Eligible Institution, the Depositary Shares in proper form for transfer together
with a properly completed and duly executed Letter of Transmittal (and any other
required documents), or a confirmation of book-entry transfer of such Depositary
Shares into the Exchange Agent's account at a Depository Institution, will be
delivered by such Eligible Institution. Unless the Depositary Shares being
tendered by the above-described method are deposited with the Exchange Agent
within the time period set forth above (accompanied or preceded by a properly
completed Letter of Transmittal and any other required documents) or a
confirmation of book-entry transfer of such Depositary Shares into the
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<PAGE>
Exchange Agent's account at the Depository Institution in accordance with such
Depository Institution's ATOP procedures is received, the Trust may, at its
option, reject the tender. In addition to the copy being transmitted herewith,
copies of a Notice of Guaranteed Delivery which may be used by Eligible
Institutions for the purposes described in this paragraph are available from the
Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Depositary Shares will be determined by the Trust, whose determination will be
final and binding. The Trust reserves the absolute right to reject any or all
tenders not in proper form or the acceptance for exchange of which may, in the
opinion of the Trust's counsel, be unlawful. The Trust also reserves the
absolute right to waive any defect or irregularity in the tender of any
Depositary Shares, and the Trust's interpretation of the terms and conditions of
the Offer (including the instructions in the Letter of Transmittal) will be
final and binding. None of the Trust, the Exchange Agent, the Dealer Managers,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Tenders of Depositary Shares involving any irregularities will not be deemed
to have been made until such irregularities have been cured or waived.
Depositary Shares received by the Exchange Agent that are not validly tendered
and as to which the irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder (or in the case of
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at a Depository Institution, such Depositary Shares will be credited to
an account maintained at the Depository Institution designated by the
participant therein who so delivered such Depositary Shares), unless otherwise
requested by the Holder in the Letter of Transmittal, as promptly as practicable
after the Expiration Date or the withdrawal or termination of the Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Offer.
The party tendering Depositary Shares for exchange (the "Transferor")
exchanges, assigns and transfers the Depositary Shares to the Trust, and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Depositary Shares to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Depositary
Shares and the underlying Series B Preferred and to acquire Preferred Securities
issuable upon the exchange of such tendered Depositary Shares and that, when
such Transferor's Depositary Shares are accepted for exchange, the Trust will
acquire good and unencumbered title to such tendered Depositary Shares and the
underlying Series B Preferred, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim. The Transferor
also warrants that it will, upon request, execute and deliver any additional
documents deemed by the Trust to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Depositary Shares or transfer
ownership of such Depositary Shares on the account books maintained by the
Depository Institution. All authority conferred by the Transferor will survive
the death, bankruptcy or incapacity of the Transferor and every obligation of
the Transferor shall be binding upon the heirs, legal representatives,
successors, assigns, executors and administrators of such Transferor.
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<PAGE>
WITHDRAWAL OF TENDERS
Tenders of Depositary Shares pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless accepted for exchange by the
Trust, may be withdrawn at any time after 40 Business Days after the date of
this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at one of its addresses set forth on the back cover page hereof. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered Depositary Shares to be withdrawn, (ii) if the Depositary Shares
are held in certificated form, the certificate numbers of the Depositary Shares
to be withdrawn, (iii) that such Holder is withdrawing its election to have such
Depositary Shares exchanged and (iv) the name of the registered Holder of such
Depositary Shares, and must be signed by the Holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Trust
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Depositary Shares being withdrawn. The Exchange Agent will return the
properly withdrawn Depositary Shares promptly following receipt of notice of
withdrawal. If Depositary Shares have been tendered pursuant to the procedure
for book-entry transfer, any notice of withdrawal must specify the name and
number of the account at a Depository Institution to be credited with the
withdrawn Depositary Shares and otherwise comply with such Depository
Institution procedures. All questions as to the validity of notice of
withdrawal, including time of receipt, will be determined by the Trust, and such
determination will be final and binding on all parties. Withdrawals of tenders
of Depositary Shares may not be rescinded and any Depositary Shares withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
Properly withdrawn Depositary Shares, however, may be retendered by following
the procedures therefor described elsewhere herein at any time prior to the
Expiration Date. See "--Procedures for Tendering".
ACCEPTANCE OF SHARES AND PRORATION
Upon the terms and subject to the conditions of the Offer, if 49,000,000 or
fewer Depositary Shares have been validly tendered and not withdrawn prior to
the Expiration Date, the Trust will accept for exchange all such Depositary
Shares. Upon the terms and subject to the conditions of the Offer, if more than
49,000,000 Depositary Shares have been validly tendered and not withdrawn prior
to the Expiration Date, the Trust will accept for exchange Depositary Shares
from each tendering Holder on a pro rata basis, subject to adjustment to avoid
the acceptance for exchange of fractional shares.
If the Trust decides, in its sole discretion, to increase or decrease the
number of Depositary Shares sought in the Offer or to increase or decrease the
consideration offered to holders of Depositary Shares, and if the Offer is
scheduled to expire less than ten Business Days from and including the date that
notice of such increase or decrease is first published, sent or given in the
manner specified in "--Expiration Date; Extensions; Amendments; Termination",
then the Offer will be extended for ten Business Days from and including the
date of such notice.
All Depositary Shares not accepted pursuant to the Offer, including shares
not purchased because of proration, will be returned to the tendering Holders at
the Trust's expense as promptly as practicable following the Expiration Date.
41
<PAGE>
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange Agent
for the Offer.
THE EXCHANGE AGENT:
First Chicago Trust Company of New York
By Hand or Overnight Courier:
Attention: Tenders and Exchanges
Suite 4680-RNH
14 Wall Street
8th Floor
New York, New York 10005
By Mail:
Attention: Tenders and Exchanges
Suite 4660-RNH
P.O. Box 2559
Jersey City, New Jersey 07303-2559
By Facsimile Transmission
(For Eligible Institutions Only):
(201) 222-4720 or 4721
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(201) 222-4707
MacKenzie Partners, Inc. has been retained as the Information Agent to
assist in connection with the Offer. Questions and requests for assistance
regarding the Offer, requests for additional copies of this Prospectus, the
Letter of Transmittal and requests for Notice of Guaranteed Delivery may be
directed to the Information Agent. Banks and brokers call collect: (212)
929-5500; all others telephone (800) 322-2885.
Holdings will pay the Exchange Agent and Information Agent reasonable and
customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith.
DEALER MANAGERS; SOLICITING DEALERS
Merrill Lynch & Co., Lehman Brothers, Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated and Smith Barney Inc., as Dealer Managers, have agreed
to solicit exchanges of Depositary Shares for Preferred Securities. Holdings
will pay the Dealer Managers a fee of $.125 per Depositary Share accepted
pursuant to the Offer. The maximum fee payable to the Dealer Managers is
approximately $6,125,000 plus any amount that the Dealer Managers may be
entitled to pursuant to the next paragraph. Holdings will also reimburse the
Dealer Managers for certain reasonable out-of-
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<PAGE>
pocket expenses in connection with the Offer and will indemnify the Dealer
Managers against certain liabilities, including liabilities under the Securities
Act. The Dealer Managers engage in transactions with, and from time to time have
performed services for, Holdings, including acting as underwriters for the
issuance of the Depositary Shares.
The Company will pay to a Soliciting Dealer a solicitation fee of $0.50 per
Depositary Share validly tendered and accepted for exchange pursuant to the
Offer. As used in this Prospectus, "Soliciting Dealer" includes (i) any broker
or dealer in securities, including a Dealer Manager in its capacity as a broker
or dealer, who is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign
broker or dealer not eligible for membership in the NASD who agrees to conform
to the NASD's Rules of Fair Practice in soliciting tenders outside the United
States to the same extent as though it were an NASD member, or (iii) any bank or
trust company, any one of whom has solicited and obtained a tender pursuant to
the Offer. No solicitation fee shall be payable to a Soliciting Dealer with
respect to the tender of depositary receipts evidencing Depositary Shares by a
Holder unless the Letter of Transmittal accompanying such tender designates such
Soliciting Dealer as such in the box captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer
made to an account maintained by the Exchange Agent with Depository
Institutions, the Soliciting Dealer must return a Notice of Solicited Tenders
(included in the materials provided to brokers and dealers) to the Exchange
Agent within three trading days after the Expiration Date in order to receive a
solicitation fee. No solicitation fee shall be payable to a Soliciting Dealer in
respect of Depositary Shares (i) beneficially owned by such Soliciting Dealer or
(ii) registered in the name of such Soliciting Dealer unless such Depositary
Shares are held by such Soliciting Dealer as nominee and such Depositary Shares
are being tendered for the benefit of one or more beneficial owners identified
on the Letter of Transmittal or the Notice of Solicited Tenders. No solicitation
fee shall be payable to the Soliciting Dealer with respect to the tender of
Depositary Shares by the Holder of record, for the benefit of the beneficial
owner, unless the beneficial owner has designated such Soliciting Dealer.
No solicitation fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such fee
to a tendering Holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of Holdings, the Exchange
Agent, the Information Agent or the Dealer Managers for purposes of the Offer.
Other than as described above, Holdings will not pay any solicitation fees
to any broker, dealer, bank, trust company or other person for any Depositary
Shares exchanged in connection with the Offer. Holdings will reimburse such
persons for customary handling and mailing expenses incurred in connection with
the Offer.
Additional solicitations may be made by telephone or in person by officers
and regular employees of Holdings and its affiliates. No additional compensation
will be paid to any such officers and employees who engage in soliciting
tenders.
LISTING AND TRADING OF PREFERRED SECURITIES AND DEPOSITARY SHARES
The Preferred Securities constitute a new issue of securities with no
established trading market. While an application has been made to list the
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Preferred Securities will develop or be sustained in the future
on such exchange. Although the Dealer Managers have indicated to the Trust that
they intend to make a market in the Preferred Securities following the
Expiration Date as permitted by applicable laws and regulations prior to the
commencement of trading on the NYSE, they are not obligated to do so and may
discontinue any such market-making at any time without notice. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Preferred Securities. In order to satisfy the
43
<PAGE>
NYSE listing requirements, acceptance of Depositary Shares validly tendered in
the Offer is subject to the Minimum Distribution Condition, which condition may
not be waived.
To the extent that Depositary Shares are tendered and accepted in the Offer,
the terms on which untendered Depositary Shares could subsequently be sold could
be adversely affected. In addition, if the Offer is substantially subscribed or
oversubscribed, there would be a significant risk that round lot holdings of
Depositary Shares outstanding following the Offer would be limited. See "Risk
Factors-- Listing and Trading of Preferred Securities and Depositary Shares.
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFER
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Offer between Holdings or
any of its directors or executive officers, the Trust or the Trustees and any
person with respect to any securities of Holdings or the Trust, including the
Junior Subordinated Debentures, the Series B Preferred, the Depositary Shares
and the Preferred Securities.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Depositary Shares will be borne by
Holdings. For compensation to be paid to the Dealer Managers and Soliciting
Dealers, see "The Offer--Dealer Managers; Soliciting Dealers". The total cash
expenditures to be incurred by Holdings in connection with the Offer, other than
fees payable to the Dealer Managers and Soliciting Dealers, but including the
expenses of the Dealer Managers, printing, accounting and legal fees, and the
fees and expenses of the Exchange Agent, the Information Agent, the
Institutional Trustee, the Delaware Trustee and the Indenture Trustee, are
estimated to be approximately $ .
Holdings will pay all transfer taxes, if any, applicable to the exchange of
Depositary Shares pursuant to the Offer. If, however, certificates representing
Preferred Securities or Depositary Shares not tendered or accepted for exchange,
are to be delivered to, or are to be issued in the name of, any person other
than the registered Holder of the Depositary Shares tendered or if a transfer
tax is imposed for any reason other than the exchange of Depositary Shares
pursuant to the Offer, then the amount of any such transfer taxes (whether
imposed on the registered Holder or any other persons) will be payable by the
tendering Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
44
<PAGE>
PRICE RANGE OF DEPOSITARY SHARES
The Depositary Shares are listed and principally traded on the NYSE. The
following table sets forth, for each period shown, the high and low sales prices
of the Depositary Shares as reported on the NYSE Composite Tape.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993 HIGH LOW
- ------------------------------------------------------------------------- ------- -------
<S> <C> <C>
3rd Quarter.............................................................. $26 $23.75
4th Quarter.............................................................. 25.625 24.25
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
- -------------------------------------------------------------------------
<S> <C> <C>
1st Quarter.............................................................. 26.25 21.75
2nd Quarter.............................................................. 23 20
3rd Quarter.............................................................. 23.375 20.625
4th Quarter.............................................................. 23 20
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
- -------------------------------------------------------------------------
<S> <C> <C>
1st Quarter.............................................................. 23.875 20.50
2nd Quarter.............................................................. 25.375 23
3rd Quarter (through July 25, 1995)...................................... 25.5 24.25
</TABLE>
On June 19, 1995, the last full day of trading prior to the first public
announcement of the Offer, the closing sales price of Depositary Shares on the
NYSE as reported on the Composite Tape was $24.875 per share. Stockholders are
urged to obtain a current market quotation for Depositary Shares.
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<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration which will be qualified under the Trust Indenture Act. The Bank of
New York, as the Institutional Trustee, but not the other Trustees of the Trust,
will act as the indenture trustee for purposes of the Trust Indenture Act. The
terms of the Preferred Securities and the Declaration include those stated in
the Declaration and those made part of the Declaration by the Trust Indenture
Act. The description of the Preferred Securities and the Declaration set forth
below summarizes the material terms thereof and is subject to, and qualified in
its entirety by reference to, the Declaration, which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, the
Business Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Trust to issue the Preferred Securities,
which represent preferred undivided beneficial interests in the assets of the
Trust, and the Common Securities, which represent common undivided beneficial
interests in the assets of the Trust. All of the Common Securities will be
owned, directly or indirectly, by Holdings. The Common Securities and the
Preferred Securities will have equivalent terms except that (i) if an Event of
Default under the Declaration occurs and is continuing, the rights of the
holders of the Common Securities to payment in respect of periodic distributions
and payments upon liquidation, redemption or otherwise are subordinated to the
rights of the holders of the Preferred Securities and (ii) holders of Common
Securities have the exclusive right (subject to the terms of the Declaration) to
appoint, remove or replace Trustees (other than a Special Regular Trustee) and
to increase or decrease the number of Trustees, subject to the right of holders
of Preferred Securities to appoint a Special Regular Trustee upon the occurrence
of an Appointment Event. The Declaration does not permit the issuance by the
Trust of any securities or other evidences of beneficial ownership of, or
beneficial interests in, the Trust other than the Preferred Securities and the
Common Securities, the incurrence of any indebtedness for borrowed money by the
Trust or the making of any investment other than in the Junior Subordinated
Debentures. The payment of distributions out of moneys held by the Trust and
payments on redemption of the Preferred Securities or liquidation of the Trust
are guaranteed by Holdings on a subordinated basis as and to the extent
described under "Description of the Preferred Securities Guarantee". The
Institutional Trustee will hold the Preferred Securities Guarantee for the
benefit of holders of the Preferred Securities. The Preferred Securities
Guarantee is a full and unconditional guarantee from the time of issuance of the
Preferred Securities, but the Preferred Securities Guarantee covers
distributions and other payments on the Preferred Securities only if and to the
extent that Holdings has made a payment to the Institutional Trustee of interest
or principal on the Junior Subordinated Debentures deposited in the Trust as
trust assets.
The Declaration does not contain provisions which would afford the holders
of the Preferred Securities protection in the event of a decline in Holdings'
credit quality resulting from a change of control transaction, a highly
leveraged transaction or other similar transactions involving Holdings.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of % of the stated liquidation amount of $25 per
Preferred Security (to the extent permitted by law), compounded quarterly. The
term "distributions" as used herein includes any such cash distributions and any
such interest payable unless otherwise stated. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and for any period shorter than a full quarterly period for which
distributions are
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<PAGE>
computed, the amount of the distribution payable will be computed on the basis
of the actual number of days elapsed in such a 30-day month.
Distributions on the Preferred Securities will be cumulative, will accrue
from the first day following the Accrual Date and, except as otherwise described
below, will be payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing on September 30, 1995, but only if, and
to the extent that, interest payments are made in respect of Junior Subordinated
Debentures held by the Trust. In addition, holders of Preferred Securities will
be entitled to an additional cash distribution at the rate of 9.25% per annum of
the liquidation amount thereof from June 1, 1995 through the Expiration Date in
lieu of dividends accumulating after June 1, 1995 on their Depositary Shares
accepted for exchange, such additional distribution to be made on September 30,
1995 to holders of the Preferred Securities on the record date for such
distribution.
So long as Holdings shall not be in default in the payment of interest on
the Junior Subordinated Debentures, Holdings has the right under the Indenture
to defer payments of interest on the Junior Subordinated Debentures by extending
the interest payment period from time to time on the Junior Subordinated
Debentures for a period not exceeding 20 consecutive quarterly interest periods
and, as a consequence, quarterly distributions on the Preferred Securities would
not be made (but would continue to accrue with interest thereon at the rate of
% per annum, compounded quarterly, to the extent permitted by applicable
law) by the Trust during any such Extension Period. If Holdings exercises the
right to extend an interest payment period, Holdings may not declare or pay
dividends on, or redeem, purchase, acquire or make a distribution or liquidation
payment with respect to, any of its common stock or preferred stock during such
Extension Period; provided that Holdings will be permitted to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion, other
than at the option of Holdings, of any of its preferred stock, including its
Series C Conversion Preferred Stock and ESOP Convertible Preferred Stock, in
accordance with the terms of such stock. Prior to the termination of any such
Extension Period, Holdings may further extend such Extension Period; provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarterly interest periods.
Upon the termination of any Extension Period and the payment of all amounts then
due, Holdings may commence a new Extension Period, subject to the above
requirements. Holdings may also prepay at any time all or any portion of the
interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to nine Extension Periods of
20 consecutive quarterly interest periods each or more numerous shorter
Extension Periods) throughout the term of the Junior Subordinated Debentures,
provided that no Extension Period may extend beyond the maturity of the Junior
Subordinated Debentures. See "Risk Factors"; "Description of the Junior
Subordinated Debentures--Interest" and "--Option to Extend Interest Payment
Period". Payments of accrued distributions will be payable to holders of
Preferred Securities as they appear on the books and records of the Trust on the
first record date after the end of an Extension Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Institutional Trustee has cash on hand to permit such
payment. The funds available for distribution to the holders of the Preferred
Securities will be limited to payments received by the Trust in respect of the
Junior Subordinated Debentures that are deposited in the Trust as trust assets.
See "Description of the Junior Subordinated Debentures". If Holdings does not
make interest payments on the Junior Subordinated Debentures, the Trust will not
make distributions on the Preferred Securities. Under the Declaration, if and to
the extent Holdings does make interest payments on the Junior Subordinated
Debentures deposited in the Trust as trust assets, the Trust is obligated to
make distributions on the Trust Securities on a Pro Rata Basis. The payment of
distributions on the Preferred Securities is guaranteed by Holdings on a
subordinated basis as and to the extent set forth under "Description of the
Preferred Securities Guarantee". The Preferred Securities Guarantee is a full
and unconditional guarantee from the time of issuance of the Preferred
Securities but the Preferred Securities Guarantee covers distributions and other
payments on the Preferred Securities only if and to the extent that
47
<PAGE>
Holdings has made a payment to the Trust of interest or principal on the Junior
Subordinated Debentures deposited in the Trust as trust assets. As used in this
Prospectus the term "Pro Rata Basis" shall mean pro rata to each holder of Trust
Securities according to the aggregate liquidation amount of the Trust Securities
held by the relevant holder in relation to the aggregate liquidation amount of
all Trust Securities outstanding unless, in relation to a payment, an Event of
Default under the Declaration has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
the Preferred Securities held by the relevant holder in relation to the
aggregate liquidation amount of all the Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the holders of the Preferred
Securities, to each holder of Common Securities pro rata according to the
aggregate liquidation amount of the Common Securities held by the relevant
holder in relation to the aggregate liquidation amount of all the Common
Securities outstanding. The liquidation amount of each Common Security is $25
per share.
Distributions on the Preferred Securities will be made to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which will be the Business Day immediately prior to the relevant
distribution dates. The Declaration provides that the payment dates or record
dates for the Preferred Securities shall be the same as the payment dates and
record dates for the Junior Subordinated Debentures. Distributions payable on
any Preferred Securities that are not punctually paid on any distribution date
as a result of Holdings having failed to make the corresponding interest payment
on the Junior Subordinated Debentures will forthwith cease to be payable to the
person in whose name such Preferred Security is registered on the relevant
record date, and such defaulted distribution will instead be payable to the
person in whose name such Preferred Security is registered on the special record
date established by the Regular Trustees, which record date shall correspond to
the special record date or other specified date determined in accordance with
the Indenture; provided, however, that distributions shall not be considered
payable on any distribution payment date falling within an Extension Period
unless Holdings has elected to make a full or partial payment of interest
accrued on the Junior Subordinated Debentures on such distribution payment date.
Distributions on the Preferred Securities will be paid by the Trust. All
distributions paid with respect to the Trust Securities shall be paid on a Pro
Rata Basis to the holders thereof entitled thereto. If any date on which
distributions are to be made on the Preferred Securities is not a Business Day,
then payment of the distribution to be made on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Tax Event or an Investment Company Event (each as
hereinafter defined, and each a "Special Event") shall occur and be continuing,
the Trust shall, unless the Junior Subordinated Debentures are redeemed in the
limited circumstances described below, be dissolved with the result that, after
satisfaction of creditors of the Trust, Junior Subordinated Debentures with an
aggregate principal amount equal to the aggregate stated liquidation amount of
the Preferred Securities and the Common Securities would be distributed on a Pro
Rata Basis to the holders of the Preferred Securities and the Common Securities
in liquidation of such holders' interests in the Trust, within 90 days following
the occurrence of such Special Event; provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such dissolution and distribution,
the Regular Trustees shall have received an opinion of nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on any then applicable published revenue
rulings of the Internal Revenue Service, to the effect that the holders of the
Preferred Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of such dissolution and distribution of
Junior Subordinated Debentures; and, provided, further, that, if at the time
there is
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available to the Trust the opportunity to eliminate, within such 90-day period,
the Special Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure, which has
no adverse effect on the Trust or Holdings or the holders of the Preferred
Securities, the Trust will pursue such measure in lieu of dissolution.
Furthermore, if in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that Holdings would be
precluded from deducting the interest on the Junior Subordinated Debentures for
United States federal income tax purposes even if the Junior Subordinated
Debentures were distributed to the holders of Preferred Securities and Common
Securities in liquidation of such holders' interests in the Trust as described
above or (ii) the Regular Trustees shall have been informed by such tax counsel
that a No Recognition Opinion cannot be delivered to the Trust, Holdings shall
have the right, upon not less than 30 nor more than 60 days' notice, to redeem
the Junior Subordinated Debentures in whole or in part for cash within 90 days
following the occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debentures so redeemed will be redeemed by the Trust at the
Redemption Price on a Pro Rata Basis; provided, however, that if at the time
there is available to Holdings or the Regular Trustees the opportunity to
eliminate, within such 90-day period, the Tax Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure, which has no adverse effect on the Trust, Holdings
or the holders of the Preferred Securities, Holdings will pursue such measure in
lieu of redemption and provided further that Holdings shall have no right to
redeem the Junior Subordinated Debentures while the Regular Trustees on behalf
of the Trust are pursuing any such ministerial action. The Common Securities
will be redeemed on a Pro Rata Basis with the Preferred Securities, except that
if an Event of Default under the Declaration has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities with
respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an opinion
of nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after the Expiration Date as
a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or (d)
any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after the Expiration Date, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to income
accrued or received on the Junior Subordinated Debentures, (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of other taxes, duties or other governmental charges or (iii) interest
payable by Holdings to the Trust on the Junior Subordinated Debentures is not,
or within 90 days of the date thereof will not be, deductible by Holdings for
United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act of 1940, as amended (the "1940 Act"),
that as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required
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to be registered under the 1940 Act, which Change in 1940 Act Law becomes
effective on or after the Expiration Date.
On the date fixed for any distribution of Junior Subordinated Debentures,
upon dissolution of the Trust, (i) the Preferred Securities and the Common
Securities will no longer be deemed to be outstanding and (ii) certificates
representing Preferred Securities will be deemed to represent Junior
Subordinated Debentures having an aggregate principal amount equal to the stated
liquidation amount of, and bearing accrued and unpaid interest equal to accrued
and unpaid distributions on, such Preferred Securities until such certificates
are presented to Holdings or its agent for transfer or reissuance.
There can be no assurance as to the market price for the Junior Subordinated
Debentures which may be distributed in exchange for Preferred Securities if a
dissolution and liquidation of the Trust were to occur. Accordingly, the Junior
Subordinated Debentures which the investor may subsequently receive on
dissolution and liquidation of the Trust may trade at a discount to the price of
the Preferred Securities exchanged. If the Junior Subordinated Debentures are
distributed to the holders of Preferred Securities upon the dissolution of the
Trust, Holdings will use its best efforts to list the Junior Subordinated
Debentures on the NYSE or on such other exchange on which the Preferred
Securities are then listed.
MANDATORY REDEMPTION
Upon the repayment of the Junior Subordinated Debentures, whether at
maturity, upon redemption or otherwise, the proceeds from such repayment or
payment will be promptly applied to redeem Preferred Securities and Common
Securities having an aggregate liquidation amount equal to the Junior
Subordinated Debentures so repaid, upon not less than 30 nor more than 60 days'
notice, at the Redemption Price. The Common Securities will be entitled to be
redeemed on a Pro Rata Basis with the Preferred Securities, except that if an
Event of Default under the Declaration has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities with
respect to payment of the Redemption Price. Subject to the foregoing, if fewer
than all outstanding Preferred Securities and Common Securities are to be
redeemed, the Preferred Securities and Common Securities will be redeemed on a
Pro Rata Basis. In the event fewer than all outstanding Preferred Securities are
to be redeemed, Preferred Securities registered in the name of and held by a
Depository Institution or its nominee will be redeemed pro rata as described
under "--Book-Entry-Only; Delivery and Form" below.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all the outstanding Preferred Securities
unless all accrued and unpaid distributions have been paid on all Preferred
Securities for all quarterly distribution periods terminating on or prior to the
date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable), then immediately prior to the close of
business on the redemption date, provided that Holdings has paid to the Trust a
sufficient amount of cash in connection with the related redemption or maturity
of the Junior Subordinated Debentures, distributions will cease to accrue on the
Preferred Securities called for redemption, such Preferred Securities shall no
longer be deemed to be outstanding and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but without
interest on such Redemption Price. Neither the Trustees nor the Trust shall be
required to register or cause to be registered the transfer of any Preferred
Securities which have been so called for redemption. If any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the
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next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date fixed for redemption. If Holdings fails to repay Junior Subordinated
Debentures on maturity or on the date fixed for this redemption or if payment of
the Redemption Price in respect of Preferred Securities is improperly withheld
or refused and not paid by the Trust or by Holdings pursuant to the Preferred
Securities Guarantee described under "Description of the Preferred Securities
Guarantee", distributions on such Preferred Securities will continue to accrue
from the original redemption date of the Preferred Securities to the date of
payment with interest compounded quarterly to the extent permitted by applicable
law, in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
If a partial redemption of the Preferred Securities would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed, Holdings
pursuant to the Indenture will only redeem the Junior Subordinated Debentures in
whole and, as a result, the Trust may only redeem the Preferred Securities in
whole.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), Holdings or any of its subsidiaries may
at any time and from time to time purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, liquidation,
winding-up or termination of the Trust, the holders of the Preferred Securities
and Common Securities at the date of dissolution, winding-up or termination of
the Trust will be entitled to receive on a Pro Rata Basis solely out of the
assets of the Trust, after satisfaction of liabilities of creditors (to the
extent not satisfied by Holdings as provided in the Declaration), an amount
equal to the aggregate of the stated liquidation amount of $25 per Trust
Security plus accrued and unpaid distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, liquidation, winding-up or termination, Junior Subordinated
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Trust Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid distributions on such
Trust Securities, shall be distributed on a Pro Rata Basis to the holders of the
Preferred Securities and Common Securities in exchange therefor.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and the Common Securities shall be paid on a
Pro Rata Basis. The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution on a Pro Rata Basis with the holders of
the Preferred Securities, except that if an Event of Default under the
Declaration has occurred and is continuing, the Preferred Securities shall have
a priority over the Common Securities with respect to payment of the Liquidation
Distribution.
Pursuant to the Declaration, the Trust shall terminate: (i) on December 31,
2044, (ii) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been paid
to the holders of Trust Securities in accordance with the terms of the Trust
Securities, or (iii) when all of the Junior Subordinated Debentures shall have
been distributed to the holders of Trust Securities in exchange for all of the
Trust Securities in accordance with the terms of the Trust Securities.
NO MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets to, any
corporation or other entity.
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DECLARATION EVENTS OF DEFAULT
An Indenture Event of Default will constitute an Event of Default under the
Declaration; provided that pursuant to the Declaration, the holder of the Common
Securities will be deemed to have waived any such Event of Default with respect
to the Common Securities until all Events of Default with respect to the
Preferred Securities have been cured or waived. Until all such Events of Default
with respect to the Preferred Securities have been cured or waived, the
Institutional Trustee will be deemed to be acting solely on behalf of the
holders of the Preferred Securities, and only the holders of the Preferred
Securities will have the right to direct the Institutional Trustee with respect
to certain matters under the Declaration and consequently under the Indenture.
In the event that any Event of Default with respect to the Preferred Securities
is waived by the holders of the Preferred Securities as provided in the
Declaration, the holders of Common Securities pursuant to the Declaration have
agreed that such waiver also constitutes a waiver of such Event of Default with
respect to the Common Securities for all purposes under the Declaration without
any further act, vote or consent of the holders of the Common Securities. See
"--Voting Rights".
Upon the occurrence of an Event of Default, the Institutional Trustee will
have the right under the Indenture to declare the principal of and interest on
the Junior Subordinated Debentures to be immediately due and payable. In
addition, the Institutional Trustee will have the power to exercise all rights,
powers and privileges under the Indenture. See "Description of the Junior
Subordinated Debentures".
VOTING RIGHTS
Except as provided below, under "--Modification and Amendment of the
Declaration" and "Description of the Preferred Securities Guarantee--Amendments
and Assignment" and as otherwise required by the Business Trust Act, the Trust
Indenture Act and the Declaration, the holders of the Preferred Securities will
have no voting rights.
If (i) the Trust fails to make distributions in full on the Preferred
Securities for six consecutive regularly scheduled quarterly distribution
periods; or (ii) an Appointment Event occurs and is continuing then the holders
of the Preferred Securities, acting as a single class, will be entitled, by the
vote of holders of Preferred Securities representing a majority in aggregate
liquidation amount of the outstanding Preferred Securities, to appoint a Special
Regular Trustee (who need not be an officer or an employee of or otherwise
affiliated with Holdings) who shall have the same rights, powers and privileges
under the Declaration as a Regular Trustee. Any holder of Preferred Securities
(other than Holdings or any of its affiliates) shall have the right to nominate
any person to be appointed as Special Regular Trustee. For purposes of
determining whether the Trust has failed to pay distributions in full for six
consecutive regularly scheduled quarterly distribution periods, distributions
shall be deemed to remain in arrears, notwithstanding any payments in respect
thereof, until full cumulative distributions have been or contemporaneously are
paid with respect to all quarterly distribution periods terminating on or prior
to the date of payment of such cumulative distributions. Not later than 30 days
after such right to appoint a Special Regular Trustee arises, the Regular
Trustees will convene a meeting for the purpose of appointing a Special Regular
Trustee. If the Regular Trustees fail to convene such meeting within such 30-day
period, the holders of Preferred Securities representing 10% in liquidation
amount of the outstanding Preferred Securities will be entitled to convene such
meeting. The provisions of the Declaration relating to the convening and conduct
of the meetings of the holders will apply with respect to any such meeting. If,
at any such meeting, holders of less than a majority in aggregate liquidation
amount of Preferred Securities entitled to vote for the appointment of a Special
Regular Trustee vote for such appointment, no Special Regular Trustee shall be
appointed. Any Special Regular Trustee may be removed without cause at any time
by holders of Preferred Securities representing a majority in liquidation amount
of the Preferred Securities and holders of Preferred Securities representing 10%
in liquidation amount of the Preferred Securities shall be entitled to convene a
meeting for such purpose. Any Special Regular Trustee appointed shall cease to
be a Special Regular Trustee if the Appointment
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Event pursuant to which the Special Regular Trustee was appointed and all other
Appointment Events have been cured and cease to be continuing. Notwithstanding
the appointment of any such Special Regular Trustee, Holdings shall retain all
rights under the Indenture, including the right to extend the interest payment
period as provided under "Description of the Junior Subordinated Debentures--
Option to Extend Interest Payment Period". If such an extension occurs, there
will be no Indenture Event of Default for failure to make any scheduled interest
payment during the Extension Period on the date originally scheduled.
Subject to the requirements of the second to last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right (i) on behalf of all holders of Trust
Securities, to waive any past default that is waivable under the Declaration and
(ii) to direct the time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration; provided,
however, that the holders of the Preferred Securities will vote as a single
class with any holders of any other undivided interests, such as the Preferred
Securities, similarly situated with respect to the Junior Subordinated
Debentures, or any other debt securities issued pursuant to the Indenture with
respect to the right to direct the Institutional Trustee, to (x) direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee or exercising any trust or power conferred on the
Indenture Trustee with respect to the Junior Subordinated Debentures, (y) waive
any past default that is waivable under Section 5.1 of the Indenture with
respect to the Junior Subordinated Debentures or (z) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable; provided that where a consent under the
Indenture would require the consent of (1) holders of Junior Subordinated
Debentures representing a specified percentage greater than a majority in
principal amount of the Junior Subordinated Debentures or (2) each holder of
Junior Subordinated Debentures affected thereby, no such consent shall be given
by the Institutional Trustee without the prior consent of, in the case of clause
(1) above, holders of Preferred Securities representing such specified
percentage of the aggregate liquidation amount of the Preferred Securities or,
in the case of clause (2) above, each holder of all Preferred Securities
affected thereby, together, in each case, if applicable with the holders of any
other undivided interests. The Institutional Trustee shall not revoke any action
previously authorized or approved by a vote of the holders of Preferred
Securities. The Institutional Trustee shall notify all holders of record of
Preferred Securities of any notice of default received from the Indenture
Trustee with respect to the Junior Subordinated Debentures. Other than with
respect to directing the time, method and place of conducting any proceeding for
any remedy available to the Institutional Trustee or the Indenture Trustee as
set forth above, the Institutional Trustee shall be under no obligation to take
any of the foregoing actions at the direction of the holders of the Preferred
Securities unless the Institutional Trustee shall have obtained an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust for
United States federal income tax purposes following such action. If the
Institutional Trustee fails to enforce its rights under the Declaration, any
holder of Preferred Securities may, after a period of 90 days has elapsed from
such holder's written request to the Institutional Trustee to enforce such
rights, institute a legal proceeding directly against Holdings to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
A waiver of an Indenture Event of Default by the Institutional Trustee at
the direction of holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the Trust
Securities.
In the event the consent of the Trust as the holder of the Junior
Subordinated Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, the Institutional Trustee shall request the direction
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of the holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the Trust Securities voting together as a single class together with the holders
of any other undivided interests, similarly situated, provided, however, that
where any such amendment, modification or termination under the Indenture would
require the consent of holders of Junior Subordinated Debentures representing a
specified percentage greater than a majority in principal amount of the Junior
Subordinated Debentures, the Institutional Trustee may only give such consent at
the direction of the holders of Trust Securities representing such specified
percentage of the aggregate liquidation amount of the Trust Securities together
with the holders of any other undivided interests similarly situated; and,
provided, further, that the Institutional Trustee shall be under no obligation
to take any such action in accordance with the directions of the holders of the
Trust Securities unless the Institutional Trustee has obtained an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust for
United States federal income tax purposes following such action.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the holders of Preferred Securities will be required
for the Trust to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debentures in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by Holdings or by any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with Holdings shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
The procedures by which persons owning Preferred Securities registered in
the name of and held by DTC or its nominee may exercise their voting rights are
described under "--Book-Entry; Delivery and Form" below.
Subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment Event, holders of the
Preferred Securities will have no rights to increase or decrease the number of
Trustees or to appoint, remove or replace a Trustee, which rights are vested
exclusively in the holders of the Common Securities.
MODIFICATION AND AMENDMENT OF THE DECLARATION
The Declaration may be modified and amended on approval of a majority of the
Regular Trustees, provided that, (i) if any proposed modification or amendment
provides for, or the Regular Trustees otherwise propose to effect, (A) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise, or (B) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the
outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval
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of at least a majority in liquidation amount of the Trust Securities, provided
that if any amendment or proposal referred to in clause (i) above would
adversely affect only the Preferred Securities or the Common Securities, then
only the affected class will be entitled to vote on such amendment or proposal
and such amendment or proposal shall not be effective except with the approval
of a majority in liquidation amount of such class of Securities.
Notwithstanding the foregoing, (i) no amendment or modification may be made
to the Declaration unless the Regular Trustees shall have obtained (A) either a
ruling from the Internal Revenue Service or a written unqualified opinion of
nationally recognized independent tax counsel experienced in such matters to the
effect that such amendment will not cause the Trust to be classified for United
States federal income tax purposes as an association taxable as a corporation or
a partnership and to the effect that the Trust will continue to be treated as a
grantor trust for purposes of United States federal income taxation and (B) a
written unqualified opinion of nationally recognized independent counsel
experienced in such matters to the effect that such amendment will not cause the
Trust to be an "investment company" which is required to be registered under the
1940 Act; (ii) certain specified provisions of the Declaration may not be
amended without the consent of all of the holders of the Trust Securities, (iii)
no amendment which adversely affects the rights, powers and privileges of the
Institutional Trustee shall be made without the consent of the Institutional
Trustee, (iv) Article IV of the Declaration relating to the obligation of
Holdings to purchase the Common Securities and to pay certain obligations and
expenses of the Trust as described under "RJR Nabisco Holdings Capital Trust I"
may not be amended without the consent of Holdings, (v) the rights of holders of
Common Securities under Article V of the Declaration to increase or decrease the
number of, and to appoint, replace or remove, Trustees (other than a Special
Regular Trustee) shall not be amended without the consent of each holder of
Common Securities and (vi) the rights of holders of Preferred Securities under
the Declaration to appoint or remove a Special Regular Trustee shall not be
amended without the consent of each holder of Preferred Securities.
The Declaration further provides that it may be amended without the consent
of the holders of the Trust Securities to (i) cure any ambiguity, (ii) correct
or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration, (iii) to add to the
covenants, restrictions or obligations of Holdings, and (iv) to conform to
changes in, or a change in interpretation or application of certain 1940 Act
requirements by the Commission, which amendment does not adversely affect the
rights, preferences or privileges of the holders.
BOOK-ENTRY; DELIVERY AND FORM
Preferred Securities will be issued in fully registered form. Investors may
elect to hold their Preferred Securities directly or, subject to the rules and
procedures of a Depository Institution described below, hold interests in a
global certificate (the "Preferred Securities Global Certificate") registered in
the name of a Depository Institution or its nominee. However, tendering holders
of Depositary Shares held in global form shall initially receive an interest in
the Preferred Securities Global Certificate and tendering holders of Depositary
Shares held directly in certificated form shall initially receive Preferred
Securities in certificated form, in each case unless otherwise specified in the
Letter of Transmittal. See "The Offer--Procedures for Tendering".
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
A Depository Institution holds securities that its participants
("Participants") deposit with the Depository Institution. A Depository
Institution also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust
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companies, clearing corporations, and certain other organizations ("Direct
Participants"). A Depository Institution is owned by a number of its Direct
Participants and by the NYSE, the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the Depository
Institution's system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to a Depository Institution and its
Participants are on file with the Commission.
Upon issuance of a Preferred Securities Global Certificate, the Depository
Institution will credit on its book-entry registration and transfer system the
number of Preferred Securities represented by such Preferred Securities Global
Certificate to the accounts of institutions that have accounts with the
Depository Institution. Ownership of beneficial interests in a Preferred
Securities Global Certificate will be limited to Participants or persons that
may hold interests through Participants. The ownership interest of each actual
purchaser of each Preferred Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from the Depository Institution of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the Beneficial
Owners purchased Preferred Securities. Transfers of ownership interests in the
Preferred Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners.
A Depository Institution has no knowledge of the actual Beneficial Owners of
the Preferred Securities; a Depository Institution's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
are credited, which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of their
customers. So long as a Depository Institution, or its nominee, is the owner of
a Preferred Securities Global Certificate, a Depository Institution or such
nominee, as the case may be, will be considered the sole owner and holder of
record of the Preferred Securities represented by such Preferred Securities
Global Certificate for all purposes.
Conveyance of notices and other communications by a Depository Institution
to Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to the Depository Institution. If less than
all of the Preferred Securities are being redeemed, the Depository Institution
will reduce pro rata (subject to adjustment to eliminate fractional Preferred
Securities) the amount of interest of each Direct Participant in the Preferred
Securities to be redeemed.
Although voting with respect to the Preferred Securities is limited, in
those instances in which a vote is required, neither the Depository Institution
nor the Depository Institution itself will consent or vote with respect to
Preferred Securities. Under its usual procedures, the Depository Institution
would mail an Omnibus Proxy to the Trust as soon as possible after the record
date. The Omnibus Proxy assigns the Depository Institution's consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Distribution payments on the Preferred Securities represented by a Preferred
Series Global Certificate will be made by the Trust to the Depository
Institution. The Depository Institution's practice is to credit Direct
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on a Depository Institution's records unless the
Depository Institution has reason to believe that it will not receive payments
on such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participants and not of a Depository Institution, the
Trust or Holdings, subject to
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any statutory or regulatory requirements as may be in effect from time to time.
Payment of distributions to a Depository Institution is the responsibility of
the Trust, disbursement of such payments to Direct Participants is the
responsibility of the Depository Institution, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
A Depository Institution may discontinue providing its services as
securities depository with respect to the Preferred Securities at any time by
giving reasonable notice to the Trust. Under such circumstances, if a successor
securities depository is not obtained, Preferred Security certificates will be
required to be printed and delivered. Additionally, the Trust may decide to
discontinue use of the system of book-entry transfers through the Depository
Institution (or a successor depository). In that event, certificates for the
Preferred Securities will be printed and delivered.
The information in this section concerning the Depository Institution and
the Depository Institution's book-entry system has been obtained from sources
that the Trust and Holdings believe to be reliable, but the Trust and Holdings
take no responsibility for the accuracy thereof.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payment of distributions and payments on redemption of the Preferred
Securities will be payable, the transfer of the Preferred Securities will be
registrable, and Preferred Securities will be exchangeable for Preferred
Securities of other denominations of a like aggregate liquidation amount, at the
principal corporate trust office of the Institutional Trustee in The City of New
York; provided that payment of distributions may be made at the option of the
Regular Trustees on behalf of the Trust by check mailed to the address of the
persons entitled thereto and payment on redemption of any Preferred Security
will be made only upon surrender of such Preferred Security to the Institutional
Trustee.
First Chicago Trust Company of New York or one of its affiliates will act as
registrar and transfer agent for the Preferred Securities. First Chicago Trust
Company of New York will also act as paying agent and, with the consent of the
Regular Trustees, may designate additional paying agents.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or Holdings may require) in respect of any tax or other
governmental charges that may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to a default with respect to the Trust
Securities, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the Institutional Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Institutional Trustee is not required to expend or risk its own
funds or otherwise incur personal financial liability in the performance of its
duties if the Institutional Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
Holdings and certain of its affiliates maintain a deposit account and
banking relationship with the Institutional Trustee.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
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MISCELLANEOUS
Application has been made to list the Preferred Securities on the NYSE. The
Regular Trustees are authorized and directed to take such action as they deem
reasonable in order that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act or that the Trust will not
be classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership and will be treated as a grantor trust
for United States federal income tax purposes. In this connection, the Regular
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust or the Declaration, that the Regular Trustees
determine in their discretion to be reasonable and necessary or desirable for
such purposes, as long as such action does not adversely affect the interests of
holders of the Trust Securities.
Holdings and the Regular Trustees on behalf of the Trust will be required to
provide to the Institutional Trustee annually a certificate as to whether or not
Holdings and the Trust, respectively, are in compliance with all the conditions
and covenants under the Declaration.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by Holdings for the
benefit of the holders from time to time of Preferred Securities. The Preferred
Securities Guarantee is separately qualified under the Trust Indenture Act and
will be held by The Bank of New York, acting in its capacity as indenture
trustee with respect thereto, for the benefit of the holders of the Preferred
Securities. The terms of the Preferred Securities Guarantee include those stated
in such Guarantee and those made part of the Preferred Securities Guarantee by
the Trust Indenture Act. The description of the Preferred Securities Guarantee
set forth below summarizes the material terms thereof and is subject in all
respects to the provisions of, and is qualified in its entirety by reference to,
the Preferred Securities Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act.
GENERAL
Pursuant to the Preferred Securities Guarantee, Holdings will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full, to
the holders of the Preferred Securities, the Guarantee Payments (as defined
below) (without duplication of amounts theretofore paid by the Trust), to the
extent not paid by the Trust, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The following payments or
distributions with respect to the Preferred Securities to the extent not paid or
made by the Trust (the "Guarantee Payments") will be subject to the Guarantee
(without duplication): (i) any accrued and unpaid distributions on the Preferred
Securities and the redemption price, including all accrued and unpaid
distributions to the date of the redemption, with respect to the Preferred
Securities called for redemption by the Trust but only if and to the extent that
in each case Holdings has made a payment to the Institutional Trustee of
interest or principal on the Junior Subordinated Debentures and (ii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated
Debentures to holders of Preferred Securities or the redemption of all of the
Preferred Securities upon the maturity or redemption of the Junior Subordinated
Debentures) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds available therefor, and (b) the
amount of assets of the Trust remaining available for distribution to holders of
Preferred Securities in liquidation of the Trust. Holdings' obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
Holdings to the holders of Preferred Securities or by paying the required amount
to the Trust and causing the Trust to pay such amounts to such holders.
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CERTAIN COVENANTS OF HOLDINGS
In the Preferred Securities Guarantee, Holdings will covenant that, so long
as the Preferred Securities remain outstanding, Holdings will not declare or pay
any dividends on, or redeem, purchase, acquire or make a distribution or
liquidation payment with respect to, any of its common stock or preferred stock
or make any guarantee payment with respect thereto if at such time (i) Holdings
shall be in default with respect to its Guarantee Payments or other payment
obligations under the Preferred Securities Guarantee, (ii) there shall have
occurred any Event of Default under the Declaration or (iii) Holdings shall have
given notice of its selection of an Extension Period as provided in the
Indenture and such period, or any extension thereof, is continuing; provided
that Holdings will be permitted to pay accrued dividends (and cash in lieu of
fractional shares) upon the conversion, other than at the option of Holdings, of
any of its preferred stock, including its Series C Conversion Preferred Stock
and ESOP Convertible Preferred Stock, in accordance with the terms of such
stock. In addition, so long as the Preferred Securities remain outstanding,
Holdings has agreed (i) to remain the sole direct or indirect owner of all of
the outstanding Common Securities and shall not cause or permit the Common
Securities to be transferred except to the extent permitted by the Declaration;
provided that any permitted successor of Holdings under the Indenture may
succeed to Holdings' ownership of the Common Securities and (ii) to use
reasonable efforts to cause the Trust to continue to be treated as a grantor
trust for United States federal income tax purposes except in connection with a
distribution of Junior Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no consent will be required),
the Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities. The manner of obtaining any such approval of
holders of the Preferred Securities will be as set forth under "Description of
the Preferred Securities--Voting Rights". All guarantees and agreements
contained in the Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of Holdings and shall inure to
the benefit of the holders of the Preferred Securities then outstanding. Except
in connection with a consolidation, merger or sale involving Holdings that is
permitted under the Indenture, Holdings may not assign its obligations under the
Preferred Securities Guarantee.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will terminate and be of no further force
and effect as to the Preferred Securities upon full payment of the Redemption
Price of all Preferred Securities, or upon distribution of the Junior
Subordinated Debentures to the holders of Preferred Securities in exchange for
all of the Preferred Securities, or upon full payment of the amounts payable
upon liquidation of the Trust. Notwithstanding the foregoing, the Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of Preferred Securities must restore
payment of any sums paid with respect to the Preferred Securities or the
Preferred Securities Guarantee.
STATUS OF THE PREFERRED SECURITIES GUARANTEE
Holdings' obligations under the Preferred Securities Guarantee to make the
Guarantee Payments will constitute an unsecured obligation of Holdings and will
rank (i) subordinate and junior in right of payment to all Senior Obligations of
Holdings, except obligations and securities made pari passu or subordinate by
their terms, and to the Junior Subordinated Debentures, and (ii) senior to all
capital stock now or hereafter issued by Holdings, including the Depositary
Shares, and to any guarantee now or hereafter entered into by Holdings in
respect of any of its capital stock. Because Holdings is a holding
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company, Holdings' obligations under the Preferred Securities Guarantee are also
effectively subordinated to all existing and future liabilities, including trade
payables, of Holdings' subsidiaries, except to the extent that Holdings is a
creditor of the subsidiaries recognized as such. The Declaration provides that
each holder of Preferred Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Preferred Securities Guarantee.
The Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity). The Preferred Securities Guarantee will be deposited with the
Institutional Trustee, as indenture trustee, to be held for the benefit of the
holders of the Preferred Securities. The Institutional Trustee shall enforce the
Preferred Securities Guarantee on behalf of the holders of the Preferred
Securities. The holders of not less than a majority in aggregate liquidation
amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available in respect of the
Preferred Securities Guarantee, including the giving of directions to the
Institutional Trustee. If the Institutional Trustee fails to enforce the
Preferred Securities Guarantee as above provided, any holder of Preferred
Securities may, after a period of 90 days has elapsed from such holder's written
request to the Institutional Trustee to enforce the Preferred Securities
Guarantee, institute a legal proceeding directly against Holdings to enforce its
rights under the Preferred Securities Guarantee, without first instituting a
legal proceeding against the Trust or any other person or entity.
GOVERNING LAW
The Preferred Securities Guarantee will be governed by and construed in
accordance with the laws of the State of New York.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the Junior Subordinated Debentures which
will be deposited in the Trust as trust assets. The terms of the Junior
Subordinated Debentures include those stated in the Indenture dated ,
1995 between Holdings and the Indenture Trustee, as supplemented by the First
Supplemental Indenture dated , 1995 between Holdings and the
Indenture Trustee (as so supplemented, the "Indenture"), forms of which have
been filed as exhibits to the Registration Statement of which this Prospectus
forms a part, and those made part of the Indenture by the Trust Indenture Act.
The following description summarizes the material terms of the Indenture and is
qualified in its entirety by reference to the Indenture and the Trust Indenture
Act. Whenever particular provisions or defined terms in the Indenture are
referred to herein, such provisions or defined terms are incorporated by
reference herein. Section and Article references used herein are references to
provisions of the Indenture.
The Indenture provides for the issuance of debentures, notes (including the
Junior Subordinated Debentures) or other evidences of indebtedness by Holdings
("Securities") in an unlimited amount from time to time. The Junior Subordinated
Debentures constitute a separate series under the Indenture.
Under certain circumstances involving the dissolution of the Trust following
the occurrence of a Special Event, Junior Subordinated Debentures may be
distributed to the holders of the Trust Securities in liquidation of the Trust.
See "Description of the Preferred Securities--Special Event Redemption or
Distribution".
GENERAL
The Junior Subordinated Debentures are unsecured, subordinated obligations
of Holdings, limited in aggregate principal amount to (i) the aggregate
liquidation preference of the Preferred Securities issued by the Trust in the
Offer and (ii) the proceeds received by the Trust upon issuance of the Common
Securities to Holdings (which proceeds will be used to purchase an equal
principal amount of Junior Subordinated Debentures).
The entire principal amount of the Junior Subordinated Debentures will
become due and payable, together with any accrued and unpaid interest thereon,
on December 31, 2044. The Junior Subordinated Debentures are not subject to any
sinking fund.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in dissolution of the Trust, such Junior Subordinated Debentures will
be so issued in fully registered certificated form in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the offices
described below.
Payments of principal and interest on Junior Subordinated Debentures will be
payable, the transfer of the Junior Subordinated Debentures will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other denominations of a like aggregate principal amount, at the
corporate trust office of the Indenture Trustee in The City of New York;
provided that payments of interest may be made at the option of Holdings by
check mailed to the address of the persons entitled thereto and that the payment
of principal with respect to any Junior Subordinated Debenture will be made only
upon surrender of such Junior Subordinated Debenture to the Indenture Trustee.
If the Junior Subordinated Debentures are distributed to the holders of
Preferred Securities upon the dissolution of the Trust, Holdings will use its
best efforts to list the Junior Subordinated Debentures on the NYSE or on such
other exchange on which the Preferred Securities are then listed.
The Indenture does not contain provisions which would afford the holders of
the Junior Subordinated Debentures protection in the event of a decline in
Holdings' credit quality resulting from a change of control transaction, a
highly leveraged transaction or other similar transactions involving Holdings.
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OPTIONAL REDEMPTION
Except as provided below, the Junior Subordinated Debentures may not be
redeemed prior to August 19, 1998. Holdings shall have the right to redeem the
Junior Subordinated Debentures, in whole or in part, from time to time, on or
after August 19, 1998, upon not less than 30 nor more than 60 days' notice, at a
redemption price equal to 100% of the principal amount to be redeemed, plus any
accrued and unpaid interest, to the redemption date, including interest accrued
during an Extension Period. Holdings will also have the right to redeem the
Junior Subordinated Debentures at any time upon the occurrence of a Tax Event if
certain conditions are met as described under "Description of the Preferred
Securities--Special Event Redemption or Distribution".
If Holdings gives a notice of redemption in respect of Junior Subordinated
Debentures (which notice will be irrevocable) then, by 12:00 noon, New York City
time, on the redemption date, Holdings will deposit irrevocably with the
Indenture Trustee funds sufficient to pay the applicable redemption price and
will give irrevocable instructions and authority to pay such redemption price to
the holders of the Junior Subordinated Debentures. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit, interest will cease to accrue on the Junior Subordinated Debentures
called for redemption, such Junior Subordinated Debentures will no longer be
deemed to be outstanding and all rights of holders of such Junior Subordinated
Debentures so called for redemption will cease, except the right of the holders
of such Junior Subordinated Debentures to receive the applicable redemption
price, but without interest on such redemption price. If any date fixed for
redemption of Junior Subordinated Debentures is not a Business Day, then payment
of the redemption price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the redemption price in respect of Junior Subordinated
Debentures is improperly withheld or refused and not paid by Holdings, interest
on such Junior Subordinated Debentures will continue to accrue compounded
quarterly, from the original redemption date to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the applicable redemption price. If fewer than all
of the Junior Subordinated Debentures are to be redeemed, the Junior
Subordinated Debentures to be redeemed shall be selected by lot or pro rata or
in some other equitable manner determined by the Indenture Trustee.
In the event of any redemption in part, Holdings shall not be required to
(i) issue, register the transfer of or exchange of any Junior Subordinated
Debentures during a period beginning at the opening of business 15 days before
any selection for redemption of Junior Subordinated Debentures and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Junior Subordinated
Debentures to be redeemed and (ii) register the transfer of or exchange of any
Junior Subordinated Debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any Junior Subordinated Debentures being
redeemed in part. (Section 2.8).
INTEREST
The Junior Subordinated Debentures will bear interest at an annual rate of
% from the Accrual Date. In addition, holders of the Junior Subordinated
Debentures will be entitled to interest ("Pre-issuance Accrued Interest") at the
rate of 9.25% per annum of the principal amount thereof from June 1, 1995
through the Expiration Date, payable on September 30, 1995 to holders of the
Preferred Securities on the record date for such distributions. Interest will be
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year (each, an "Interest Payment Date"), commencing on September 30,
1995, to the person in whose name such Junior Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. Interest payable on any
Junior Subordinated Debenture that is not
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punctually paid or duly provided for on any interest payment date will forthwith
cease to be payable to the person in whose name such Junior Subordinated
Debenture is registered on the relevant record date, and such defaulted interest
will instead be payable to the person in whose name such Junior Subordinated
Debenture is registered on the special record date or other specified date
determined in accordance with the Indenture; provided, however, that interest
shall not be considered payable by Holdings on any interest payment date falling
within an Extension Period unless Holdings has elected to make a full or partial
payment of interest accrued on the Junior Subordinated Debentures on such
interest payment date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months and for any period shorter than a full
quarterly period for which interest is computed, the amount of interest payable
will be computed on the basis of the actual number of days elapsed in such a
30-day month. If any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as Holdings shall not be in default in the payment of interest on
the Junior Subordinated Debentures, Holdings shall have the right to extend the
interest payment period from time to time for a period not exceeding 20
consecutive quarterly interest periods. Holdings has no current intention of
exercising its right to extend an interest payment period. No extension of
interest will be permitted with respect to interest accruing from June 1, 1995
through the Expiration Date. No interest shall be due and payable during an
Extension Period, except at the end thereof. During any Extension Period,
Holdings shall not declare or pay any dividends on, or redeem, purchase, acquire
or make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock or make any guarantee payments with respect thereto;
provided that Holdings will be permitted to pay accrued dividends (and cash in
lieu of fractional shares) upon the conversion, other than at the option of
Holdings, of any of its preferred stock, including its Series C Conversion
Preferred Stock and ESOP Convertible Preferred Stock, in accordance with the
terms of such stock. Prior to the termination of any such Extension Period,
Holdings may further extend the interest payment period; provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarterly interest periods. On the interest
payment date occurring at the end of each Extension Period, Holdings shall pay
to the holders of Junior Subordinated Debentures of record on the record date
for such interest payment date (regardless of who the holders of record may have
been on other dates during the Extension Period) all accrued and unpaid interest
on the Junior Subordinated Debentures, together with interest thereon at the
rate specified for the Junior Subordinated Debentures. Upon the termination of
any Extension Period and the payment of all amounts then due, Holdings may
commence a new Extension Period, subject to the above requirements. Holdings may
also prepay at any time all or any portion of the interest accrued during an
Extension Period. Consequently, there could be multiple Extension Periods of
varying lengths (up to nine Extension Periods of 20 consecutive quarterly
interest periods each or more numerous shorter Extension Periods) throughout the
term of the Junior Subordinated Debentures provided that no Extension Period may
extend beyond the maturity of the Junior Subordinated Debentures. The failure by
Holdings to make interest payments during an Extension Period would not
constitute a default or an event of default under the Indenture or Holdings'
currently outstanding indebtedness.
If the Trust shall be the sole holder of the Junior Subordinated Debentures,
Holdings shall give the Institutional Trustee notice of its selection of such
Extension Period one Business Day prior to the earlier of (i) the date the
distributions on the Preferred Securities are payable or (ii) the date the Trust
is required to give notice to the NYSE or other applicable self-regulatory
organization or to holders of
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the Preferred Securities of the record date or the date such distribution is
payable, but in any event not less than one Business Day prior to such record
date. The Trust shall give notice of Holdings' selection of such Extension
Period to the holders of the Preferred Securities.
If Junior Subordinated Debentures have been distributed to holders of Trust
Securities, Holdings shall give the holders of the Junior Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the next succeeding interest payment date or (ii)
the date Holdings is required to give notice to the NYSE (if the Junior
Subordinated Debentures are then listed thereon) or other applicable
self-regulatory organization or to holders of the Junior Subordinated Debentures
of the record or payment date of such related interest payment.
CERTAIN COVENANTS OF HOLDINGS APPLICABLE TO THE JUNIOR SUBORDINATED DEBENTURES
In the Indenture, Holdings will covenant that, so long as the Preferred
Securities remain outstanding, Holdings will not declare or pay any dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its common stock or preferred stock or make any
guarantee payment with respect thereto if at such time (i) Holdings shall be in
default with respect to its Guarantee Payments or other payment obligations
under the Preferred Securities Guarantee, (ii) there shall have occurred any
Indenture Event of Default with respect to the Junior Subordinated Debentures or
(iii) Holdings shall have given notice of its selection of an Extension Period
as provided in the Indenture and such period, or any extension thereof, is
continuing; provided that Holdings will be permitted to pay accrued dividends
(and cash in lieu of fractional shares) upon the conversion, other than at the
option of Holdings, of any of its preferred stock, including its Series C
Conversion Preferred Stock and ESOP Convertible Preferred Stock, in accordance
with the terms of such stock. In addition, so long as the Preferred Securities
remain outstanding, Holdings has agreed (i) to remain the sole direct or
indirect owner of all of the outstanding Common Securities and shall not cause
or permit the Common Securities to be transferred except to the extent permitted
by the Declaration; provided that any permitted successor of Holdings under the
Indenture may succeed to Holdings' ownership of the Common Securities, (ii) to
comply fully with all of its obligations and agreements contained in the
Declaration and (iii) not to take any action which would cause the Trust to
cease to be treated as a grantor trust for United States federal income tax
purposes except in connection with a distribution of Junior Subordinated
Debentures.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness of
Holdings. In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of Holdings or its property or any proceeding for voluntary liquidation,
dissolution or other winding up of Holdings, or (b) that Junior Subordinated
Debentures of any series are declared due and payable before their expressed
maturity because of the occurrence of an Event of Default under the Indenture
(under circumstances other than as set forth in clause (a) above), then the
holders of all Senior Indebtedness shall first be entitled to receive payment of
the full amount due thereon in money, before the holders of any of the
Subordinated Debentures are entitled to receive a payment on account of the
principal of, premium, if any, or interest on the indebtedness evidenced by such
Subordinated Debentures. In the event and during the continuation of any default
in payment of any Senior Indebtedness or if any event of default shall exist
under any Senior Indebtedness, as "event of default" is defined therein or in
the agreement under which the same is outstanding, no payment of the principal
of, premium, if any, or interest on the Junior Subordinated Debentures shall be
made.
The term "Senior Indebtedness" means (a) the principal of and premium, if
any, and interest on all indebtedness of Holdings, whether outstanding on the
date of the Indenture or thereafter created, (i) for money borrowed by Holdings,
(ii) for money borrowed by, or obligations of, others and either assumed or
guaranteed, directly or indirectly, by Holdings, (iii) in respect of letters of
credit and acceptances
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issued or made by banks, or (iv) constituting purchase money indebtedness, or
indebtedness secured by property included in the property, plant and equipment
accounts of Holdings at the time of the acquisition of such property by
Holdings, for the payment of which Holdings is directly liable and (b) all
deferrals, renewals, extensions and refundings of, and amendments, modifications
and supplements to, any such indebtedness. As used in the first sentence of this
paragraph the term "purchase money indebtedness" means indebtedness evidenced by
a note, debenture, bond or other instrument (whether or not secured by any lien
or other security interest) issued or assumed as all or a part of the
consideration for the acquisition of property, whether by purchase, merger,
consolidation or otherwise, unless by its terms such indebtedness is subordinate
to other indebtedness of Holdings.
The Indenture does not limit the aggregate amount of indebtedness, including
Senior Indebtedness, that may be issued. As of June 30, 1995, Holdings (on an
unconsolidated basis) had no Senior Indebtedness other than the Credit Agreement
Guarantees. Because Holdings is a holding company, the Junior Subordinated
Debentures are also effectively subordinated to all existing and future
liabilities, including trade payables, of Holdings' subsidiaries, except to the
extent that Holdings is a creditor of the subsidiaries recognized as such.
Claims on Holdings' subsidiaries by creditors other than Holdings include
liabilities incurred in the ordinary course of business. At June 30, 1995,
Holdings' subsidiaries had outstanding approximately $10.6 billion of debt, $3.0
billion of current liabilities and $6.4 billion of other liabilities (excluding
intercompany liabilities). There are no terms in the Preferred Securities, the
Junior Subordinated Debentures or the Preferred Securities Guarantee that limit
Holdings' ability to incur additional indebtedness, including indebtedness that
ranks senior to or pari passu with the Junior Subordinated Debentures and the
Preferred Securities Guarantee, or the ability of its subsidiaries to incur
additional indebtedness. See "Description of the Preferred Securities
Guarantee--Status of the Preferred Securities Guarantee".
RESTRICTIONS ON MERGERS AND SALES OF ASSETS
Nothing contained in the Indenture or in the Securities will prevent any
consolidation of Holdings with, or merger of Holdings into, any other
corporation or corporations (whether or not affiliated with Holdings), or
successive consolidations or mergers to which Holdings or its successor will be
a party, or will prevent any sale, lease or conveyance of the property of
Holdings, as an entirety or substantially as an entirety; provided that upon any
such consolidation, merger, sale, lease or conveyance to which Holdings is a
party and in which Holdings is not the surviving corporation, the due and
punctual performance and observance of all of the covenants and conditions of
the Indenture to be performed or observed by Holdings and the due and punctual
payment of the principal of and interest on all of the Securities, according to
their tenor, shall be expressly assumed by supplemental indenture satisfactory
in form to the Indenture Trustee, executed and delivered to the Indenture
Trustee, by the corporation formed by such consolidation, or into which Holdings
shall have been merged, or which shall have acquired such property. (Section
9.1)
EVENTS OF DEFAULT
An Event of Default is defined under the Indenture as being: (a) default in
payment of any principal of the Securities of such series, either at maturity
(or upon any redemption), by declaration or otherwise; (b) default for 30 days
in payment of any interest on any Securities of such series, provided that a
declaration of a valid Extension Period by Holdings shall not constitute a
default in the payment of interest for this purpose; (c) default in the payment
of any sinking fund installment on the Securities of such series when the same
shall become due and payable; (d) default for 90 days after written notice in
the observance or performance of any other covenant or agreement in the
Securities of such series or the Indenture other than a covenant included in
such Indenture solely for the benefit of a series of Securities other than such
series; and (e) certain events of bankruptcy, insolvency or reorganization.
(Section 5.1)
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The Indenture provides that (a) if an Event of Default due to the default in
payment of principal of, premium, if any, or any interest on, any series of
Securities or due to the default in the performance or breach of any other
covenant or warranty of Holdings applicable to the Securities of such series but
not applicable to all outstanding Securities shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of the Securities of all affected series (treated as one class) (and, in
the case of any series of Securities held as trust assets of an RJR Nabisco
Holdings Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), then outstanding may then declare the principal of all Securities of
each such affected series and interest accrued thereon to be due and payable
immediately; and (b) if an Event of Default due to a default in the performance
of any of the other covenants or agreements in the Indenture applicable to all
outstanding Securities or due to certain events of bankruptcy, insolvency and
reorganization of Holdings shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of all
Securities then outstanding (treated as one class) (and, in the case of any
series of Securities held as trust assets of an RJR Nabisco Holdings Capital
Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of holders of the Preferred Securities and the Common
Securities of such RJR Nabisco Holdings Capital Trust as may be required under
the Declaration of Trust of such RJR Nabisco Holdings Capital Trust), may
declare the principal of all such Securities and interest accrued thereon to be
due and payable immediately, but upon certain conditions such declarations may
be annulled and past defaults may be waived (except a continuing default in
payment of principal of, premium, if any, or any interest on such Securities) by
the holders of a majority in principal amount of the Securities of all such
affected series then outstanding (and, in the case of any series of Securities
held as trust assets of an RJR Nabisco Holdings Capital Trust and with respect
to which a Security Exchange has not theretofore occurred, such consent of
holders of the Preferred Securities and the Common Securities of such RJR
Nabisco Holdings Capital Trust as may be required under the Declaration of Trust
of such RJR Nabisco Holdings Capital Trust). (Section 5.1)
The Indenture contains a provision entitling the Trustee, subject to the
duty of the trustee during a default to act with the required standard of care,
to be indemnified by the holders of Securities (treated as one class) (and, in
the case of any series of Securities held as trust assets of an RJR Nabisco
Holdings Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), before proceeding to exercise any right or power under the Indenture at
the request of such holders. (Section 5.6) Subject to such provisions in the
Indenture for the indemnification of the Trustee and certain other limitations,
the holders of a majority in principal amount of the outstanding Securities
(treated as one class) (and, in the case of any series of Securities held as
trust assets of an RJR Nabisco Holdings Capital Trust and with respect to which
a Security Exchange has not theretofore occurred, such consent of holders of the
Preferred Securities and the Common Securities of such RJR Nabisco Holdings
Capital Trust as may be required under the Declaration of Trust of such RJR
Nabisco Holdings Capital Trust), 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. (Section 5.9)
The Indenture provides that no holder of Securities may institute any action
against Holdings under the Indenture (except actions for payment of overdue
principal or interest, provided that a declaration of a valid Extension Period
by Holdings shall not constitute a failure to pay interest for this purpose)
unless such holder previously shall have given to the Trustee written notice of
default and continuance thereof and unless the holders of not less than 25% in
principal amount of the Securities of all affected series (treated as one class)
(and, in the case of any series of Securities held as trust assets of an RJR
Nabisco Holdings Capital Trust and with respect to which a Security Exchange has
not
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theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), then outstanding shall have requested the Trustee to institute such
action and shall have offered the Trustee reasonable indemnity, the Trustee
shall not have instituted such action within 60 days of such request and the
Trustee shall not have received direction inconsistent with such written request
by the holders of a majority in principal amount of the Securities of all
affected series (treated as one class). (and, in the case of any series of
Securities held as trust assets of an RJR Nabisco Holdings Capital Trust and
with respect to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common Securities of such
RJR Nabisco Holdings Capital Trust as may be required under the Declaration of
Trust of such RJR Nabisco Holdings Capital Trust). (Section 5.6 and Section 5.7)
The Indenture contains a covenant that Holdings will file annually, not more
than four months after the end of its fiscal year, with the Trustee a
certificate that no default existed or a certificate specifying any default that
existed, each as of the end of the fiscal year so ended. (Section 3.5)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides with respect to each series of Securities that,
except to the extent the terms of such series of Securities provide otherwise,
Holdings may elect either (a) to defease and be discharged from any and all
obligations with respect to the Securities of such series (except for the
obligations to register the transfer or exchange of the Securities of such
series, to replace temporary or mutilated, destroyed, lost or stolen Securities
of such series, to maintain an office or agency in respect of the Securities of
such series and to hold moneys for payment in trust) ("legal defeasance") or (b)
to be released from its obligations with respect to the Securities of such
series (except for the obligations set forth as exceptions in the preceding
clause (a) and except for the obligations to pay the principal of and interest,
if any, on the Securities, to compensate and indemnify the Trustee, to appoint a
successor Trustee, to repay certain moneys held by the Paying Agent and to
return certain unclaimed moneys held by the Trustee and Paying Agent) ("covenant
defeasance"), upon the deposit with the Trustee (or other qualifying trustee),
in trust for such purpose, of money or, in the case of Securities payable in
U.S. dollars, U.S. Government Obligations (as defined in the Indenture) which
through the payment of principal and interest in accordance with their terms
will provide money in an amount sufficient to pay the principal of, premium, if
any, and any interest on the Securities of such series, and any mandatory
sinking fund or analogous payments thereon, on the due date thereof. Such a
trust may (except to the extent the terms of the Securities of such series
otherwise provide) only be established, if among other things, Holdings has
delivered to the Trustee an opinion of counsel (as specified in the Indenture)
to the effect that the Holders of the Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result of
such legal defeasance or covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same time as would
have been the case if such legal defeasance or covenant defeasance had not
occurred. Such opinion, in the case of legal defeasance under clause (a) above,
must (except to the extent the terms of the Securities of the relevant series
otherwise provide) 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 the Indenture. (Section 10.1)
MODIFICATION OF THE INDENTURE
The Indenture provides that Holdings and the Trustee may enter into
supplemental indentures without the consent of the holders of Securities to: (a)
secure any Securities, (b) evidence the assumption by a successor corporation of
the obligations of Holdings, (c) add covenants for the protection of the holders
of Securities, (d) cure any ambiguity or correct any inconsistency in the
Indenture, (e) establish the forms or terms of Securities of any series, (f)
provide for uncertificated Securities and (g) evidence the acceptance of
appointment by a successor trustee. (Section 8.1)
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The Indenture also contains provisions permitting Holdings and the Trustee,
with the consent of the holders of not less than a majority in principal amount
of all Securities then outstanding and affected (treated as one class) (and, in
the case of any series of Securities held as trust assets of an RJR Nabisco
Holdings Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), to add any provisions to, or change in any manner or eliminate any of
the provisions of, the Indenture or modify in any manner the rights of the
holders of the Securities of each series so affected; provided that Holdings and
the Trustee may not, without the consent of the holder of each outstanding
Security affected thereby, (a) extend the stated maturity of the principal of
any Security, or reduce the principal amount thereof or reduce the rate or
extend the time of payment of interest thereon (except that a declaration of a
valid Extension Period by Holdings shall not constitute an extension of time of
payment of interest for this purpose), or reduce any amount payable on the
redemption thereof or change the currency in which the principal thereof
(including any amount in respect of original issue discount), premium, if any,
or any interest thereon is payable or reduce the amount of any original issue
discount security payable upon acceleration or provable in bankruptcy or alter
certain provisions of the Indenture relating to the Securities issued thereunder
not denominated in U.S. dollars or impair the right to institute suit for the
enforcement of any payment on any Security when due or (b) reduce the aforesaid
percentage in principal amount of Securities of any series, the consent of the
holders of which is required for any such modification. (Section 8.2)
CONCERNING THE INDENTURE TRUSTEE
Holdings and its subsidiaries maintain ordinary banking relationships with
The Bank of New York and its affiliates and a number of other banks.
BOOK-ENTRY AND SETTLEMENT
If any Junior Subordinated Debentures are distributed to holders of
Preferred Securities (see "Description of the Preferred Securities"), such
Junior Subordinated Debentures will be issued in fully registered form. In such
event, investors may elect to hold their Junior Subordinated Debentures directly
or, subject to the rules and procedures of a Depository Institution, hold
interests in a global certificate registered in the name of a Depository
Institution or its nominee.
For a description of a Depository Institution and a Depository Institution's
book-entry system, see "Description of the Preferred Securities--Book-Entry;
Delivery and Form". As of the date of this Prospectus, the description herein of
a Depository Institution's book-entry system and Depository Institution's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any Junior
Subordinated Debentures registered in the name of and held by a Depository
Institution or its nominee.
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DESCRIPTION OF THE SERIES B PREFERRED AND DEPOSITARY SHARES
The description of the terms of the Series B Preferred and the Depositary
Shares set forth below summarizes the material terms thereof and is subject to,
and is qualified in its entirety by reference to, the provisions of Holdings'
Certificate of Incorporation and the Certificate of Designation for the Series B
Preferred and the Deposit Agreement, copies of which may be obtained from
Holdings upon request.
GENERAL
The Series B Preferred consists of 50,000 shares. The Series B Preferred is
not convertible into, or exchangeable for, shares of any other class or series
of stock of Holdings. The Series B Preferred, with respect to dividend rights
and rights upon liquidation, dissolution or winding up, ranks (i) senior to the
common stock of Holdings and all other securities junior to the Series B
Preferred ("Junior Securities"), (ii) on a parity with the outstanding preferred
stock of Holdings and all other securities on a parity with the Series B
Preferred ("Parity Securities") and (iii) junior to all securities senior to the
Series B Preferred Stock.
Each Depositary Share represents ownership of 1/1000 of a share of Series B
Preferred. Subject to the terms of the deposit agreement among Holdings, the
Depositary and holders of Depositary Shares, each holder of a Depositary Share
is entitled to all the rights and preferences of 1/1000 of a share of Series B
Preferred (including dividend, voting, redemption and liquidation rights and
preferences). The Depositary is First Chicago Trust Company of New York, and its
principal office is currently located at 14 Wall Street, Suite 4680, New York,
New York 10005.
DIVIDENDS
Holders of shares of the Series B Preferred are entitled to receive, when,
as and if declared by the board of directors of Holdings, out of funds legally
available for the payment of dividends, cumulative preferential cash dividends
at the rate per annum of 9.25% per share or $2.3125 per Depositary Share. Such
dividends are cumulative from the date of original issue and are payable
quarterly in arrears on the first business day that is not a legal holiday of
each March, June, September and December, respectively. Such dividend and any
dividend payable on the Series B Preferred for any partial dividend period is
computed on the basis of a 360-day year consisting of twelve 30-day months. Each
dividend is payable to holders of record as they appear in the stock records of
Holdings at the close of business on each record date, which is the 15th day
prior to the payment date.
Dividends on the Series B Preferred accrue whether or not Holdings has
earnings, whether or not there are funds legally available for the payment of
such dividends and whether or not such dividends are declared. Accrued but
unpaid dividends on the Series B Preferred do not bear interest. Holders of
Series B Preferred are not entitled to any dividends in excess of full
cumulative dividends as described above.
No full dividends shall be declared or paid or set apart for payment by
Holdings on any Parity Security for any period unless full dividends for all
series of preferred stock that are Parity Securities (including any accumulation
in respect of unpaid dividends for prior dividend periods, if dividends on such
preferred stock are cumulative) have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof through the most
recent dividend payment date is set apart for such payment. When dividends are
not so paid in full (or a sum sufficient for such full payment is not so set
apart) upon the Series B Preferred and any other such Parity Security, all
dividends declared (if any) on the Series B Preferred and any such Parity
Security shall be declared pro rata so that the amount of dividends declared per
share on the Series B Preferred an any such Parity Security shall in all cases
bear to each other the same ratio that accrued dividends (including any
accumulation with respect
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to unpaid dividends for prior dividend periods, if dividends for such series are
cumulative) per share for the Series B Preferred and any such Parity Securities
bear to each other.
Unless full dividends (including any accumulation with respect to unpaid
dividends for prior periods, if dividends for such series are cumulative) on the
Series B Preferred have been or contemporaneously are declared and paid or
declared and a sum set apart sufficient for such payment through the most recent
dividend payment date, no dividend shall be declared and paid or set apart for
payment or other distribution declared or made on the Common Stock or on any
other Junior Securities (other than a dividend or distribution paid in shares
of, or warrants, rights or options exercisable for or convertible into, Common
Stock or any other Junior Securities), nor shall any Common Stock nor any other
Junior Securities be redeemed, purchased or otherwise retired for any
consideration, nor may any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such securities, by Holdings (other
than redemptions and purchases pursuant to or in accordance with employee stock
subscription agreements entered into between Holdings and certain of its
subsidiaries' directors, officers and key employees), except by conversion into
or exchange for Junior Securities.
Payment of dividends on Series B Preferred are and may be further restricted
by loan agreements, indentures or other transactions entered into by the
Company.
REDEMPTION
The Series B Preferred is not redeemable prior to August 19, 1998. On and
after August 19, 1998, Holdings, at its option upon not less than 30 nor more
than 60 days' notice, may redeem shares of the Series B Preferred (and the
Depositary will redeem the number of Depositary Shares representing the shares
of Series B Preferred so redeemed upon not less than 30 days' notice to the
holders thereof), as a whole or in part, at any time, at a redemption price
equivalent to $25 per Depositary Share, plus accrued and unpaid dividends
thereon to the date fixed for redemption, without interest, to the extent
Holdings has funds legally available therefor. Each holder of Depositary Shares
to be redeemed shall surrender the receipts evidencing such Depositary Shares at
the place designated in such notice and shall be entitled to the redemption
price and any accrued and unpaid dividends payable upon such redemption
following such surrender and following the date of such redemption. If fewer
than all the outstanding Depositary Shares are to be redeemed, the Depositary
Shares to be redeemed shall be selected by lot or pro rata (as nearly as may be
practicable without creating fractional shares) or by any other equitable method
determined by Holdings.
The holders of Depositary Shares at the close of business on a dividend
payment record date are entitled to receive the dividend payable with respect to
such Depositary Shares on the corresponding dividend payment date
notwithstanding the redemption thereof (except that holders of Depositary Shares
called for redemption on a date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date) or Holdings' default in payment of the dividend due.
Except as provided above, Holdings makes no payment or allowance for unpaid
dividends, whether or not in arrears, on called Series B Preferred or Depositary
Shares.
The Series B Preferred has no stated maturity and is not be subject to any
sinking fund or mandatory redemption.
LIQUIDATION PREFERENCE
In the event of any voluntary of involuntary liquidation, dissolution or
winding up of Holdings, the holders of shares of Series B Preferred then
outstanding shall be entitled to be paid out of the assets of Holdings available
for distribution to its stockholders, after payment or provision for payment of
any Senior Securities, an amount per share of Series B Preferred in cash
equivalent to $25 per Depositary Share plus all accrued and unpaid dividends
thereon to the date of liquidation, dissolution or winding
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up, before any payment shall be made or any assets distributed to the holders of
any of the securities junior to the Series B Preferred.
VOTING
The holders of the Series B Preferred do not have any voting rights, except
as otherwise provided by law and as provided below.
In the event that dividends on all series of Preferred Stock, including the
Series B Preferred, are in arrears and unpaid for six quarterly periods, the
Board of Directors shall be increased by two directors and the holders of Series
B Preferred, together with the holders of all other series of Preferred Stock
then entitled to vote thereon, shall be entitled to elect two directors of the
expanded Board of Directors; provided that such directors do not exceed 25% of
such expanded Board of Directors and provided, further, that such holders shall
be entitled to elect at least one director notwithstanding the foregoing
proviso. Such voting rights will continue until such time as all dividends in
arrears have been paid or declared and set aside for payment at which time the
term of office of all directors so elected shall terminate.
In addition, the Certificate of Incorporation provides that Holdings will
not authorize a new class of securities senior to the Series B Preferred, or
designate a new series of securities senior to the Series B Preferred from the
existing class of Preferred Stock, without the approval of the holders of at
least two-thirds of the then outstanding shares of Series B Preferred and any
other series of Preferred Stock entitled to vote thereon then outstanding,
voting together as one class. The Certificate of Incorporation also provides
that Holdings may not amend the Certificate of Incorporation so as to affect
materially and adversely the specified rights, preferences, privileges or voting
rights of the Preferred Stock without the approval of the holders of at least
two-thirds of the then outstanding shares of Series B Preferred and any other
series of Preferred Stock entitled to vote thereon then outstanding, voting
together as one class. These voting rights with respect to the Series B
Preferred will terminate if Holdings has given notice of the redemption of all
outstanding shares of Series B Preferred and the funds required for such
redemption have been deposited in trust for such redemption.
The Certificate of Incorporation provides that the following events do not
require the approval of the holders of the Series B Preferred or any other
series of Preferred Stock currently outstanding and will not be deemed to affect
materially and adversely the rights, preferences, privileges or voting rights of
the Series B Preferred or any other series of Preferred Stock currently
outstanding:
(a) the designation of any series of securities on a parity with the
Series B Preferred from the existing authorized class Preferred;
(b) the increase or decrease in the amount of authorized capital stock of
any class, including the existing authorized class of Preferred
Stock;
(c) the creation of any shares of securities junior to the Series B
Preferred; or
(d) the creation of any indebtedness of any kind of Holdings.
TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York is the transfer agent and registrar
for the Series B Preferred.
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RELATIONSHIP BETWEEN THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and other payments due on the Preferred Securities primarily
because (i) the aggregate principal amount of Junior Subordinated Debentures
held as trust assets will be equal to the sum of the aggregate stated
liquidation amount of the Preferred Securities and the proceeds received by the
Trust upon issuance of the Common Securities to Holdings; (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures will
match the distribution rate and distribution and other payment dates for the
Preferred Securities; (iii) the Declaration provides that Holdings shall pay for
all debts and obligations (other than with respect to the Trust Securities) and
all costs and expenses of the Trust, including any taxes and all costs and
expenses with respect thereto, to which the Trust may become subject, except for
United States withholding taxes; and (iv) the Declaration further provides that
the Trustees shall not cause or permit the Trust, among other things, to engage
in any activity that is not consistent with the limited purposes of the Trust.
With respect to clause (iii) above, however, no assurance can be given that
Holdings will have sufficient resources to enable it to pay such debts,
obligations, costs and expenses on behalf of the Trust.
Payments of distributions and other payments due on the Preferred Securities
are guaranteed by Holdings on a subordinated basis as and to the extent set
forth under "Description of the Preferred Securities Guarantee". If Holdings
does not make interest or other payments on the Junior Subordinated Debentures,
the Trust will not make distributions or other payments on the Preferred
Securities. Under the Declaration, if and to the extent Holdings does make
interest or other payments on the Junior Subordinated Debentures, the
Institutional Trustee is obligated to make distributions or other payments on
the Preferred Securities. The Preferred Securities Guarantee is a full and
unconditional guarantee from the time of issuance of the Preferred Securities,
but the Preferred Securities Guarantee covers distributions and other payments
on the Preferred Securities only if and to the extent that Holdings has made a
payment of interest or principal on the Junior Subordinated Debentures deposited
in the Trust as trust assets.
If an Appointment Event occurs, the Declaration provides that the holders of
the Preferred Securities may appoint a Special Regular Trustee who will have the
same rights, powers and privileges under the Declaration as a Regular Trustee.
The Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture with respect to the Junior Subordinated
Debentures, including its rights as the holder of the Junior Subordinated
Debentures to enforce Holdings' obligations under the Junior Subordinated
Debentures upon the occurrence of an Indenture Event of Default, and will also
have the right to enforce the Preferred Securities Guarantee on behalf of the
holders of the Preferred Securities. In addition, the holders of at least a
majority in liquidation amount of the Preferred Securities will have the right
to direct the Institutional Trustee with respect to certain matters under the
Declaration and the Preferred Securities Guarantee. If the Institutional Trustee
fails to enforce its rights under the Indenture or fails to enforce the
Preferred Securities Guarantee, any holder of Preferred Securities may, after a
period of 90 days has elapsed from such holder's written request to the
Institutional Trustee to enforce such rights or the Preferred Securities
Guarantee, institute a legal proceeding against Holdings to enforce such rights
or the Preferred Securities Guarantee, as the case may be. See "Description of
the Preferred Securities" and "Description of the Preferred Securities
Guarantee".
Holdings and the Trust believe that for accounting purposes the above
mechanisms and obligations, taken together, are equivalent to a full and
unconditional guarantee by Holdings of payments due on the Preferred Securities.
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If a Special Event shall occur and be continuing, the Trust shall be
dissolved unless the Junior Subordinated Debentures are redeemed in the limited
circumstances described below, with the result that Junior Subordinated
Debentures held by the Trust having an aggregate principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities and Common
Securities will be distributed on a Pro Rata Basis in exchange for the
outstanding Preferred Securities and Common Securities, subject in the case of a
Tax Event to Holdings' right in certain circumstances to redeem Junior
Subordinated Debentures as described under "Description of the Preferred
Securities -- Special Event Redemption or Distribution". The Preferred
Securities represent preferred undivided beneficial interests in the assets of
the Trust, a statutory business trust which exists for the purpose of (a)
issuing (i) its Preferred Securities in exchange for Depositary Shares validly
tendered in the Offer and delivering such Depositary Shares to Holdings in
consideration for the deposit by Holdings of Junior Subordinated Debentures in
the Trust as trust assets, and (ii) its Common Securities to Holdings in
exchange for cash and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures and (b) engaging in such other activities as are
necessary or incidental thereto.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Trust, the holders of Preferred Securities will be entitled to receive the
Liquidation Distribution in cash or Junior Subordinated Debentures and will be
entitled to the benefits of the Preferred Securities Guarantee with respect to
any such distribution. See "Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution". Upon any voluntary or involuntary liquidation or
bankruptcy of Holdings, the holders of Junior Subordinated Debentures would be
subordinated creditors of Holdings, subordinated in right of payment to all
Senior Indebtedness, but entitled to receive payment in full of principal,
premium, if any, and interest, before any stockholders of Holdings receive
payments or distributions.
A default or event of default under any Senior Indebtedness would not
constitute a default or event of default under the Junior Subordinated
Debentures. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness, the subordination provisions of the Junior Subordinated
Debentures provide that no payments may be made in respect of the Junior
Subordinated Debentures. Failure to make required payments on the Junior
Subordinated Debentures would constitute an event of default under the
Indenture.
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<PAGE>
TAXATION
In the opinion of Davis Polk & Wardwell, counsel to Holdings and the Trust,
the following are the material United States federal income tax consequences of
the issuance of Preferred Securities in exchange for the Depositary Shares
pursuant to the Offer, and of the ownership and disposition of Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets by holders who acquire the Preferred
Securities pursuant to the Offer ("Initial Holders"). It does not deal with
special classes of holders, such as dealers in securities or currencies, life
insurance companies, persons holding Preferred Securities as a hedge against or
which are hedged against currency risks or as part of a straddle, or persons
whose functional currency is not the United States dollar. This summary is based
on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations thereunder and administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change (possibly on a
retroactive basis).
ALL HOLDERS OF DEPOSITARY SHARES ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF DEPOSITARY
SHARES FOR PREFERRED SECURITIES AND OF THE OWNERSHIP AND DISPOSITION OF
PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS.
EXCHANGE OF DEPOSITARY SHARES FOR PREFERRED SECURITIES
The exchange of Depositary Shares for Preferred Securities pursuant to the
Offer will be a taxable transaction. In the case of an Initial Holder who
actually or constructively owns solely Depositary Shares, or not more than one
percent of such stock and not more than one percent of any other class of
Holdings stock, gain or loss will be recognized in an amount equal to the
difference between the fair market value on the Expiration Date of the Preferred
Securities (representing an undivided interest in the Junior Subordinated
Debentures) received in the exchange and the exchanging Holder's tax basis in
the Depositary Shares exchanged therefor and will be long-term capital gain or
loss if the Depositary Share has been held for more than one year as of such
date. A holder's aggregate tax basis in his pro rata share of the underlying
Junior Subordinated Debentures will be equal to his pro rata share of their
"issue price" on the Expiration Date as defined below.
Holders of Depositary Shares who actually or constructively own more than
one percent of any other class of Holdings stock are advised to consult their
tax advisors as to the income tax consequences of exchanging Depositary Shares.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Preferred Securities, Davis Polk &
Wardwell, counsel to Holdings and the Trust, will render its opinion generally
to the effect that, under then current law and assuming full compliance with the
terms of the Declaration, the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, each Securityholder will be considered the owner of a
pro rata portion of the Junior Subordinated Debentures held by the Trust.
Accordingly, each Securityholder will be required to include in gross income his
pro rata share of the income accrued on the Junior Subordinated Debentures.
ACCRUAL OF ORIGINAL ISSUE DISCOUNT AND PREMIUM
The Junior Subordinated Debentures will be considered to have been issued
with "original issue discount" and each Securityholder, including a taxpayer who
otherwise uses the cash method of
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<PAGE>
accounting, will be required to include his pro rata share of original issue
discount on the Junior Subordinated Debentures in income as it accrues, in
accordance with a constant yield method based on a compounding of interest,
before the receipt of cash distributions on the Preferred Securities. Generally,
all of a Securityholder's taxable interest income with respect to the Junior
Subordinated Debentures will be accounted for as "original issue discount" and
actual distributions of stated interest will not be separately reported as
taxable income. So long as the interest payment period is not extended, cash
distributions received by an Initial Holder for any quarterly interest period
(assuming no disposition prior to the record date for such distribution) will
equal or exceed the sum of the daily accruals of income for such quarterly
interest period, unless the issue price of the Junior Subordinated Debentures
(as defined below) is less than $25.
The total amount of "original issue discount" on the Junior Subordinated
Debentures will equal the difference between the "issue price" of the Junior
Subordinated Debentures and their "stated redemption price at maturity." Because
Holdings has the right to extend the interest payment period of the Junior
Subordinated Debentures, all of the stated interest payments on the Junior
Subordinated Debentures will be includible in determining their "stated
redemption price at maturity." The "issue price" of each $25 principal amount of
the Junior Subordinated Debentures will be equal to the fair market value of a
Preferred Security on the Expiration Date, which may be more or less than $25,
with the result that the total amount of original issue discount on the Junior
Subordinated Debentures may be more or less than the amount of stated interest
payable with respect thereto. The issue price of each $25 principal amount of
the Junior Subordinated Debentures may be reduced by the Pre-Issuance Accrued
Interest. If a Securityholder computes the issue price of his pro rata share of
the Junior Subordinated Debentures in this manner, then the payment of such
amount will be treated as a return of capital rather than as an interest
payment. Holdings and the Trust intend to compute the issue price of the Junior
Subordinated Debentures in this manner and, will report the payment of such
amount on Form 1099-B.
A Securityholder's initial tax basis for his pro rata share of the Junior
Subordinated Debentures will be equal to his pro rata share of their "issue
price," as defined above, and will be increased by original issue discount
accrued with respect thereto, and reduced by the amount of cash distributions
(including the amount of Pre-issuance Accrued Interest) paid to such
Securityholder. No portion of the amounts received on the Preferred Securities
will be eligible for the dividends received deduction for corporate holders.
POTENTIAL EXTENSION OF PAYMENT PERIOD ON THE JUNIOR SUBORDINATED DEBENTURES
Securityholders will continue to accrue original issue discount with respect
to their pro rata share of the Junior Subordinated Debentures during an extended
interest payment period, and any holders who dispose of Preferred Securities
prior to the record date for the payment of interest following such extended
interest payment period will not receive from the Trust any cash related
thereto.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED
SECURITIES
Under current law, a distribution by the Trust of the Junior Subordinated
Debentures as described under the caption "Description of the Preferred
Securities--Special Event Redemption or Distribution", will be non-taxable and
will result in the Securityholder receiving directly his pro rata share of the
Junior Subordinated Debentures previously held indirectly through the Trust,
with a holding period and tax basis equal to the holding period and adjusted tax
basis such Securityholder was considered to have had in his pro rata share of
the underlying Junior Subordinated Debentures prior to such distribution.
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<PAGE>
MARKET DISCOUNT AND BOND PREMIUM
Securityholders other than Initial Holders may be considered to have
acquired their pro rata interest in the Junior Subordinated Debentures with
market discount, acquisition premium or amortizable bond premium. Such holders
are advised to consult their tax advisors as to the income tax consequences of
the acquisition, ownership and disposition of the Preferred Securities.
DISPOSITION OF THE PREFERRED SECURITIES
Upon a sale, exchange or other disposition of the Preferred Securities
(including a distribution of cash in redemption of a Securityholder's Preferred
Securities upon redemption or repayment of the underlying Junior Subordinated
Debentures, but excluding the distribution of Junior Subordinated Debentures), a
Securityholder will be considered to have disposed of all or part of his pro
rata share of the Junior Subordinated Debentures, and will recognize gain or
loss equal to the difference between the amount realized and the
Securityholder's adjusted tax basis in his pro rata share of the underlying
Junior Subordinated Debentures deemed disposed of. Gain or loss will be capital
gain or loss (except to the extent of any accrued market discount with respect
to such Securityholder's pro rata share of the Junior Subordinated Debentures
not previously included in income). See "--Market Discount and Bond Premium"
above. Such gain or loss will be long-term capital gain or loss if the Preferred
Securities have been held for more than one year.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law:
(i) payments by the Trust or any of its paying agents to any holder of a
Preferred Security who or which is a United States Alien Holder will not be
subject to United States federal withholding tax, provided that (a) the
beneficial owner of the Preferred Security does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of Holdings entitled to vote, (b) the beneficial owner of
the Preferred Security is not a controlled foreign corporation that is
related to Holdings through stock ownership, and (c) either (A) the
beneficial owner of the Preferred Security certifies to the Trust or its
agent, under penalties of perjury, that it is not a United States holder and
provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution") and
holds the Preferred Security certifies to the Trust or its agent under
penalties of perjury that such statement has been received from the
beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof;
(ii) a United States Alien Holder of a Preferred Security will not be
subject to United States federal withholding tax on any gain realized upon
the sale or other disposition of a Preferred Security; and
(iii) any gain realized by a United States Alien Holder upon the
exchange of Series B Preferred for Preferred Securities will not be subject
to United States federal withholding tax.
INFORMATION REPORTING TO HOLDERS
The Trust will report the original issue discount that accrued during the
year with respect to the Junior Subordinated Debentures, and any gross proceeds
received by the Trust from the retirement or
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<PAGE>
redemption of the Junior Subordinated Debentures, annually to certain
non-corporate holders of record of the Preferred Securities and the Internal
Revenue Service. The Trust currently intends to deliver such reports to such
holders of record prior to January 31 following each calendar year. It is
anticipated that persons who hold Preferred Securities as nominees for
beneficial holders will report the required tax information to beneficial
holders on Form 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of Preferred Securities may be
subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's federal income tax, provided the
required information is timely filed with the Internal Revenue Service.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for the Trust by Morris, Nichols, Arsht &
Tunnell, special Delaware counsel to the Trust. The validity of the Preferred
Securities Guarantee and the Junior Subordinated Debentures will be passed upon
for the Trust and Holdings by Davis Polk & Wardwell, New York, New York, special
counsel to Holdings and the Trust. Steven F. Goldstone, a partner at Davis Polk
& Wardwell, is General Counsel of Holdings. Certain legal matters in connection
with the Preferred Securities, the Preferred Securities Guarantee and the Junior
Subordinated Debentures will be passed upon for the Trust and Holdings by Jo-Ann
Ford, Senior Vice President, Law and Secretary of Holdings. Ms. Ford holds
options to purchase in the aggregate less than 0.1% of Holdings' common stock.
Certain legal matters in connection with the Preferred Securities will be passed
upon for the Co-Dealer Managers by Simpson Thacher & Bartlett (a partnership
which includes professional corporations), New York, New York. Davis Polk &
Wardwell and Simpson Thacher & Bartlett have in the past provided, and may
continue to provide, legal services to Holdings and its affiliates.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31, 1994
have been so incorporated in reliance on the report of Deloitte & Touche LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
ERISA MATTERS
Holdings and certain affiliates of Holdings may each be considered a "party
in interest" within the meaning of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or a "disqualified person" within the meaning of
the Code with respect to many employee benefit plans. Prohibited transactions
within the meaning of ERISA or the Code may arise, for example, if the
securities offered hereby are acquired by a pension or other employee benefit
plan with respect to which Holdings or any of its affiliates is a service
provider, unless such securities are acquired pursuant to an exemption for
transactions effected on behalf of such plan by a "qualified professional asset
manager" or pursuant to any other available exemption. Any such pension or
employee benefit plan proposing to invest in the securities offered hereby
should consult with its legal counsel.
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<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. Letters of
Transmittal, certificates representing Depositary Shares and any other required
documents should be sent by each Holder of Depositary Shares or his broker,
dealer, commercial bank, trust company or other nominee to the Exchange Agent at
one of the addresses as set forth below:
THE EXCHANGE AGENT IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Hand or Overnight Courier By Mail:
Attention: Tenders and Exchanges Attention: Tenders and Exchanges
Suite 4680-RNH Suite 4660-RNH
14 Wall Street P.O. Box 2559
8th Floor Jersey City, New Jersey 07303-2559
New York, New York 10005
By Facsimile Transmission
(For Eligible Institutions Only):
(201) 222-4720 or 4721
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(201) 222-4707
THE INFORMATION AGENT IS:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
1-212-929-5500 (call collect) or
1-800-322-2885 (Toll Free)
Any questions or requests for assistance or additional copies of this
Prospectus, the Letter of Transmittal or for copies of the Notice of Guaranteed
Delivery may be directed to the Information Agent at its telephone number and
location set forth above. You may also contact your broker, dealer, commercial
bank or trust company or other nominee for assistance concerning the Offer.
THE DEALER MANAGERS FOR THE OFFER ARE:
MERRILL LYNCH & CO.
World Financial Center
North Tower--Seventh Floor
New York, New York 10281
(212) 236-4565 (collect)
<TABLE>
<S> <C>
LEHMAN BROTHERS MORGAN STANLEY & CO.
3 World Financial Center INCORPORATED
New York, New York 10285 1221 Avenue of the Americas
(800) 438-3242 (Toll-Free) New York, New York 10020
(800) 422-6464 ext. 6620 (Toll-Free)
PAINEWEBBER INCORPORATED SMITH BARNEY INC.
1285 Avenue of the Americas 388 Greenwich Street
New York, New York 10019 New York, New York 10013
(800) 324-0210 (Toll-Free) (212) 723-7599 (collect)
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors against expenses (including
attorneys' fees) in connection with the defense or settlement of an action by or
in the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Certificate of Incorporation of
Holdings contains a provision to limit the personal liability of the directors
of Holdings for violations of their fiduciary duty. This provision eliminates
each director's liability to Holdings or its stockholders for monetary damages
except (i) for any breach of the director's duty of loyalty to Holdings or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware Law providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit. The
effect of this provision is to eliminate the personal liability of directors for
monetary damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.
Section 6 of the form of dealer manager agreement filed as Exhibit 1 to this
Registration Statement provides for indemnification of directors, officers who
sign the Registration Statement and controlling persons of the Registrant by the
dealer managers, and for indemnification of each dealer manager and its
controlling persons by the Registrant, against certain liabilities. Similar
provisions are contained in agreements entered into between the Registrant and
groups of dealer managers or underwriters on past occasions.
The Declaration provides that no Trustee, affiliate of any Trustee or any
officers, directors, shareholders, members, partners, employees, representatives
or agents of any Trustee or any employee or agent of the Trust or its affiliates
(each, an "Indemnified Person") shall be liable, responsible or accountable in
damages or otherwise to any employee or agent of the Trust or its affiliates, or
any officers, directors, shareholders, employees, representatives or agents of
Holdings or its affiliations or to any holders of Trust Securities of the Trust
for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by the
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Institutional Trustee, negligence) or willful
misconduct with respect to
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<PAGE>
such acts or omission. The Declaration also provides that, to the fullest extent
permitted by applicable law, Holdings shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by the Declaration, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of gross
negligence (or, in the case of the Institutional Trustee, negligence) or willful
misconduct with respect to such acts or omissions. The Declaration further
provides that to the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by
Holdings prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by Holdings of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified pursuant to the
Declaration.
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
- ----------- ---------------------------------------------------------------------------------
<C> <S>
*1 --Form of Dealer Managers Agreement
*4.1 --Form of Indenture between Holdings and The Bank of New York, as Trustee
*4.2 --Form of First Supplemental Indenture to Indenture
*4.3 --Declaration of Trust of RJR Nabisco Holdings Capital Trust I
*4.4 --Certificate of Trust of RJR Nabisco Holdings Capital Trust I (included in
Exhibit 4.3 above)
*4.5 --Form of Amended and Restated Declaration of Trust of RJR Nabisco Holdings
Capital Trust I
*4.6 --Form of Preferred Security (included in Exhibit 4.5 above)
*4.7 --Form of Junior Subordinated Debenture (included in Exhibit 4.2 above)
*4.8 --Form of Guarantee Agreement with respect to Preferred Securities
*5.1 --Opinion of Davis Polk & Wardwell
**5.2 --Opinion of Morris, Nichols, Arsht & Tunnell
*8.1 --Tax Opinion of Davis Polk & Wardwell
12.1 --RJR Nabisco Holdings Corp. Computation of Earnings to Combined Fixed Charges
and Preferred Stock Dividends/Deficiency in the coverage of Fixed Charges and
Preferred Stock Dividends by Earnings before Fixed Charges for each of the
years in the four year period ended December 31, 1993 (incorporated by
reference to Exhibits 12.2, 12.3 and 12.4 to Form S-3, Registration Statement
No. 33-52381).
*12.2 --RJR Nabisco Holdings Corp. Computation of Earnings to Combined Fixed Charges
and Preferred Stock Dividends for the year ended December 31, 1994 and the
three month period ended March 31, 1995.
**23.1 --Consent of Deloitte & Touche LLP
*23.2 --Consents of Davis Polk & Wardwell (included in Exhibits 5.1 and 8.1 above)
*23.3 --Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.2 above)
24.1 --Powers of Attorney for Holdings
*24.2 --Powers of Attorney for Holdings, as sponsor, to sign this Registration
Statement on behalf of RJR Nabisco Holdings Capital Trust I (included in
Exhibit 4.3 above)
*25.1 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee under the Indenture
*25.2 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Institutional Trustee under the Amended and Restated
Declaration of Trust
*25.3 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as indenture trustee under the Preferred Securities
Guarantee (same as Exhibit 25.1 above)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
- ----------- ---------------------------------------------------------------------------------
<C> <S>
*99.1 --Proposed Form of Letter of Transmittal
*99.2 --Proposed Form of Notice of Guaranteed Delivery
*99.3 --Proposed Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
*99.4 --Proposed Form of Letter to Clients
*99.5 --Form of Exchange Agent Agreement
*99.6 --Form of Information Agent Agreement
*99.7 --Form of Newspaper Announcement
*99.8 --Proposed Form of Holdings Letter to Holders of 9.25% Preferred Stock, Series B
</TABLE>
- ------------
* Previously filed.
** Filed herewith.
ITEM 22. UNDERTAKINGS.
Each of the Registrants hereby undertakes:
(1) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of Holdings' Annual Report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(3) To respond to requests for information that is incorporated by reference
into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4, within one
business day of receipt of such request, and to send the incorporated documents
by first-class mail or equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the Registration
Statement through the date responding to the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
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<PAGE>
(5) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RJR NABISCO
HOLDINGS CORP. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON THIS 26TH DAY OF
JULY, 1995.
RJR NABISCO HOLDINGS CORP.
By /s/ JO-ANN FORD
...................................
(Jo-Ann Ford)
Senior Vice President, Law
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------- ----------------------------- --------------
<S> <C> <C>
* Chairman, and Chief Executive July 26, 1995
...................................... Officer (Principal Executive
(Charles M. Harper) Officer)
* Senior Vice President and July 26, 1995
...................................... Chief Financial Officer
(Robert S. Roath) (Principal Financial Officer)
* Senior Vice President and July 26, 1995
...................................... Corporate Controller
(Richard G. Russell) (Principal Accounting
Officer)
* Director July 26, 1995
......................................
(John T. Chain, Jr.)
* Director July 26, 1995
......................................
(Julius L. Chambers)
* Director July 26, 1995
......................................
(John L. Clendenin)
* Director July 26, 1995
......................................
(H. John Greeniaus)
...................................... Director July 26, 1995
(James W. Johnston)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------- ----------------------------- --------------
<S> <C> <C>
* Director July 26, 1995
......................................
(John G. Medlin, Jr.)
* Director July 26, 1995
......................................
(Rozanne L. Ridgway)
*By /s/ JO-ANN FORD
..................................
(Jo-Ann Ford)
Attorney-in-Fact
</TABLE>
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RJR NABISCO
HOLDINGS CAPITAL TRUST I HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON THIS 26TH DAY OF JULY, 1995.
RJR NABISCO HOLDINGS CAPITAL TRUST I
By: RJR Nabisco Holdings Corp., as
Sponsor
By /s/ JO-ANN FORD
...................................
Name: Jo-Ann Ford
Title Senior Vice President, Law and
Secretary
II-7
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EXHIBIT INDEX
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EXHIBIT
NO. DOCUMENT PAGE
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*1.1 -- Form of Dealer Managers Agreement
*4.1 -- Form of Indenture between Holdings and The Bank of New York, as Trustee
*4.2 -- Form of First Supplemental Indenture to Indenture
*4.3 -- Declaration of Trust of RJR Nabisco Holdings Capital Trust I
*4.4 -- Certificate of Trust of RJR Nabisco Holdings Capital Trust I (included in
Exhibit 4.3 above)
*4.5 -- Form of Amended and Restated Declaration of Trust of RJR Nabisco Holdings
Capital Trust I
*4.6 -- Form of Preferred Security (included in Exhibit 4.5 above)
*4.7 -- Form of Junior Subordinated Debenture (included in Exhibit 4.2 above)
*4.8 -- Form of Guarantee Agreement with respect to Preferred Securities
*5.1 -- Opinion of Davis Polk & Wardwell
**5.2 -- Opinion of Morris, Nichols, Arsht & Tunnell
*8.1 -- Tax Opinion of Davis Polk & Wardwell
12.1 -- RJR Nabisco Holdings Corp. Computation of Earnings to Combined Fixed
Charges and Preferred Stock Dividends/Deficiency in the coverage of Fixed
Charges and Preferred Stock Dividends by Earnings before Fixed for each of
the years in the four year period ended December 31, 1993 (incorporated by
reference to Exhibits 12.2, 12.3 and 12.4 to Form S-3, Registration
Statement No. 33-52381).
*12.2 -- RJR Nabisco Holdings Corp. Computation of Earnings to Combined Fixed
Charges and Preferred Stock Dividends for the year ended December 31, 1994
and the three month period ended March 31, 1995
**23.1 -- Consent of Deloitte & Touche LLP
*23.2 -- Consents of Davis Polk & Wardwell (included in Exhibits 5.1 and 8.1 above)
*23.4 -- Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.2
above)
24.1 -- Powers of Attorney for Holdings
*24.2 -- Powers of Attorney for Holdings, as sponsor, to sign this Registration
Statement on behalf of RJR Nabisco Holdings Capital Trust I (included in
Exhibit 4.3 above)
*25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Indenture
*25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Institutional Trustee under the
Amended and Restated Declaration of Trust
*25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as indenture trustee under the Preferred
Securities Guarantee (same as Exhibit 25.1 above)
*99.1 -- Proposed Form of Letter of Transmittal
*99.2 -- Proposed Form of Notice of Guaranteed Delivery
*99.3 -- Proposed Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
*99.4 -- Proposed Form of Letter to Clients
*99.5 -- Form of Exchange Agent Agreement
*99.6 -- Form of Information Agent Agreement
*99.7 -- Form of Newspaper Announcement
*99.8 -- Proposed Form of Holdings Letter to Holders of 9.25% Preferred Stock,
Series B
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* Previously filed.
** Filed herewith.
EXHIBIT 5.2
, 1995
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RJR Nabisco Holdings
Capital Trust I
1301 Avenue of the Americas
New York, NY 10019
Re: RJR Nabisco Holdings Capital Trust I
------------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to RJR Nabisco Holdings
Capital Trust I, a Delaware statutory business trust (the "Trust"), in
connection with certain matters relating to the organization of the Trust and
the proposed issuance of Preferred Securities to beneficial owners pursuant to
and as described in the Trust's Registration Statement (and the Prospectus
forming a part thereof) on Form S-4 to be filed with the Securities and Exchange
Commission on or about the date hereof (the "Registration Statement").
Capitalized terms used herein and not otherwise herein defined are used as
defined in the Amended and Restated Declaration of Trust of the Trust in the
form attached as an exhibit to the Registration Statement (the "Governing
Instrument").
In rendering this opinion, we have examined copies of the following
documents in the forms provided to us: the Certificate of Trust of the Trust as
filed in the Office of the Secretary of State of the State of Delaware (the
"State Office") on June 20, 1995 (the "Certificate"); a Declaration of Trust
dated as of June 20, 1995 (the "Original Governing Instrument"); the Governing
Instrument; the Guarantee Agreement by RJR Nabisco Holdings Corp. relating to
the Preferred Securities; the Dealer Manager Agreement relating to the Preferred
Securities; the Registration Statement; and a certificate of good standing of
the Trust obtained as of the date hereof from the State Office. In such
examinations, we have assumed the genuineness of all signatures, the conformity
to original documents of all documents submitted to us as drafts or copies or
forms of documents to be executed and the legal capacity of natural persons to
complete the execution of documents. We have further assumed for purposes of
this opinion: (i) the due formation or organization, valid existence and good
standing of each entity
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RJR Nabisco Holdings
Capital Trust I
, 1995
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Page 2
(other than the Trust) that is a party to any of the documents reviewed by us
under the laws of the jurisdiction of its respective formation or organization;
(ii) the due authorization, execution and delivery by, or on behalf of, each of
the parties thereto of the above-referenced documents (including, without
limitation, the due execution and delivery of the Governing Instrument and the
Dealer Manager Agreement prior to the first issuance of Preferred Securities);
(iii) that no event has occurred subsequent to the filing of the Certificate
that would cause a dissolution or liquidation of the Trust under the Original
Governing Instrument or the Governing Instrument, as applicable; (iv) that the
activities of the Trust have been and will be conducted in accordance with the
Original Governing Instrument or the Governing Instrument, as applicable, and
the Delaware Business Trust Act, 12 Del. C. Sec. 3801 et seq. (the "Delaware
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Act"); (v) that each Holder of a Preferred Security has validly tendered a
Depository Share in exchange therefor, that such Depository Share has been duly
accepted, and that such Holder has duly received a Preferred Securities
Certificate in consideration thereof, all in accordance with the terms and
conditions of the Governing Instrument, Registration Statement and Dealer
Manager Agreement; (vi) that the Preferred Securities are issued and sold to
the Preferred Securities Holders in accordance with the terms, conditions,
requirements and procedures set forth in the Governing Instrument,
Registration Statement and Dealer Manager Agreement; and (vii) that the
documents examined by us are in full force and effect, express the entire
understanding of the parties thereto with respect to the subject matter
thereof and have not been modified, supplemented or otherwise amended, except
as herein referenced. No opinion is expressed with respect to the requirements
of, or compliance with, federal or state securities or blue sky laws. We have
not participated in the preparation of the Registration Statement or any other
offering materials relating to the Preferred Securities and we assume no
responsibility for their contents. As to any fact material to our opinion,
other than those assumed, we have relied without independent investigation on
the above-referenced documents and on the accuracy, as of the date hereof, of
the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly organized and validly existing business trust
in good standing under the laws of the State of Delaware.
2. The Preferred Securities, upon issuance, will constitute validly
issued and, subject to the qualifications set forth in paragraph 3 below, fully
paid and nonassessable beneficial interests in the Trust.
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RJR Nabisco Holdings
Capital Trust I
, 1995
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Page 3
3. Under the Delaware Act and the terms of the Governing Instrument,
each Preferred Security Holder of the Trust, in such capacity, will be entitled
to the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the General Corporation Law of
the State of Delaware; provided, however, we express no opinion with respect to
the liability of any Preferred Security Holder who is, was or may become a named
Trustee of the Trust. Notwithstanding the foregoing, we note that pursuant to
Sec. 11.4 of the Governing Instrument, the Trust may withhold amounts otherwise
distributable to a Holder and pay over such amounts to the applicable
jurisdictions in accordance with federal, state and local law and any amount
withheld will be deemed to have been distributed to such Holder and that,
pursuant to the Governing Instrument, Preferred Security Holders may be
obligated to make payments or provide indemnity or security under the
circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus. In giving this consent, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. This opinion
speaks only as of the date hereof and is based on our understandings or
assumptions as to present facts, and on our review of the above referenced
documents and the application of Delaware law as the same exist as of the date
hereof, and we undertake no obligation to update or supplement this opinion
after the date hereof for the benefit of any person or entity with respect to
any facts or circumstances that may hereafter come to our attention or any
changes in facts or law that may hereafter occur or take effect.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement Nos. 33-60415 and 33-60415-01 of RJR Nabisco Holdings
Capital Trust I and RJR Nabisco Holdings Corp. on Form S-4 (the "Registration
Statement") of our report dated January 30, 1995 (February 21, 1995 as to Notes
11 and 17) appearing in RJR Nabisco Holdings Corp.'s Annual Report on Form 10-K
for the fiscal year ended December 31, 1994.
We also consent to the reference to us under the headings "Selected
Consolidated Financial Data" and "Experts" in the Prospectus, which is part of
this Registration Statement.
Deloitte & Touche LLP
New York, New York
July 26, 1995
