<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 21, 1996
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
PRICE/COSTCO, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 33-0572969
(State of incorporation) (I.R.S. Employer Identification Number)
</TABLE>
999 LAKE DRIVE
ISSAQUAH, WASHINGTON 98027
(206) 313-8100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
RICHARD J. OLIN
VICE PRESIDENT
PRICE/COSTCO, INC.
999 LAKE DRIVE
ISSAQUAH, WASHINGTON 98027
(206) 313-8100
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
COPIES TO:
<TABLE>
<S> <C>
DAVID R. WILSON NICK P. SAGGESE
Foster Pepper & Shefelman Skadden, Arps, Slate, Meagher & Flom
1111 Third Avenue, Suite 3400 300 South Grand Avenue, Suite 3400
Seattle, Washington 98101 Los Angeles, California 90071
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: FROM TIME TO
TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Debt Securities............... $500,000,000 100% $500,000,000 $172,414
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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 SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 21, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1996)
$300,000,000
PRICECOSTCO, INC.
% SENIOR NOTES DUE 2001
% SENIOR NOTES DUE 2016
Interest on the % Senior Notes due March , 2001 (the "Senior Notes due
2001") and on the % Senior Notes due March , 2016 (the "Senior Notes due
2016" and, together with the Senior Notes due 2001, the "Notes") is payable
semi-annually on March and September of each year, commencing September ,
1996. The Notes may not be redeemed at the option of the Company at any time
prior to maturity. The Senior Notes due 2016 may be redeemed, in whole or in
part, at the option of the Holders thereof on March , 2003, at a redemption
price equal to 100% of the aggregate principal amount to be redeemed, together
with accrued and unpaid interest. See "Description of the Notes -- Redemption at
the Option of Holders of Senior Notes due 2016." The Notes do not provide for
any sinking fund. The Notes are unsecured obligations of the Company and will
rank equally with all unsecured and unsubordinated indebtedness of the Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Senior Note due 2001.......... % % %
Total............................. $ $ $
Per Senior Note due 2016.......... % % %
Total............................. $ $ $
- -------------------------------------------------------------------------------------------
</TABLE>
(1) PLUS ACCRUED INTEREST, IF ANY, FROM THE DATE OF ISSUANCE.
(2) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SEE "UNDERWRITING."
(3) BEFORE DEDUCTING ESTIMATED EXPENSES OF $ PAYABLE BY THE COMPANY.
The Notes offered by this Prospectus Supplement are offered by the
Underwriters, subject to prior sale, when, as and if delivered to and accepted
by them and subject to various prior conditions, including the right to reject
any order in whole or in part. It is expected that delivery of the Notes will be
made in New York, New York on or about March , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
J.P. MORGAN SECURITIES INC.
BA SECURITIES, INC.
CIBC WOOD GUNDY SECURITIES CORP.
NATIONSBANC CAPITAL MARKETS, INC.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
RECENT DEVELOPMENTS
For the twelve weeks ended February 18, 1996, net sales were $4.6 billion,
an increase of 9 percent from $4.2 billion in the same twelve-week period of the
prior fiscal year. On a comparable warehouse basis (sales from warehouses open
at least one year), sales during the second quarter increased 5 percent over the
same period in the prior year.
For the twenty-four weeks ended February 18, 1996, net sales were $8.9
billion, an increase of 9 percent from $8.2 billion in the same twenty-four-week
period of the prior fiscal year. On a comparable warehouse basis, sales during
this twenty-four week period increased 4 percent over the same period in the
prior year.
USE OF PROCEEDS
The net proceeds from the sale of the Notes are estimated to be $297.0
million. Substantially all of such net proceeds will be used to redeem the
outstanding 6 3/4% convertible subordinated debentures due March 1, 2001 issued
by The Price Company, a wholly owned subsidiary of the Company. The aggregate
redemption price of and accrued interest on all such debentures is approximately
$ , as of , 1996. The remaining net proceeds will be used for
general corporate purposes.
S-2
<PAGE>
CAPITALIZATION
The following table sets forth the short-term borrowings and capitalization
of the Company as of November 26, 1995, and adjusted to give effect to the
issuance of the Notes and the anticipated application of the estimated net
proceeds thereof as set forth in "Use of Proceeds" as though it occurred on
November 26, 1995.
<TABLE>
<CAPTION>
NOVEMBER 26, 1995
----------------------------------
ACTUAL AS ADJUSTED
---------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Short-term borrowings......................................................... $ 247,108(1) $ 240,689
---------------- ----------------
---------------- ----------------
Long-term debt
Senior Notes offered hereby................................................... -- 300,000
7 1/8% Senior Notes due 2005.................................................. 300,000 300,000
5 3/4% Convertible Subordinated Debentures due 2002........................... 300,000 300,000
6 3/4% Convertible Subordinated Debentures due 2001........................... 285,079 --
5 1/2% Convertible Subordinated Debentures due 2012........................... 179,338 179,338
Other long-term debt and capital lease obligations, net of current portion.... 29,163 29,163
---------------- ----------------
Total long-term debt...................................................... $ 1,093,580 $ 1,108,501
Stockholders' equity
Preferred stock, 100,000,000 shares authorized; none outstanding............ -- --
Common stock, 900,000,000 shares authorized; 195,260,000 outstanding........ 1,953 1,953
Additional paid-in capital.................................................. 304,895 304,895
Accumulated foreign currency translation adjustment......................... (54,830) (54,830)
Retained earnings........................................................... 1,326,645 1,322,258(2)
---------------- ----------------
Total stockholders' equity.................................................... 1,578,663 1,574,276
---------------- ----------------
Total capitalization...................................................... $ 2,672,243 $ 2,682,777
---------------- ----------------
---------------- ----------------
</TABLE>
- ------------------------
(1) The Company had outstanding short-term borrowings of approximately $235.6
million at February 18, 1996.
(2) The early extinguishment of the 6 3/4% convertible subordinated debentures
will result in an after tax extraordinary loss of approximately $4.4 million
resulting from payment of the redemption premium, the unamortized portion of
the issuance costs on the debentures to be redeemed and the costs of this
transaction.
S-3
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AND OPERATING DATA)
The selected consolidated financial information of the Company presented in
the table below for each of the last five fiscal years and the balance sheet
data as of the end of each such year has been derived from audited consolidated
financial statements included in the documents incorporated by reference in the
accompanying Prospectus. The selected consolidated financial information of the
Company presented in the table below for the 12 weeks ended November 20, 1994
and November 26, 1995 is unaudited; however, in the opinion of management, all
adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of the results for such periods, have been included. The
results of operations for the 12 weeks ended November 26, 1995 may not be
indicative of results of operations to be expected for the full year. The table
should be read in conjunction with the Consolidated Financial Statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended September 3, 1995 and the Quarterly Report on Form 10-Q for the fiscal
quarter ended November 26, 1995 incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus.
<TABLE>
<CAPTION>
12 WEEKS
ENDED
------------
NOVEMBER 20,
1994
FISCAL YEARS(1) ------------
------------------------------------------------------------------
1991 1992 1993 1994 1995 (UNAUDITED)
------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data
Net sales.......................... $11,813,509 $13,820,380 $15,154,685 $16,160,911 $17,905,926 $3,943,718
Gross profit(2).................... 1,057,686 1,254,917 1,403,532 1,498,020 1,680,078 366,274
Membership fees and other.......... 228,742 276,998 309,129 319,732 341,360 86,205
Operating expenses(3).............. 952,259 1,156,493 1,347,832 1,457,613 1,588,106 357,169
Operating income................... 334,169 375,422 364,829 360,139 433,332 95,310
Other income (expense)(4).......... 7,872 (6,567) (28,366) (36,584) (65,128) (13,060)
Provision for merger and
restructuring expenses(5)......... -- -- -- (120,000) -- --
Income from continuing
operations........................ $ 207,293 $ 223,022 $ 202,843 $ 110,898 $ 217,241 $ 48,527
Discontinued operations (6)
Income (loss), net of tax...... 11,566 19,385 20,404 (40,766) -- --
Loss on disposal............... -- -- -- (182,500) (83,363) --
Net income (loss).................. $ 218,859 $ 242,407 $ 223,247 $ (112,368) $ 133,878 $ 48,527
Income (loss) per common and common
equivalent share (fully
diluted)..........................
Continuing operations............ $ .93 $ .98 $ .92 $ .51(5) $ 1.05 $ .22
Discontinued operations (6)
Income (loss) net of tax....... .05 .08 .08 (.19) -- --
Loss on disposal............... -- -- -- (.83) (.37) --
------------ ---------- ---------- ------------- ------------- ------------
Net income (loss)................ $ .98 $ 1.06 $ 1.00 $ (.51) $ .68 $ .22
------------ ---------- ---------- ------------- ------------- ------------
------------ ---------- ---------- ------------- ------------- ------------
Ratio of earnings to fixed
charges(7)........................ 8.0 6.6 5.2 3.3(8) 4.5(9) 4.7
Operating Data
Warehouses open at end of period... 140 170 200 221 240 228
Comparable warehouse sales increase
(decrease) (10)................... 10% 6% (3)% (3)% 2% 1%
<CAPTION>
NOVEMBER 26,
1995
SEPTEMBER 1, AUGUST 30, AUGUST 29, AUGUST 28, SEPTEMBER 3, ------------
1991 1992 1993 1994 1995 ACTUAL
------------ ---------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data
Working capital (deficit).......... $ 304,703 $ 281,592 $ 127,312 $ (113,009) $ 9,381 $ (44,934)
Total assets....................... 2,986,094 3,576,543 3,930,799 4,235,659 4,437,419 4,925,472
Long-term debt (11)................ 500,440 813,976 812,576 795,492 1,094,615 1,093,580
Stockholders' equity (12).......... 1,429,703 1,593,943 1,796,728 1,684,960 1,530,744 1,578,663
<CAPTION>
NOVEMBER 26,
1995
---------------
<S> <C>
Income Statement Data
Net sales.......................... $ 4,295,862
Gross profit(2).................... 408,746
Membership fees and other.......... 87,702
Operating expenses(3).............. 395,423
Operating income................... 101,025
Other income (expense)(4).......... (16,680)
Provision for merger and
restructuring expenses(5)......... --
Income from continuing
operations........................ $ 49,553
Discontinued operations (6)
Income (loss), net of tax...... --
Loss on disposal............... --
Net income (loss).................. $ 49,553
Income (loss) per common and common
equivalent share (fully
diluted)..........................
Continuing operations............ $ .25
Discontinued operations (6)
Income (loss) net of tax....... --
Loss on disposal............... --
---------------
Net income (loss)................ $ .25
---------------
---------------
Ratio of earnings to fixed
charges(7)........................ 4.2(9)
Operating Data
Warehouses open at end of period... 243
Comparable warehouse sales increase
(decrease) (10)................... 3%
AS ADJUSTED(13)
---------------
<S> <C>
Balance Sheet Data
Working capital (deficit).......... $ (38,515)
Total assets....................... 4,925,471
Long-term debt (11)................ 1,108,501
Stockholders' equity (12).......... 1,574,276
</TABLE>
(FOOTNOTES ON NEXT PAGE)
S-4
<PAGE>
- ------------------------------
(1) The Company reports its financial position and results of operations
utilizing a 52 or 53 week fiscal year which ends on the Sunday nearest
August 31. Fiscal 1995 was a 53-week year; all other fiscal years presented
were 52 weeks.
(2) Gross profit is comprised of net sales less merchandise costs.
(3) Operating expenses include selling, general and administrative expenses,
preopening expenses and provision for estimated warehouse closing costs.
(4) Other income (expense) includes interest expense, interest income and other
income or expense.
(5) Includes provision for merger and restructuring expenses of $120,000
pre-tax ($80,000 or $.36 per share, after tax) related to the merger of The
Price Company and Costco Wholesale Corporation in October 1993. If such
provision for merger and restructuring expenses were excluded, income from
continuing operations for fiscal 1994 would have been $190,898 or $.87 per
share.
(6) In the fourth quarter of fiscal 1994, the Company reported its non-club
real estate segment as a discontinued operation. All of the assets of the
non-club real estate segment, along with certain other assets, were
included in the spin-off of Price Enterprises. In connection with the
decision to discontinue the non-club real estate operations, the Company
recorded primarily non-cash charges of $80,500 pre-tax ($47,500 after tax
or $.22 per share) related to a change in calculating estimated losses for
assets which are considered to be economically impaired and of $182,500
($15,250 of which related to expenses of the transaction) for estimated
loss on disposal of Price Enterprises. In the second quarter of fiscal
1995, an additional non-cash charge of $83,363 for the loss on disposal of
Price Enterprises was recorded to reflect the consummation of the spin-off
transaction. The additional charge on the spin-off of Price Enterprises
reflected the difference between the $15.25 per share estimated trading
price of Price Enterprises Common Stock (used to calculate the estimated
loss in the fourth quarter of fiscal 1994) and the average closing sales
price of Price Enterprises Common Stock during the 20-trading days
commencing on the sixth trading day following the closing of the spin-off
on December 20, 1994 (which was approximately $12.16 per share) multiplied
by the 27 million shares which were exchanged or sold during the second
quarter of fiscal 1995.
(7) The ratio of earnings to fixed charges has been computed by dividing
earnings (defined as income from continuing operations before provision for
income taxes) plus fixed charges (excluding capitalized interest) by fixed
charges. Fixed charges consist of interest, debt amortization expense, the
estimated interest component of property rentals and capitalized interest.
(8) If the $120,000 pre-tax provision for merger and restructuring expenses were
excluded, the ratio of earnings to fixed charges for fiscal 1994 would have
been 4.7.
(9) The difference between the pro forma and actual calculation of the ratio of
earnings to fixed charges is less than 10% of the actual ratio of earnings
to fixed charges for both fiscal year 1995 and the 12-week period ended
November 26, 1995. As such, the pro forma ratio of earnings to fixed charges
is not presented for fiscal year 1995 and the 12-week period ended November
26, 1995.
(10) Calculated based on sales from warehouses open at least one year.
(11) Long-term debt includes convertible subordinated debt and other long-term
debt, net of current portion.
(12) PriceCostco did not pay any dividends on its common stock during the
periods presented.
(13) Adjusted to give effect to the issuance and sale of the Notes and the
anticipated application of the estimated net proceeds therefrom as though
they occurred on November 26, 1995.
S-5
<PAGE>
DESCRIPTION OF THE NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY (REFERRED TO IN THE ACCOMPANYING PROSPECTUS AS THE "DEBT SECURITIES")
SUPPLEMENTS AND, TO THE EXTENT INCONSISTENT THEREWITH, REPLACES, INSOFAR AS SUCH
DESCRIPTION RELATES TO THE NOTES, THE DESCRIPTION OF THE DEBT SECURITIES SET
FORTH IN THE PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE.
The Notes are to be issued under an Indenture, to be dated as of March ,
1996 (the "Indenture"), between the Company and American Bank National
Association, as Trustee (the "Trustee"), a form of which is filed as an exhibit
to the Registration Statement. The following summaries of certain provisions of
the Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms. Capitalized terms
not otherwise defined herein or in the Indenture shall have the meanings given
to them in the Prospectus.
GENERAL
The Notes will be senior unsecured obligations of the Company. The Senior
Notes due 2001 will be limited to aggregate principal amount and will
mature on March , 2001. The Senior Notes due 2016 will be limited to
aggregate principal amount and will mature on March , 2016. The
Notes will bear interest at the rate per annum shown on the front cover of this
Prospectus Supplement from the date of issuance of the Notes or from the most
recent Interest Payment Date to which interest has been paid or provided for,
payable semiannually on March and September of each year, commencing on
September , 1996, to the persons in whose names the Notes are registered at
the close of business on the preceding and , as the case
may be. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
The Notes are obligations exclusively of the Company. Because the operations
of the Company are currently conducted substantially through subsidiaries, the
cash flow of the Company and the consequent ability to service its debt,
including the Notes, are dependent upon the earnings of such subsidiaries and
the distribution of those earnings to the Company, or upon loans or other
payments of funds by such subsidiaries to the Company. The subsidiaries are
separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due with respect to the Notes or to make funds
available therefor, whether by dividends, loans or other payments. In addition,
the payment of dividends and certain loans and advances to the Company by such
subsidiaries may be subject to certain statutory or contractual restrictions,
are contingent upon the earnings of such subsidiaries, and are subject to
various business considerations.
The Notes will be effectively subordinated to all liabilities, including
trade payables and capitalized lease obligations, of the Company's subsidiaries.
As of , 1996, as adjusted to give effect to the redemption of
subsidiary indebtedness from the proceeds of this offering, the Company's
subsidiaries had approximately $ billion of debt outstanding, including
guarantees of indebtedness of the Company. Any right of the Company to receive
assets of any such subsidiaries upon the latter's liquidation or reorganization
(and the consequent right of the holders of the Notes to participate in those
assets) will be effectively subordinated to the claims of that subsidiary's
creditors, except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security interests in the assets of such subsidiary and
any liabilities of such subsidiary senior to that held by the Company.
Principal of and interest on the Notes are payable, and the Notes may be
presented for transfer and exchange, either at the office or agency of the
Company maintained for such purposes in New York, New York or St. Paul,
Minnesota, provided that payment of interest may, at the option of the Company,
be made by check mailed to the registered address of the person entitled
thereto. Initially, the office or agency in New York, New York, shall be the
office of the Trustee maintained for such purpose. Notes will be issued in
registered form without coupons in denominations of $1,000 and any multiple of
$1,000. No service charge will be made for any transfer or exchange of Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
S-6
<PAGE>
REDEMPTION AT THE OPTION OF THE COMPANY
The Notes may not be redeemed at the option of the Company at any time prior
to maturity.
REDEMPTION AT THE OPTION OF HOLDERS OF SENIOR NOTES DUE 2016
On March , 2003, or if such date is not a business day, then the next
succeeding business day (the "Redemption Date"), each Holder of Senior Notes due
2016 will have the right (the "Redemption Right") to require the Company to
redeem all or a part, equal to $1,000 or an integral multiple thereof, of such
Holder's Senior Notes due 2016 at a redemption price equal to 100% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon to
the Redemption Date.
In order for a Holder of any Senior Notes due 2016 to exercise the
Redemption Right, the Company must receive at the office of its paying agent in
New York, New York or St. Paul, Minnesota during the period beginning on January
, 2003 and ending at 5:00 p.m., local time, on February , 2003, or if such
date is not a business day, then the next succeeding business day, the Senior
Notes due 2016 to be redeemed with the form entitled "Option to Require
Redemption on March , 2003" on the reverse of the Senior Notes due 2016 duly
completed. Any such notice received by the Company during the aforementioned
period shall be irrevocable. Holders whose Senior Notes due 2016 are being
redeemed only in part will be issued new Senior Notes due 2016 equal in
principal amount to the unredeemed portion of the Senior Notes due 2016
surrendered, which unredeemed portion must be equal to $1,000 in principal
amount or an integral multiple thereof. Unless the Company defaults in the
payment of principal or accrued interest on the Senior Notes due 2016 to be
redeemed on the Redemption Date, interest on such Senior Notes due 2016 will
cease to accrue on the Redemption Date. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any Senior Notes due
2016 for redemption will be determined by the Company, whose determination will
be final and binding.
On the Redemption Date, the Company will, to the extent lawful, deposit with
its paying agent an amount sufficient to redeem all Senior Notes due 2016 or
portions thereof being redeemed (together with accrued interest). Failure by the
Company to redeem the Senior Notes due 2016 when required as described in the
preceding paragraph will result in an Event of Default under the Indenture.
Holders of Senior Notes due 2001 do not have the right at any time prior to
maturity to require the Company to redeem all or any part of the Senior Notes
due 2001.
The Company may not elect to have its obligations, either with respect to
payment of the indebtedness, including, without limitation, upon redemption at
the option of the Holders, or with respect to the covenants that are described
in the Indenture or in the Senior Notes due 2016, discharged or released with
respect to the Senior Notes due 2016 prior to the Redemption Date.
S-7
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), J.P. Morgan Securities Inc., BA Securities,
Inc., CIBC Wood Gundy Securities Corp., and NationsBanc Capital Markets, Inc.
(together, the "Underwriters"), the Underwriters have severally agreed to
purchase from the Company, and the Company has agreed to sell to the
Underwriters at the public offering price set forth on the cover page of this
Prospectus Supplement less the underwriting discounts and commissions, the
Notes. The respective principal amounts of the Notes that each Underwriter has
agreed to purchase is set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
SENIOR NOTES SENIOR NOTES
UNDERWRITERS DUE 2001 DUE 2016
- ----------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.................... $ $
J.P. Morgan Securities Inc.............................................
BA Securities, Inc.....................................................
CIBC Wood Gundy Securities Corp........................................
NationsBanc Capital Markets, Inc.......................................
-------------- --------------
Total.............................................................. $ $
-------------- --------------
-------------- --------------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
thereunder are subject to the approval of certain legal matters by their counsel
and to certain other conditions precedent. The Underwriting Agreement also
provides that the Company will indemnify the Underwriters and certain persons
controlling the Underwriters against certain liabilities and expenses, including
under the Securities Act, or will contribute to payments the Underwriters are
required to make in respect thereof. The nature of the Underwriters' obligations
under the Underwriting Agreement is such that they are committed to purchase all
of the Notes if any of the Notes are purchased by them.
The Underwriters have advised the Company that they propose to offer the
Notes to the public initially at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of . % of the principal amount. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of . % of the principal amount of the Notes to certain other dealers. After
the initial public offering, the public offering price, concession and
reallowance may be changed by the Underwriters.
Certain of the Underwriters have performed investment banking services, and
affiliates of certain of the Underwriters have performed, and continue to
perform, commercial banking services, for the Company for which they received or
receive customary compensation. Hamilton E. James, a Managing Director of DLJ,
is a director of the Company.
There is currently no public market for the Notes. The Company has no
present plan to list any of the Notes on a national securities exchange or to
seek the admission thereof for trading in the National Association of Securities
Dealers Automated Quotation System. The Underwriters have advised the Company
that they currently intend to make a market in the Notes, but they are not
obligated to do so and may discontinue any such market making at any time
without notice. Accordingly, there can be no assurance as to the liquidity of,
or that an active trading market will develop for, the Notes.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Foster
Pepper & Shefelman, Seattle, Washington. As of , 1996, members of
Foster Pepper & Shefelman owned an aggregate of shares of the Company's
Common Stock. The validity of the Notes will be passed upon for the Underwriters
by Skadden, Arps, Slate, Meagher & Flom, Los Angeles, California. Foster Pepper
&
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<PAGE>
Shefelman may rely on the opinion of Skadden, Arps, Slate, Meagher & Flom as to
matters of New York law. Skadden, Arps, Slate, Meagher & Flom has from time to
time represented the Company on unrelated matters.
EXPERTS
The consolidated financial statements and schedules of the Company for each
of the last three fiscal years, incorporated herein by reference, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto. In those reports, that firm states that with
respect to The Price Company for fiscal year 1993, its opinion is based on the
report of other independent auditors, namely Ernst & Young LLP. The consolidated
financial statements referred to above have been incorporated herein by
reference in reliance upon the reports of said firms and upon the authority of
those firms as experts in accounting and auditing.
With respect to the unaudited financial information of the Company for the
fiscal quarter ended November 26, 1995, incorporated herein by reference, Arthur
Andersen LLP has applied limited procedures in accordance with professional
standards for a review of such information. However, their separate report
thereon and incorporated by reference herein, states that they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on that information should
be restricted in light of the limited nature of the review procedures applied.
In addition, Arthur Andersen LLP is not subject to the liability provisions of
Section 11 of the Securities Act for their report on the unaudited interim
financial information because that report is not a "report" or a "part" of this
Prospectus prepared or certified by Arthur Andersen LLP within the meaning of
Sections 7 or 11 of the Securities Act.
S-9
<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 SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 21, 1996
PROSPECTUS
MARCH , 1996
$500,000,000
PRICECOSTCO, INC.
DEBT SECURITIES
PriceCostco, Inc. (the "Company" or "PriceCostco") may offer from time to
time, in one or more series, debentures, notes or other unsecured obligations
(the "Debt Securities") of the Company. The aggregate initial offering price of
the Debt Securities offered by the Company hereby will not exceed $500,000,000.
The Debt Securities will be offered at prices and on terms to be determined at
the time such Securities are offered for sale. The Debt Securities will be
unsecured and will rank prior to all subordinated indebtedness of the Company.
When a particular series of Debt Securities is offered, a prospectus
supplement ("Prospectus Supplement") together with this Prospectus will be
delivered setting forth the terms of such Debt Securities, including, where
applicable, the specific designation, aggregate principal amount, denomination,
maturity, rate or rates of any interest, any index to be used for determining
the amount of any payment of principal or interest, any interest payment dates,
whether the Debt Securities are issuable in the form of one or more Global
Securities ("Global Securities"), any redemption provisions, whether the Debt
Securities are subject to defeasance, any listing on a securities exchange or
quotation on the Nasdaq National Market ("The Nasdaq Stock Market"), the initial
public offering price, methods of distribution and any other specific terms in
connection with the offering and sale of such Debt Securities.
The Company may sell Debt Securities to or through underwriters, through
dealers or agents, or directly to other purchasers. If any underwriters, dealers
or agents are involved in the sale of Debt Securities in respect of which this
Prospectus is being delivered, the names of such underwriters, dealers or
agents, the amount proposed to be purchased by them, and any compensation to
such underwriters, dealers or agents will be set forth in the applicable
Prospectus Supplement. The net proceeds to the Company will also be set forth in
the applicable Prospectus Supplement. See "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street N.W., Washington, D.C. 20549 and at the Commission's regional offices at
7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549. This Prospectus
does not contain all information set forth in the Registration Statement and the
exhibits thereto which the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), and to which
reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended September
3, 1995, and the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended November 26, 1995 filed by the Company with the Commission, are hereby
incorporated in this Prospectus by reference.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to termination of the offering of the Debt Securities
offered hereby shall be deemed to be incorporated by reference herein and to be
a part hereof from the date of the filing of such reports and documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus 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 or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a Prospectus is delivered, upon written or oral request of such person, a
copy of any document incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Requests should be directed to Richard J. Olin, Vice
President, PriceCostco, Inc., 999 Lake Drive, Issaquah, Washington 98027,
telephone number (206) 313-8100.
THE COMPANY
The Company operates, principally through subsidiaries, a chain of cash and
carry membership warehouses under the names "Costco Wholesale" and "Price Club".
The Company's business is based on the concept that offering members very low
prices on a limited selection of nationally branded and selected private label
products in a wide range of merchandise categories will produce rapid inventory
turnover and high sales volumes. This rapid inventory turnover, when combined
with operating efficiencies achieved by volume purchasing, efficient
distribution and reduced handling of merchandise in no-frills, self-service
warehouse facilities, enables the Company to operate profitably at significantly
lower gross margins than traditional wholesalers, discount retailers and
supermarkets.
The Company buys virtually all of its merchandise directly from
manufacturers for shipment either directly to the Company's selling warehouses
or to a consolidation point where various shipments are combined so as to
minimize freight and handling costs. As a result, the Company eliminates many of
the costs associated with multiple step distribution channels, which include
purchasing from distributors as opposed to manufacturers, use of central
receiving, storing and distributing warehouses and storage of merchandise in
locations off the sales floor. By providing this more cost effective means of
distributing goods, the Company meets the needs of business customers who
otherwise
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would pay a premium for small purchases and for the distribution services of
traditional wholesalers, and who cannot otherwise obtain the full range of their
product requirements from any single source. In addition, these business members
will often combine personal shopping with their business purchases. The
Company's merchandise selection is designed to appeal to both the business and
consumer requirements of its members by offering a wide range of nationally
branded and selected private label products, often in case, carton or
multiple-pack quantities, at low prices.
As of February 18, 1996, the Company operated 250 warehouses in 21 states
(193 locations), nine Canadian provinces (52 locations), and the United Kingdom
(five locations, through a 60% owned subsidiary). In addition, the Company
operated 13 warehouses in Mexico through a joint venture in which the Company
has a 50% interest. A Price Club warehouse operated by a licensee opened in
October 1994 in Seoul, Korea.
The Company is incorporated in the State of Delaware. The Company's offices
are located at 999 Lake Drive, Issaquah, Washington 98027, telephone (206)
313-8100.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds from the sale of the Debt Securities by the Company are intended to be
used for general corporate purposes, which may include working capital,
acquisitions, refinancings of indebtedness and payment of securities upon their
maturity or redemption.
The Company expects that it will, from time to time, engage in additional
financings in character and amount to be determined as the need arises.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The consolidated ratio of earnings to fixed charges has been computed by
dividing earnings (defined as income from continuing operations before provision
for income taxes) plus fixed charges (excluding capitalized interest) by fixed
charges. Fixed charges consist of interest, debt amortization expense, the
estimated interest component of property rentals and capitalized interest. The
following table sets forth the ratio of earnings to fixed charges of the Company
for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEARS(1) 12 WEEKS ENDED
---------------------------------------------------------------- -----------------
1991 1992 1993 1994 1995 NOVEMBER 20, 1994
----- ----- ----- ------------ ----- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges 8.0 6.6 5.2 3.3(2) 4.5 4.7
<CAPTION>
NOVEMBER 26, 1995
-----------------
<S> <C>
Ratio of Earnings to Fixed Charges 4.2
</TABLE>
- ------------------------
(1) The Company reports its financial position and results of operations
utilizing a 52 or 53 week fiscal year which ends on the Sunday nearest
August 31. Fiscal 1995 was a 53-week year; all other fiscal years presented
were 52 weeks.
(2) If the $120,000 pre-tax provision for merger and restructuring expenses were
excluded, the ratio of earnings to fixed charges for fiscal 1994 would have
been 4.7.
DESCRIPTION OF DEBT SECURITIES
The Company may offer under this Prospectus Debt Securities which will
represent senior unsecured general obligations of the Company and which in all
cases will rank prior to all subordinated indebtedness of the Company and pari
passu with all other indebtedness of the Company. The Debt Securities are to be
issued under an indenture (the "Indenture") between the Company and American
Bank National Association, as Trustee ("Trustee"), dated , 1996,
substantially in the form filed as an exhibit to the Registration Statement.
The following summary of certain provisions of the Debt Securities and the
Indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all provisions of
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<PAGE>
the Indenture, including the definitions therein of certain terms. "Principal"
when used herein includes, when appropriate, the premium, if any, on the Debt
Securities. Provisions of the Indenture referred to herein are incorporated by
reference in their entirety.
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities of any series to which any
Prospectus Supplement may relate. The particular terms and provisions of the
series of Debt Securities offered by any Prospectus Supplement, and the extent
to which such general terms and provisions described below may apply thereto,
will be described in the Prospectus Supplement relating to such series of Debt
Securities.
GENERAL
The Debt Securities offered hereby will be limited to an aggregate initial
offering price not to exceed $500,000,000. The Indenture does not limit the
amount of Debt Securities that may be issued thereunder, and additional Debt
Securities may be issued thereunder up to the aggregate principal amount as
authorized from time to time by, or pursuant to, a resolution of the Board of
Directors of the Company. Each series of Debt Securities will constitute senior
unsecured indebtedness of the Company.
Reference is made to the Prospectus Supplement for the following terms of
the particular series of Debt Securities being offered thereby: (i) the title of
the Debt Securities of the series; (ii) any limit upon the aggregate principal
amount of the Debt Securities of the series; (iii) the date or dates on which
the principal of the Debt Securities of the series is payable; (iv) the rate or
rates (or manner of calculation thereof) at which the Debt Securities of the
series will bear interest, if any, the date or dates from which any such
interest will accrue and on which such interest will be payable, and the record
date for the interest payable on any interest payment date; (v) the place or
places where the principal of and interest on the Debt Securities of the series
will be payable; (vi) any optional or mandatory redemption, prepayment or
sinking fund provision; (vii) if in other than denominations of $1,000 and any
integral multiple thereof, the denominations in which Debt Securities of the
series shall be issuable; (viii) if other than the principal amount thereof, the
portion of the principal amount of Debt Securities of the series which will be
payable upon declaration of the acceleration of the maturity thereof; (ix)
whether any such Debt Securities are to be issuable initially in temporary
global form and whether any such Debt Securities are to be issuable in permanent
global form with or without coupons and, if so, whether beneficial owners of
interests in any such permanent global Debt Security may exchange such interests
for Debt Securities of like tenor of any authorized form and denomination and
the circumstances under which any such exchange may occur; (x) whether and under
what circumstances the Company will pay additional amounts on the Debt
Securities of the series held by a person who is not a U.S. person in respect of
taxes or similar charges withheld or deducted and, if so, whether the Company
will have the option to redeem such Debt Securities rather than pay such
additional amounts; (xi) any index used to determine the amount of payments of
principal of and interest on the Debt Securities of the series; (xii) any
additions to, modifications of or deletions from the terms of the Debt
Securities with respect to Events of Default or covenants set forth in the
applicable Indenture; (xiii) any changes to permit the Debt Securities to be
issued in bearer form and, if in bearer form, the denominations thereof and the
terms and conditions relating thereto; (xiv) whether the Debt Securities are
subject to defeasance; (xv) the appointment of a paying agent; and (xvi) any
additional provisions or other special terms not inconsistent with the
provisions of the Indenture including any terms that may be required by or
advisable under federal laws or regulations or advisable in connection with the
marketing of Debt Securities of such series.
REGISTRATION, DENOMINATIONS AND TRANSFER
Debt Securities of any series will be issued as registered Debt Securities,
without coupons or in the form of one or more Global Securities, as specified in
the terms of the series. Unless otherwise indicated in the Prospectus
Supplement, Debt Securities will be issued in denominations of U.S. $1,000 and
integral multiples thereof.
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<PAGE>
Registration of transfer of registered Debt Securities may be requested upon
surrender thereof at an agency of the Company maintained for such purpose
("Registrar") and upon fulfillment of all other requirements of such Registrar.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal and interest on registered Debt Securities (other than a Global
Security) will be made at the office or agency of the Company maintained for
such purposes in New York, New York or St. Paul, Minnesota, provided that
payment of any interest may, at the option of the Company, be made (i) by check
mailed to the address of the payee entitled thereto or (ii) by wire transfer to
an account maintained by such payee. The Company initially appoints the Trustee
as its agent for such purposes. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of any installment of interest on registered Debt
Securities will be made to the person in whose name such registered Debt
Security is registered at the close of business on the record date for such
interest payment.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities, which will be deposited with a Depositary
(the "Depositary") or its nominee identified in the applicable Prospectus
Supplement. In such a case, one or more Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding Debt Securities of the series to be represented
by such Global Security or Securities. Unless and until it is exchanged in whole
or in part for Debt Securities in registered form, a Global Security may not be
registered for transfer or exchange except as a whole by the Depositary for such
Global Security to a nominee of such Depositary and except in such circumstances
as may be described in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement. The Company expects that the
following provisions will apply to depositary arrangements.
Unless otherwise specified in an applicable Prospectus Supplement, Debt
Securities that are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of a Global
Security and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary of such Global Security will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of institutions that have accounts with such Depositary or its
nominee ("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities, or by the Company if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in a Global Security will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial interests in a
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depositary (with respect to
participants' interests) or its nominee for such Global Security or by
participants or persons that hold through participants. The laws of some
jurisdictions require that certain purchasers of Debt Securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security in registered form, or its
nominee, is the registered owner of such Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture. Except as set forth below or in the Prospectus Supplement, owners
of beneficial interests in such Global Securities will not be entitled to have
Debt Securities of the series represented by such Global Securities registered
in their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture.
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<PAGE>
Principal of and interest on a Global Security will be payable in the manner
described in the applicable Prospectus Supplement.
If a Depositary for Debt Securities notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary ceases to be a clearing agency registered under the
Exchange Act, and a successor Depositary is not appointed by the Company within
90 days, the Company will issue Debt Securities in definitive registered form in
exchange for the Global Security representing such Debt Securities. In addition,
the Company may at any time and in its sole discretion determine not to have any
Debt Securities in registered form represented by one or more Global Securities
and, in such event, will issue Debt Securities in definitive registered form in
exchange for all Global Securities representing such Debt Securities. Further,
if an Event of Default, or an event which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default, under the Indenture occurs
and is continuing with respect to the Debt Securities of a series, or if the
Company so specifies with respect to the Debt Securities of a series, the
Depositary may exchange a Global Security representing Debt Securities of such
series for Debt Securities of such series in definitive registered form. In any
such instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery in definitive form of Debt Securities of the
series represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name.
ABSENCE OF RESTRICTIVE COVENANTS
The Company is not restricted by the Indenture from paying dividends or from
incurring additional indebtedness or, except as described below, from creating
liens on its assets. The Indenture does not require the maintenance of any
financial ratios or specified levels of net worth or liquidity.
CERTAIN DEFINITIONS
"Attributable Debt" with respect to any sale leaseback transaction that is
subject to the restrictions described under "Certain Covenants -- Limitation on
Sale and Leaseback Transactions" below means the lesser of (i) the total net
amount of rent required to be paid during the remaining base term of the related
lease or until the earliest date on which the lessee may terminate such lease
upon payment of a penalty or a lump-sum termination payment (in which case the
total net rent shall include such penalty or termination payment), discounted at
the interest rate borne by the Debt Securities, computed semi-annually, or (ii)
the sale price of the property so leased multiplied by a fraction the numerator
of which is the remaining base term of the related lease (expressed in months)
and the denominator of which is the base term of such lease (expressed in
months).
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves) after deducting therefrom (i) all current liabilities
and (ii) all goodwill, tradenames, trademarks, patents, unamortized debt
discount and expense (to the extent included in said aggregate amount of assets)
and other intangible assets, all as set forth on the most recent consolidated
balance sheet of the Company and its consolidated Subsidiaries and computed in
accordance with generally accepted accounting principles.
"Principal Property" means any right, title or interest (including leasehold
interests under capital leases) of the Company or any Subsidiary in, to or under
real property or improvements to real property, which right, title or interest
has a book value equal to or greater than 0.5% of the Consolidated Net Tangible
Assets of the Company and its consolidated Subsidiaries.
"Restricted Subsidiary" means any Subsidiary that owns or is lessee of one
or more Principal Properties.
"Secured Debt" means indebtedness for money borrowed which is secured by a
Lien on property of the Company or any Restricted Subsidiary, excluding certain
guarantees arising in the ordinary course of business.
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CERTAIN COVENANTS
LIMITATION ON LIENS
The Indenture provides that, except as described below under "Exempted
Indebtedness," the Company will not, nor will it permit any Restricted
Subsidiary to, create, assume or suffer to exist any mortgage, security
interest, pledge or lien ("Lien") of or upon any Principal Property or any
shares of capital stock or evidences of indebtedness for borrowed money issued
by any Restricted Subsidiary and owned by the Company or any Restricted
Subsidiary, unless the Debt Securities are directly secured equally and ratably
by (or, at the option of the Company, prior to) such Lien with any and all other
indebtedness or obligations thereby secured, so long as such indebtedness or
obligations shall be so secured. This restriction does not apply to: (i) Liens
that exist on the date of the Indenture; (ii) Liens on property or shares of
capital stock or evidences of indebtedness of any corporation existing at the
time such corporation becomes a Subsidiary; (iii) Liens in favor of the Company
or any Subsidiary; (iv) Liens in favor of governmental bodies to secure
progress, advance or other payments pursuant to contract or law or indebtedness
incurred to finance all or part of construction of, or improvements to, property
subject to such Liens; (v) Liens (a) on property, shares of capital stock or
evidences of indebtedness for borrowed money existing at the time of acquisition
thereof (including acquisition through merger or consolidation), and
construction and improvement Liens that are entered into within one year from
the date of such construction or improvement, provided that in the case of
construction or improvement the Lien does not apply to any property theretofore
owned by the Company or any Restricted Subsidiary except substantially
unimproved real property on which the property so constructed or the improvement
is located and (b) for the acquisition of any Principal Property which Liens are
created within 180 days after the completion of such acquisition to secure or
provide for the payment of the purchase price of the Principal Property
acquired, provided that any such Liens do not extend to any other property of
the Company or any of its Restricted Subsidiaries (whether or not such property
is then owned or thereafter acquired); (vi) mechanics', landlords' and similar
Liens arising in the ordinary course of business in respect of obligations not
due or being contested in good faith; (vii) Liens for taxes, assessments, or
governmental charges or levies that are not delinquent or are being contested in
good faith; (viii) Liens arising from any legal proceedings that are being
contested in good faith; (ix) any Liens that (a) are incidental to the ordinary
conduct of its business or the ownership of its properties and assets, including
Liens incurred in connection with workmen's compensation, unemployment insurance
or other forms of governmental insurance or benefits, or to secure performance
of tenders, statutory obligations, leases and contracts, (b) were not incurred
in connection with the borrowing of money or the obtaining of advances or
credit, and (c) do not in the aggregate materially detract from the value of the
property of the Company or any Restricted Subsidiary or materially impair the
use thereof in the operation of its business; (x) Liens securing industrial
development, road, traffic improvement, sewer, utility, or pollution control
bonds; and (xi) Liens for the sole purpose of extending, renewing or replacing
in whole or in part any of the foregoing.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that, except as described below under "Exempted
Indebtedness," the Company will not, nor will it permit any Restricted
Subsidiary to, enter into any sale and leaseback transactions (except for
transactions involving temporary leases for a term of three years or less) of
any Principal Property unless either: (i) the Company or such Restricted
Subsidiary would be entitled, pursuant to the covenant described under
"Limitations on Liens" above, to incur a Lien on the Principal Property to be
leased without equally and ratably securing the Debt Securities or (ii) the
proceeds of such sale are at least equal to the fair value of the Principal
Property sold and the Company will apply an amount equal to the net proceeds of
such sale to (a) the retirement of Secured Debt of the Company or a Restricted
Subsidiary or (b) the acquisition, construction or improvement of a Principal
Property, in the case of either clause (a) or (b), within 180 days of the
effective date of any such sale and leaseback transaction.
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EXEMPTED INDEBTEDNESS
The Indenture provides that, notwithstanding the limitations on Liens and
sale and leaseback transactions described above, the Company or any Restricted
Subsidiary may create, assume or suffer to exist Liens or enter into sale and
leaseback transactions not otherwise permitted by the Indenture provided that at
the time of such event, and after giving effect thereto, the sum of outstanding
indebtedness for borrowed money incurred after the date of the Indenture and
secured by such Liens plus the Attributable Debt in respect of such sale and
leaseback transactions entered into after the date of the Indenture does not
exceed 15% of the Consolidated Net Tangible Assets of the Company and its
Restricted Subsidiaries.
LIMITATION ON MERGERS AND CONSOLIDATIONS
The Indenture provides that the Company will not merge, consolidate or
convey, transfer or lease its properties and assets substantially as an entirety
and the Company will not permit any Person to be consolidated with or merge into
the Company unless, among other things: (i) the successor Person is the Company
or other corporation organized and existing under the laws of the United States,
any state thereof or the District of Columbia that expressly assumes the
Company's obligations on the Debt Securities and under the Indenture, (ii)
immediately after giving effect to such transaction on a pro forma basis no
Default or Event of Default shall exist or shall occur and (iii) if, as a result
of any such consolidation or merger or such conveyance, transfer or lease, any
Principal Property of the Company would become subject to a Lien that would not
be permitted by the Indenture, the Company or such successor Person takes such
steps as are necessary effectively to directly secure the Debt Securities
equally and ratably with (or, at the option of the Company, prior to) all
indebtedness secured thereby.
MODIFICATION AND WAIVER
Modification and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of each series affected thereby;
provided, however, that no such modification or amendment may, among other
things, without the consent of the Holder of each Outstanding Debt Security
affected thereby: (a) change the Stated Maturity of the principal of, or any
installment of interest on, any Outstanding Debt Security; (b) reduce the
principal amount of, or interest on, any Outstanding Debt Security; (c) change
the place or currency of payment of principal or interest on any Outstanding
Debt Security; (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any Outstanding Debt Security; (e) reduce the
percentage in principal amount of Outstanding Debt Securities of any series, the
consent of the Holders of which is required for modification or amendment of the
Indenture, for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults; (f) alter or impair the right of any Holder to
convert the Debt Securities of any series that provides for conversion; or (g)
change the redemption provisions of the Indenture or a series of Debt Securities
in a manner adverse to the Holders.
The Company may obtain a waiver of compliance with certain restrictive
covenants with respect to the Debt Securities of a series if the Holders of a
majority in principal amount of the Outstanding Debt Securities of each series
affected thereby. The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series may on behalf of the Holders of
all Debt Securities of that series waive any past default under the Indenture
with respect to that series of Debt Securities, except a default in the payment
of the principal of, or any interest on, any Debt Security of that series or in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the Holder of each Outstanding Debt Security
of that series affected.
EVENTS OF DEFAULT
The Indenture provides that the following constitute Events of Default: (i)
default for 30 days in the payment of any interest when due; (ii) default in the
payment of principal when due; (iii) default in the performance of any other
covenant in the Indenture for 60 days after written notice; (iv) a failure to
pay when due, or a default resulting in the acceleration of maturity, of any
other indebtedness for
8
<PAGE>
borrowed money of the Company or any Subsidiary provided the principal amount of
any such indebtedness together with the principal amount of any other such
indebtedness that is presently in payment default or the maturity of which has
been so accelerated, aggregates $10 million or more, without such acceleration
having been rescinded, stayed or annulled, or such indebtedness having been
discharged or, in the case of indebtedness contested in good faith by the
Company, a bond, letter of credit, escrow deposit or other cash equivalent in an
amount sufficient to discharge such indebtedness having been set aside, within
60 days after written notice of default is given to the Company; and (v) certain
events of bankruptcy, insolvency or reorganization. The Company is required to
furnish the Trustee annually with a statement as to the fulfillment by the
Company of its obligations under the Indenture. The Indenture provides that the
Trustee may withhold notice to the Holders of the Debt Securities of any default
(except in payment of principal or interest on the Debt Securities) if it
considers it in the interest of the Holders to do so.
If an Event of Default with respect to Outstanding Debt Securities of any
series occurs and is continuing, then and in every such case the Trustee or the
Holders of not less than 25 percent in principal amount of the Outstanding Debt
Securities of that series may declare the principal amount to be due and payable
immediately, by notice in writing to the Company (and to the Trustee if given by
the Holders), and upon any such declaration such principal will become
immediately due and payable. However, at any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on such acceleration has been obtained, the
Holders of a majority in principal amount of Outstanding Debt Securities of that
series may, subject to certain conditions, rescind and annul such acceleration
and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee is
under no obligation to exercise any of its rights or powers under the Indenture
at the request, order or direction of any of the Holders, unless such Holders
have offered to the Trustee reasonable security or indemnity. Subject to such
provisions for the security or indemnification of the Trustee, the Holders of a
majority in principal amount of the outstanding Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
powers conferred on the Trustee with respect to the Debt Securities of that
series.
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder has previously given to the Trustee written
notice of a continuing Event of Default with respect to Debt Securities of that
series and unless also the Holders of at least 25 percent in principal amount of
the Outstanding Debt Securities of that series have made written request, and
offered reasonable security or indemnity, to the Trustee to institute such
proceeding as trustee, and the Trustee has not received from the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series a
direction inconsistent with such request, and the Trustee has failed to
institute such proceeding within 60 days. However, the Holder of any Debt
Security will have an absolute right to receive payment of the principal of and
any interest on such Debt Security on or after the due dates expressed in such
Debt Security and to institute a proceeding for the enforcement of any such
payment.
SATISFACTION, DISCHARGE, AND DEFEASANCE PRIOR TO MATURITY OR REDEMPTION
Under the Indenture, the Company may, at its option, elect to have its
obligations discharged with respect to the outstanding Debt Securities of any
defeasible series ("Defeasance"). Defeasance means that the Company will be
deemed to have paid and discharged the entire indebtedness represented, and the
Indenture will cease to be of further effect as to all outstanding Debt
Securities of such series except as to (i) rights of holders to receive payments
in respect of the principal of and interest on the Debt Securities of such
series when such payments are due from the trust assets described below; (ii)
the Company's obligations with respect to the Debt Securities of such series
concerning issuing temporary Debt Securities, registration of Debt Securities,
mutilated, destroyed, lost or stolen Debt Securities, and the maintenance of an
office or agency for payment of the Debt Securities; (iii) the
9
<PAGE>
rights, powers, trusts, duties, and immunities of the Trustee, and the Company's
obligations in connection therewith; and (iv) the Defeasance provisions of the
Indenture. The Company may cause Defeasance to occur at any time. In addition,
the Company may, at its option and at any time, elect to have the obligations of
the Company released with respect to the covenants that are described in the
Indenture with respect to the outstanding Debt Securities of any defeasible
series ("Covenant Defeasance") and thereafter any omission to comply with such
obligations will not constitute an Event of Default with respect to the Debt
Securities of such series. In the event Covenant Defeasance occurs, certain
events (not including non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described under "Events of Default" will no longer constitute
an Event of Default with respect to the Debt Securities of such series.
In order to exercise either Defeasance or Covenant Defeasance with respect
to any defeasible series, (i) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the holders of the Debt Securities of such
series, at or before maturity or redemption of the Debt Securities of such
series, money and/or Government Obligations in such amounts and maturing at such
times such that the proceeds of such obligations to be received upon the
respective maturities and interest payment dates of such obligations will
provide funds sufficient, without reinvestment, in the opinion of a nationally
recognized firm of independent public accountants, to pay when due the principal
of (and premium, if any) and each installment of principal of (and premium, if
any) and interest on such series of Debt Securities at the stated maturity of
such principal or installment of principal or interest, as the case may be, and
the Holders of Debt Securities must have a valid, perfected, exclusive security
interest in such trust; (ii) no Event of Default or event that, with notice or
lapse of time, would become an Event of Default at the date of the deposit will
have occurred and be continuing to exist, or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit; (iii) such Defeasance or Covenant
Defeasance must not cause any Debt Securities of such series then listed on any
nationally recognized securities exchange to be delisted; (iv) such Defeasance
or Covenant Defeasance must not result in a breach of, or constitute a default
under, any instrument by which the Company or any of its Subsidiaries is bound;
(v) such Defeasance or Covenant Defeasance must not cause the Trustee for the
Securities of such series to have conflicting interest for purposes of the Trust
Indenture Act with respect to any securities of the Company; (vi) such
Defeasance or Covenant Defeasance must not cause the trust to be an investment
company as defined under the Investment Company Act of 1940; (vii) the Company
must have delivered to the Trustee an Officers' Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders of
the Debt Securities over any other creditors of the Company or with the intent
of defeating, hindering, delaying or defrauding any other creditors of the
Company or others; and (viii) the Company must have delivered to the Trustee an
Officers' Certificate to the effect that all conditions precedent, if any,
provided for in the Indenture relating to Defeasance or Covenant Defeasance have
been complied with. In addition, the Company will be required to deliver to the
Trustee an Opinion of Counsel (i) in connection with a proposed Defeasance,
stating that (a) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling, or (b) since the date of the Indenture
there has been a change in the applicable Federal income tax law, in either case
to the effect that Holders of the Debt Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result of
such Defeasance and will be subject to Federal income tax in the same amounts
and in the same manner and at the same times as would have been the case if such
Defeasance had not occurred and (ii) in connection with a proposed Covenant
Defeasance, to the effect that Holders of the Debt Securities of such series
will not recognize income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance and will be subject to Federal income tax in
the same amounts and in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred.
10
<PAGE>
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities being offered hereby: (i) directly to
purchasers, (ii) through agents, (iii) through dealers, (iv) through
underwriters, or (v) through a combination of any such methods of sale.
The distribution of the Securities may be effected from time to time in one
or more transactions either (i) at a fixed price or prices, which may be
changed, (ii) at market prices prevailing at the time of sale, (iii) at prices
related to such prevailing market prices, or (iv) at negotiated prices.
Offers to purchase Securities may be solicited directly by the Company or by
agents designated by the Company from time to time. Any such agent, which may be
deemed to be an underwriter as that term is defined in the Securities Act of
1933, as amended (the "Securities Act"), involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company to such agent will be set forth in the
Prospectus Supplement relating to the offering of such Securities. Unless
otherwise indicated in the applicable Prospectus Supplement, any such agent will
be acting on a best efforts basis for the period of its appointment.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer, which may be deemed to be an underwriter as
that term is defined in the Securities Act, may then resell such Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
If an underwriter or underwriters are utilized in the sale, the Company will
execute an underwriting agreement with such underwriters at the time of sale to
them and the names of the underwriters will be set forth in the applicable
Prospectus Supplement, which will be used by the underwriters to make resales of
the Securities in respect of which this Prospectus is delivered to the public.
The obligations of underwriters to purchase securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all of the securities of a series if any are purchased.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with the Company, to indemnification against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that they may be required to make in
respect thereof. Underwriters, dealers and agents may engage in transactions
with, or perform services for, the Company in the ordinary course of business.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in a Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as agents of the Company to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date or
dates. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will not be subject to any conditions except that (a)
the purchase of the Securities will not at the time of delivery be prohibited
under the laws of the jurisdiction to which such purchaser is subject, and (b)
if the Securities are also being sold to such underwriters, the Company must
have sold to such underwriters the total principal amount of such Securities
less the principal amount thereof covered by such delayed delivery and payment
arrangements. The underwriters, dealers and such other persons will not have any
responsibility in respect of the validity or performance of such contracts.
11
<PAGE>
EXPERTS
The consolidated financial statements and schedules of the Company for each
of the last three fiscal years, incorporated herein by reference, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto. In those reports, that firm states that with
respect to The Price Company for fiscal year 1993, its opinion is based on the
report of other independent auditors, namely Ernst & Young LLP. The consolidated
financial statements referred to above have been incorporated herein by
reference in reliance upon the reports of said firms and upon the authority of
those firms as experts in accounting and auditing.
With respect to the unaudited financial information of the Company for the
fiscal quarter ended November 26, 1995, incorporated herein by reference, Arthur
Andersen LLP has applied limited procedures in accordance with professional
standards for a review of such information. However, their separate report
thereon and incorporated by reference herein, states that they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on that information should
be restricted in light of the limited nature of the review procedures applied.
In addition, Arthur Andersen LLP is not subject to the liability provisions of
Section 11 of the Securities Act for their report on the unaudited interim
financial information because that report is not a "report" or a "part" of this
Prospectus prepared or certified by Arthur Andersen LLP within the meaning of
Sections 7 or 11 of the Securities Act.
12
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY THE NOTES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
Recent Developments............................ S-2
Use of Proceeds................................ S-2
Capitalization................................. S-3
Selected Financial and Operating Data.......... S-4
Description of the Notes....................... S-6
Underwriting................................... S-8
Legal Matters.................................. S-8
Experts........................................ S-9
PROSPECTUS
Available Information.......................... 2
Incorporation of Documents by Reference........ 2
The Company.................................... 2
Use of Proceeds................................ 3
Consolidated Ratio of Earnings to Fixed
Charges....................................... 3
Description of Debt Securities................. 3
Plan of Distribution........................... 11
Experts........................................ 12
</TABLE>
PRICECOSTCO, INC.
% SENIOR NOTES
DUE MARCH , 2001
% SENIOR NOTES
DUE MARCH , 2016
--------------
PROSPECTUS SUPPLEMENT
, 1996
-------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
J.P. MORGAN SECURITIES INC.
BA SECURITIES, INC.
CIBC WOOD GUNDY SECURITIES CORP.
NATIONSBANC CAPITAL MARKETS, INC.
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses (not including underwriting commissions and fees) of issuance
and distribution of the securities are estimated to be:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee...................... $ 172,414
Accounting Fees and Expenses............................................. $ 10,000
Attorneys' Fees and Expenses............................................. $ 25,000
Trustee's Fees and Expenses.............................................. $ 7,500
Rating Agencies.......................................................... $ 135,000
Printing Expenses........................................................ $ 50,000
Blue Sky Filing Fees and Expenses (including attorneys' fees)............ $ 10,000
Miscellaneous Expenses................................................... $ 15,086
---------
Total:............................................................... $ 425,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation of the Company (the "Certificate
of Incorporation") and the Amended and Restated Bylaws of the Company (the
"Bylaws") provide for indemnification of present and former directors and
officers of the Company, The Price Company ("Price") and Costco Wholesale
Corporation ("Costco") and persons serving as directors, officers, employees or
agents of another corporation or entity at the request of the Company, Price or
Costco (each, an "Indemnified Party"), each to the fullest extent permitted by
the Delaware General Corporation Law (the "DGCL"). Section 145 of the DGCL
allows indemnification of specified persons by Delaware corporations, and
describes requirements and limitations on such powers of indemnification. The
Company has included in the Certificate of Incorporation and the Bylaws
provisions which require the Company to indemnify an Indemnified Party if the
standard of conduct and other requirements set forth therein and by the DGCL are
met.
Indemnified Parties are specifically indemnified in the Certificate of
Incorporation and the Bylaws (the "Indemnification Provisions") from expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with an action, suit or proceeding (i) by reason of the fact that
he or she is or was a director or officer of the Company, Price or Costco or
served as a director, officer, employee or agent at the request of the Company,
Price or Costco or (ii) by or in right of the Company, Price or Costco, provided
that indemnification is permitted only with judicial approval if the Indemnified
Party is adjudged to be liable to the Company. Such Indemnified Party must have
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the subject corporation and, with respect
to any criminal action or proceeding, must have had no reasonable cause to
believe his or her conduct was unlawful. Any indemnification must be authorized
based on a determination that the indemnification is proper as the applicable
standard of conduct has been met by the Indemnified Party. Such determination
will be made by a majority vote of a quorum of the Board consisting of directors
not a party to the suit, action or proceeding, by a written opinion of
independent legal counsel or by the stockholders. In the event that a
determination is made that a director or officer is not entitled to
indemnification under the Indemnification Provisions, the Indemnification
Provisions provide that the Indemnified Party may seek a judicial determination
of his or her rights to indemnification. The Indemnification Provisions further
provide that the Indemnified Party is entitled to indemnification for and
advancement of, all expenses (including attorneys' fees) incurred in any
proceeding seeking to collect from the Company an indemnity claim or advancement
of expenses under the Indemnification Provision whether or not such Indemnified
Party is successful.
II-1
<PAGE>
The Company will pay expenses incurred by a director or officer of the
Company, or a former director or officer of Price or Costco, in advance of the
final disposition of an action, suit or proceeding, if he or she undertakes to
repay amounts advanced if it is ultimately determined that he or she is not
entitled to be indemnified by the Company. The Indemnification Provision is
expressly not exclusive of any other rights of indemnification or advancement of
expenses pursuant to the Bylaws or any agreement, vote of the stockholders or
disinterested directors or pursuant to judicial direction.
The Company is authorized to purchase insurance on behalf of an Indemnified
Party for liabilities incurred, whether or not the Company would have the power
or obligation to indemnify him or her pursuant to the Certificate of
Incorporation or the DGCL. The Company has obtained such insurance.
The Company has entered into indemnification agreements with all of its
directors providing for the foregoing.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<C> <S>
1.1* Underwriting Agreement.
4.1 Form of Senior Note due 2001.
4.2 Form of Senior Note due 2016.
4.3 Form of Indenture, dated as of March ___, 1996, between Price/Costco, Inc. and
American Bank National Association, as Trustee.
5.1 Opinion of Foster Pepper & Shefelman.
12.1 Statement re computation of ratios.
15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial information
(included in its consent filed as Exhibit 23.1).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Foster Pepper & Shefelman (included in its opinion filed as Exhibit 5.1).
23.3 Consent of Ernst & Young LLP.
24.1 Power of Attorney (included on the signature page of this Registration Statement).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 under the Trust
Indenture Act of 1939.
</TABLE>
*To be filed by incorporation by reference to the Company's Current Report on
Form 8-K to be filed subsequent to the effectiveness of this Registration
Statement.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
this registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
Provided, however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
this registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Issaquah, State of Washington, on the 21st day of
February, 1996
PRICE/COSTCO, INC.
By: /s/ JAMES D. SINEGAL
-----------------------------------
Its: PRESIDENT, CHIEF EXECUTIVE
OFFICER
AND DIRECTOR
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Jeffrey H. Brotman, James D. Sinegal, Richard A. Galanti or Richard J. Olin, or
any of them, as attorneys-in-fact with full power of substitution, to execute in
the name and on behalf of each person, individually and in each capacity stated
below, and to file, any and all amendments to this Registration Statement,
including any and all post-effective amendments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 21, 1996.
<TABLE>
<C> <S>
/s/ JEFFREY H. BROTMAN
- ------------------------------------------- Chairman of the Board of Directors
Jeffrey H. Brotman
/s/ JAMES D. SINEGAL
- ------------------------------------------- President, Chief Executive Officer
James D. Sinegal and Director
/s/ RICHARD A. GALANTI Executive Vice President, Chief Financial
- ------------------------------------------- Officer and Director (Principal Financial
Richard A. Galanti Officer)
/s/ RICHARD D. DICERCHIO
- ------------------------------------------- Executive Vice President and Director
Richard D. DiCerchio
/s/ DANIEL BERNARD
- ------------------------------------------- Director
Daniel Bernard
/s/ HAMILTON E. JAMES
- ------------------------------------------- Director
Hamilton E. James
/s/ RICHARD M. LIBENSON
- ------------------------------------------- Director
Richard M. Libenson
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
/s/ JOHN W. MEISENBACH
- ------------------------------------------- Director
John W. Meisenbach
/s/ FREDRICK O. PAULSELL, JR.
- ------------------------------------------- Director
Fredrick O. Paulsell, Jr.
/s/ JILL S. RUCKELSHAUS
- ------------------------------------------- Director
Jill S. Ruckelshaus
/s/ DAVID S. PETTERSON
- ------------------------------------------- Senior Vice President and Corporate
David S. Petterson Controller (Principal Accounting Officer)
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------- ---------
<C> <S> <C>
4.1 Form of Senior Note due 2001.....................................................................
4.2 Form of Senior Note due 2016.....................................................................
4.3 Form of Indenture, dated as of March , 1996, between Price/Costco, Inc. and American Bank
National Association, as Trustee................................................................
5.1 Opinion of Foster Pepper & Shefelman.............................................................
12.1 Statement re computation of ratios...............................................................
15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial information (included in its
consent filed as Exhibit 23.1)..................................................................
23.1 Consent of Arthur Andersen LLP...................................................................
23.2 Consent of Foster Pepper & Shefelman (included in its opinion filed as Exhibit 5.1)
23.3 Consent of Ernst & Young LLP.....................................................................
24.1 Power of Attorney (included on the signature page of this Registration Statement)
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 under the Trust Indenture Act
of 1939.........................................................................................
</TABLE>
<PAGE>
FORM OF FACE OF SECURITY
PRICE/COSTCO, INC.
[ ]% SENIOR NOTES DUE 2001
No. ________ $ _________
CUSIP No. _________
Price/Costco, Inc., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _____________, or registered
assigns, the principal sum of ____________ Dollars on March [ ], 2001, and to
pay interest thereon from [ ] or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semiannually on March
[ ] and September [ ] of each year, commencing September [ ], 1996, at the
rate of [ ]% per annum, until the principal hereof is paid or made available
for payment. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest which shall be September 1 or March 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of and interest on this Security will be made at the
office or agency of the Company maintained for that purpose in New York, New
York or St. Paul, Minnesota, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; PROVIDED, however, that at the option of the Company payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Securities Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by MANUAL signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Price/Costco, Inc.
By:
-----------------------------------------
President and Chief Executive Officer
Attest:
Chairman of the Board
<PAGE>
FORM OF REVERSE OF SECURITY
This Security is one of a duly authorized issue of Securities of the
Company designated as its [ ]% Senior Notes Due 2001 (herein called the
"Securities"), limited in aggregate principal amount to $ , issued
under an Indenture, dated as of March [ ], 1996 (herein called the
"Indenture"), between the Company and American Bank National Association, as
Trustee (herein called the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
The Securities are not subject to redemption, whether at the option of
the Company or otherwise.
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries to, among other things, incur Liens, enter
into sale and leaseback transactions and merge, consolidate or convey,
transfer or lease its properties and assets substantially as an entirety.
The limitations are subject to a number of important qualifications and
exceptions.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment hereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of
a majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders
of the majority in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration or transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in New York, New York or St. Paul, Minnesota,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities, of
<PAGE>
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in
the Indenture and subject to certain limitations therein set forth, the
Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to
be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
[FORM OF ASSIGNMENT]
I or we assign this Security to
_____________________________________________
_____________________________________________
_____________________________________________
(Print or type name, address and zip code of assignee)
<PAGE>
Please insert Social Security or other identify number of assignee
____________ and irrevocably appoint _____________ agent to transfer this
Security on the books of the Company. The agent may substitute another to
act for him.
Date: ____________________ Signed: _______________________
(Sign exactly as your name appears on the other side of this Security)
___________________________
Signature guarantee should be made by a guarantor institution participating
in the Securities Transfer Agents Medallion Program or in such other
guarantee program acceptable to the Trustee.
<PAGE>
FORM OF FACE OF SECURITY
PRICE/COSTCO, INC.
[ ]% SENIOR NOTES DUE 2016
No. ________ $ ________
CUSIP No. ________
Price/Costco, Inc., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _____________, or registered
assigns, the principal sum of ____________ Dollars on March [ ], 2016, except
to the extent redeemed on March [ ], 2003, and to pay interest thereon from
[ ] or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semiannually on March [ ] and September [ ] of
each year, commencing September [ ], 1996, at the rate of [ ]% per annum,
until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest which shall be September 1 or March 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of and interest on this Security will be made at the
office or agency of the Company maintained for that purpose in New York, New
York or St. Paul, Minnesota, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; PROVIDED, however, that at the option of the Company payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Securities Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by MANUAL signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Price/Costco, Inc.
By:
-----------------------------------------
President and Chief Executive Officer
Attest:
Chairman of the Board
<PAGE>
FORM OF REVERSE OF SECURITY
This Security is one of a duly authorized issue of Securities of the
Company designated as its [ ]% Senior Notes Due 2016 (herein called the
"Securities"), limited in aggregate principal amount to $ , issued
under an Indenture, dated as of March [ ], 1996 (herein called the
"Indenture"), between the Company and American Bank National Association, as
Trustee (herein called the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
The Securities are not subject to redemption at the option of the
Company.
The Securities are subject to redemption at the option of the Holders
thereof on March [ ], 2003, in whole or in part in denominations of $1,000 or
any integral multiple thereof (provided that any remaining principal amount
thereof shall be at least $1,000 or any integral multiple thereof), at a
redemption price equal to 100% of the unpaid principal amount to be redeemed,
together with unpaid interest accrued thereon to March [ ], 2003. For this
Security to be redeemed, this Security must be received, together with the
form hereon entitled "Option to Require Redemption on March [ ], 2003" duly
completed, by the Company at the office of its paying agent in New York, New
York or St. Paul, Minnesota during the period beginning on January [ ], 2003
and ending at 5:00 p.m., local time, on February [ ], 2003, or if such date
is not a Business Day, then the next succeeding Business Day. Exercise of
such redemption option by the Holder hereof will be irrevocable. In the
event of redemption of this Security in part only, a new Security of like
tenor for the unredeemed portion hereof and otherwise having the same terms
as this Security shall be issued in the name of the Holder hereof upon the
presentation and surrender hereof.
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries to, among other things, incur Liens, enter
into sale and leaseback transactions and merge, consolidate or convey,
transfer or lease its properties and assets substantially as an entirety.
The limitations are subject to a number of important qualifications and
exceptions.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment hereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of
a majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders
of the majority in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such
<PAGE>
Holder and upon all future Holders of this Security and of any Security
issued upon the registration or transfer hereof or in exchange hereof or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in New York, New York or St. Paul, Minnesota,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in
the Indenture and subject to certain limitations therein set forth, the
Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to
be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
________________________________
________________________________
________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identify number of assignee
____________ and irrevocably appoint _____________ agent to transfer this
Security on the books of the Company. The agent may substitute another to
act for him.
Date: ____________________ Signed: _______________________
(Sign exactly as your name appears on the other side of this Security)
___________________________
Signature guarantee should be made by a guarantor institution participating
in the Securities Transfer Agents Medallion Program or in such other
guarantee program acceptable to the Trustee.
OPTION TO REQUIRE REDEMPTION ON MARCH [ ], 2003
I or we hereby exercise my or our right to require the Company to redeem the
following amount of this Security pursuant to the terms of this Security:
$__________________________
(Amount must be equal to $1,000 or any integral multiple thereof)
Date: ____________________ Signed: _______________________
(Sign exactly as your name appears on the other side of this Security)
___________________________
Signature guarantee should be made by a guarantor institution participating
in the Securities Transfer Agents Medallion Program or in such other
guarantee program acceptable to the Trustee.
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PRICE/COSTCO, INC.
and
AMERICAN BANK NATIONAL ASSOCIATION,
TRUSTEE
_____________________
INDENTURE
DATED AS OF ______, 1996
_____________________
SENIOR DEBT SECURITIES ISSUABLE IN SERIES
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
PRICE/COSTCO, INC.
TRUST INDENTURE ACT CROSS REFERENCE SHEET
This Cross Reference Sheet shows the location in this Indenture of
the provisions inserted pursuant to Sections 310-318(a), inclusive, of the
Trust Indenture Act of 1939, as amended. This Cross Reference Sheet
shall not, for any purpose, be considered a part of this Indenture.
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
----------------------------------------- ---------------
<S> <C> <C>
SECTION 310 (a)(1), (2). . . . . . . . . . . . . . . . 6.09
(a)(3), (4). . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . 6.09
(b). . . . . . . . . . . . . . . . . . . . 6.08, 6.10
(c). . . . . . . . . . . . . . . . . . . . Not Applicable
SECTION 311 (a), (b) . . . . . . . . . . . . . . . . . 6.13
(c). . . . . . . . . . . . . . . . . . . . Not Applicable
SECTION 312 (a). . . . . . . . . . . . . . . . . . . . 7.01, 7.02(a)
(b). . . . . . . . . . . . . . . . . . . . 7.02(b)
(c). . . . . . . . . . . . . . . . . . . . 7.02(c)
SECTION 313 (a)(1)-(4), (6)-(8). . . . . . . . . . . . 7.03(a)
(a)(5) . . . . . . . . . . . . . . . . . . Not Applicable
(b)(1) . . . . . . . . . . . . . . . . . . Not Applicable
(b)(2) . . . . . . . . . . . . . . . . . . 7.03(b)
(c), (d) . . . . . . . . . . . . . . . . . 7.03
SECTION 314 (a). . . . . . . . . . . . . . . . . . . . 7.04
(b). . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1), (2). . . . . . . . . . . . . . . . 1.03
(c)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(d). . . . . . . . . . . . . . . . . . . . Not Applicable
(e). . . . . . . . . . . . . . . . . . . . 1.03
(f). . . . . . . . . . . . . . . . . . . . Not Applicable
SECTION 315 (a). . . . . . . . . . . . . . . . . . . . 6.01(a)
(b). . . . . . . . . . . . . . . . . . . . 6.02
(c). . . . . . . . . . . . . . . . . . . . 6.01(b)
(d). . . . . . . . . . . . . . . . . . . . 6.01(c)
(d)(1) . . . . . . . . . . . . . . . . . . 6.01(a)
(d)(2) . . . . . . . . . . . . . . . . . . 6.01(c)(ii)
(d)(3) . . . . . . . . . . . . . . . . . . 6.01(c)(iii)
(e). . . . . . . . . . . . . . . . . . . . 5.14
SECTION 316 (a). . . . . . . . . . . . . . . . . . . . 1.01
(a)(1)(A). . . . . . . . . . . . . . . . . 5.12
(a)(1)(B). . . . . . . . . . . . . . . . . 5.13
(a)(2) . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . 5.08
SECTION 317 (a)(1) . . . . . . . . . . . . . . . . . . 5.03
(a)(2) . . . . . . . . . . . . . . . . . . 5.04
(b). . . . . . . . . . . . . . . . . . . . 10.03
SECTION 318 (a). . . . . . . . . . . . . . . . . . . . 1.08
</TABLE>
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. . . . . . . . . 10
SECTION 1.03. Compliance Certificates and Opinions . . . . . . . . . . . . . . . 11
SECTION 1.04. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . 11
SECTION 1.05. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.06. Notices, Etc., to Trustee and Company. . . . . . . . . . . . . . . 13
SECTION 1.07. Notices to Holders; Waiver . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.08. Conflict With Trust Indenture Act. . . . . . . . . . . . . . . . . 13
SECTION 1.09. Effect of Headings and Table of Contents . . . . . . . . . . . . . 13
SECTION 1.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.11. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.12. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.13. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.14. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE TWO - FORM OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.01. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.02. Additional Provisions Required in Global Security. . . . . . . . . 15
SECTION 2.03. Form of Trustee's Certificate of Authentication. . . . . . . . . . 16
ARTICLE THREE - THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.01. Amount; Issuable in Series . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.02. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.03. Execution, Authentication, Delivery and Dating . . . . . . . . . . 18
SECTION 3.04. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.05. Registration, Registration of Transfer and Exchange. . . . . . . . 19
SECTION 3.06. Mutilated, Destroyed, Lost or Stolen Securities. . . . . . . . . . 20
SECTION 3.07. Payment of Interest; Interest Rights Preserved . . . . . . . . . . 21
SECTION 3.08. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.10. Computation of Interest. . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE FOUR - LEGAL DEFEASANCE AND COVENANT DEFEASANCE 22
SECTION 4.01. Option to Effect Legal Defeasance or Covenant Defeasance . . . . . 22
SECTION 4.02. Legal Defeasance and Discharge . . . . . . . . . . . . . . . . . . 22
SECTION 4.03. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.04. Conditions to Legal or Covenant Defeasance . . . . . . . . . . . . 23
SECTION 4.05. Deposited U.S. Legal Tender and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous Provisions. . 24
SECTION 4.06. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.07. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE FIVE - REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment . . . . . . . . 26
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.04. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . 27
</TABLE>
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SECTION 5.05. Trustee May Enforce Claims Without Possession of Securities. . . . 28
SECTION 5.06. Application of Money Collected . . . . . . . . . . . . . . . . . . 28
SECTION 5.07. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.08. Unconditional Right of Holders to Receive Principal
and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.09. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . 29
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . 29
SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . 29
SECTION 5.12. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.13. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.14. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.15. Waiver of Usury, Stay or Extension Laws. . . . . . . . . . . . . . 30
ARTICLE SIX - THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.01. Certain Duties and Responsibilities. . . . . . . . . . . . . . . . 30
SECTION 6.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.03. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.04. Not Responsible for Recitals or Issuance of Securities . . . . . . 32
SECTION 6.05. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.06. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.07. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . 32
SECTION 6.08. Disqualification; Conflicting Interests. . . . . . . . . . . . . . 33
SECTION 6.09. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . . 33
SECTION 6.10. Resignation and Removal; Appointment of Successor. . . . . . . . . 33
SECTION 6.11. Acceptance of Appointment by Successor . . . . . . . . . . . . . . 34
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. . . . 35
SECTION 6.13. Preferential Collection of Claims Against Company. . . . . . . . . 35
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY TRUSTEE
AND COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.01. Company to Furnish Trustee Names and Addresses of Holders. . . . . 35
SECTION 7.02. Preservation of Information; Communications to Holders . . . . . . 35
SECTION 7.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.04. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.05. Establishment of Record Date . . . . . . . . . . . . . . . . . . . 36
ARTICLE EIGHT - CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.01. Company May Consolidate, Etc., Only on Certain Terms . . . . . . . 36
SECTION 8.02. Successor Corporation Substituted. . . . . . . . . . . . . . . . . 37
ARTICLE NINE - SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.01. Supplemental Indentures Without Consent of Holders . . . . . . . . 37
SECTION 9.02. Supplemental Indentures With Consent of Holders. . . . . . . . . . 38
SECTION 9.03. Execution of Supplemental Indentures . . . . . . . . . . . . . . . 39
SECTION 9.04. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . 39
SECTION 9.05. Conformity with Trust Indenture Act. . . . . . . . . . . . . . . . 39
SECTION 9.06. Reference in Securities to Supplemental Indentures . . . . . . . . 39
ARTICLE TEN - COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 10.01. Payment of Principal and Interest . . . . . . . . . . . . . . . . 39
SECTION 10.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . 39
SECTION 10.03. Money for Security Payments to be Held in Trust . . . . . . . . . 40
</TABLE>
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SECTION 10.04. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.05. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.06. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . 41
SECTION 10.07. Statement by Officers as to Default; Notice of Certain Events . . 41
SECTION 10.08. Limitations on Liens. . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.09. Limitation on Sale and Leaseback. . . . . . . . . . . . . . . . . 42
SECTION 10.10. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . 43
ARTICLE ELEVEN - Redemption of Securities. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 11.01. Applicability of This Article . . . . . . . . . . . . . . . . . . 43
SECTION 11.02. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . 43
SECTION 11.03. Selection of Securities to be Redeemed. . . . . . . . . . . . . . 43
SECTION 11.04. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . 44
SECTION 11.06. Payment of Securities Called for Redemption . . . . . . . . . . . 44
</TABLE>
5
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INDENTURE
INDENTURE, dated as of ______, 1996, between PRICE/COSTCO, INC., a
Delaware corporation (herein called the "Company"), and AMERICAN BANK
NATIONAL ASSOCIATION, a national banking association duly incorporated and
existing under the laws of the United States of America, as Trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation and issuance of
unsecured debt securities from time to time in series (hereinafter called the
"Securities") of substantially the tenor hereinafter provided, and to
provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, in accordance with their
terms, have been done.
All things necessary to make this Indenture a valid agreement of the
Company and the Trustee, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the
Securities are made, executed, authenticated, issued and delivered, the
Company and the Trustee covenant and agree with each other, for the equal and
proportionate benefit of all Holders (as defined below) of the Securities, as
follows:
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. DEFINITIONS
For all purposes of this Indenture and any indenture supplemental
hereto, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as well as the
singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles used by
the Company as are generally accepted at the date of such computation; and
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision. Certain terms, used
principally in Article Six, are defined in Section 1.02.
"Act" when used with respect to any Holder has the meaning
specified in Section 1.05.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
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"Attributable Debt" with respect to any sale leaseback transaction
restricted by Section 10.09 means the lesser of (i) the total net amount of
rent required to be paid during the remaining base term of the related lease
or until the earliest date on which the lessee may terminate such lease upon
payment of a penalty or a lump-sum termination payment (in which case the
total net rent shall include such penalty or termination payment), discounted
at the interest rate borne by the Securities, computed semi-annually, or (ii)
the sale price of the property so leased multiplied by a fraction the
numerator of which is the remaining base term of the related lease (expressed
in months) and the denominator of which is the base term of such lease
(expressed in months).
"Authorized Newspaper" means a newspaper of general circulation in
the New York, New York area, printed in the English language and customarily
published on each Business Day, whether or not published on Saturdays,
Sundays or holidays. Whenever successive weekly publications in an Authorized
Newspaper are required hereunder they may be made (unless otherwise expressly
provided herein) on the same or different days of the week and in the same or
in different Authorized Newspapers.
"Bankruptcy Law" means Title II, U.S. Code or any similar federal,
state or foreign law for the relief of debtors.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors, or such committee of the Board of Directors or
officers of the Company to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date
of such certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the States of New
York, Minnesota or Washington are authorized or obligated by law or executive
order to close.
"Capital Stock" means, for any Corporation, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) capital stock issued by
such Corporation.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
President, a Vice Chairman or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves) after deducting therefrom (a) all current
liabilities and (b) all goodwill, tradenames, trademarks, patents,
unamortized debt discount and expense (to the extent included in said
aggregate amount of assets) and other intangible assets, all as set forth on
the most recent consolidated balance sheet of the Company and its
Consolidated Subsidiaries and computed in accordance with GAAP.
"Consolidated Subsidiary" means, for any person, each Subsidiary
of such person (whether now existing or hereafter created or acquired) the
financial statements of which are or are required to be consolidated for
financial statement reporting purposes with the financial statements of such
person in accordance with GAAP.
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<PAGE>
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 101 East Fifth Street, St. Paul, Minnesota
55101.
"Corporation" includes corporations, associations, companies and
business trusts.
"Debt" means indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Company pursuant to
Section 3.01, and, subject to the provisions of this Indenture, shall also
include its successors and assigns.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exempted Indebtedness" means as of any particular time the sum of
(i) all then-outstanding indebtedness for borrowed money of the Company and
Restricted Subsidiaries incurred after the date hereof and secured by any
mortgage, security interest, pledge or lien other than those permitted by
paragraph (a) of Section 10.08, and (ii) all Attributable Debt with respect
to Sale and Leaseback Transactions entered into by the Company and Restricted
Subsidiaries after the date hereof other than those permitted by paragraph
(a) of Section 10.09.
"GAAP" means United States generally accepted accounting
principles as in effect on the date of this Indenture.
"Global Security" means a Security in the form prescribed in
Section 2.01, bearing the legend set forth in Section 2.02, evidencing all or
part of a series of Securities, issued to the Depositary or its nominee for
such Series, and registered in the name of such Depositary or nominee.
"Holder" means a Person in whose name a Security is registered in
the Securities Register.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 3.01.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate" means the rate of interest specified or determined
as specified in each Security as being the rate of interest payable on such
Security.
"Maturity," when used with respect to one of the Securities, means
the date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration
of acceleration or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, the President, a Vice Chairman or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee, which shall to the extent
applicable contain the statements required by Section 1.03.
8
<PAGE>
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company and who shall be acceptable to the Trustee, which
shall to the extent applicable contain the statements required by Section
1.03.
"Original Issue Date" means the date of issuance specified as such
in each Security.
"Outstanding," when used with respect to the Securities of any
series, means, as of the date of determination, all Securities of such series
theretofore authenticated and delivered under this Indenture, except:
(i) Securities of such series theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;
(ii) Securities of such series, or portions thereof, for whose
payment money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities of such series; and
(iii) Securities of such series in exchange for or in lieu
of which other Securities of such series have been authenticated and
delivered pursuant to this Indenture;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities of such series owned by the Company or any other
obligor upon the Securities of such series or any Affiliate of the Company or
of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities of such series which the Trustee knows to be so owned
shall be so disregarded. Securities of such series so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to Securities of such series and that the pledgee is not the
Company or any other obligor upon the Securities of such series or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay
the principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.06 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost
or stolen Security.
"Principal Property" means any right, title or interest (including
leasehold interests under capital leases, but excluding operating leases) of
the Company or any Subsidiary in, to or under real property or improvements
to real property, which right, title or interest has a book value equal to or
greater than 0.5% of the Consolidated Net Tangible Assets of the Company and
its Consolidated Subsidiaries.
"Regular Record Date" for the interest payable on any Interest
Payment Date with respect to the Securities of a series means the date
specified as such in the terms of the Securities of such series, or, if no
such date is so specified, the date which is fifteen days next preceding such
Interest Payment Date (whether or not a Business Day).
"Responsible Officer," when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the
chairman or any vice-chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any
assistant
9
<PAGE>
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above-designated officers, and also means, with
respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Subsidiary" means any Subsidiary that owns, or is a
lessee of one or more Principal Properties.
"Secured Debt" means indebtedness for money borrowed which is
secured by a mortgage, pledge, lien, security interest or encumbrance on
property of the Company or any Restricted Subsidiary, but shall not include
guarantees arising in connection with the sale, discount, guarantee or pledge
of notes, chattel mortgages, leases, accounts receivable, trade acceptances
and other paper arising, in the ordinary course of business, out of
installment or conditional sales to or by, or transactions involving title
retention with, distributors, dealers or other customers, of merchandise,
equipment or service.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any securities of any series
authenticated and delivered under this Indenture.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 3.05.
"Significant Subsidiary" of a person means a Subsidiary of such
person which, together with its Consolidated Subsidiaries, has assets or
revenues equal to or greater than ten percent (10%) of the assets or
revenues, respectively, of such person and its Subsidiaries on a consolidated
basis.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity," when used with respect to any Security of any
series or any installment of interest thereon, means the date specified in a
Security of such series as the fixed date on which the principal of such
Security or such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
Voting Stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries.
"Trustee" means the person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this instrument was executed,
except as provided in Section 9.05.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
"Voting Stock" means stock which ordinarily has voting power for
the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture. The following Trust Indenture Act terms used in this Indenture
have the following meanings:
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"Bankruptcy Act" means the Bankruptcy Act (Title 11 of the United
States Code).
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the Securities means the Company or any other obligor
on the Securities.
All the other Trust Indenture Act terms used in this Indenture that
are defined by the Trust Indenture Act, defined by Trust Indenture Act
reference to another statute or defined by Commission rule have the meanings
assigned to them thereby.
SECTION 1.03. COMPLIANCE CERTIFICATES AND OPINIONS
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as
to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.04. FORM OF DOCUMENTS DELIVERED TO TRUSTEE
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
11
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certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.05. ACTS OF HOLDERS
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the Outstanding Securities may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holder or Holders signing such instrument
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Trustee
and the Company if made in the manner provided in this Section 1.05.
Without limiting the generality of the foregoing, a Holder,
including a Depositary that is a Holder of a Global Security, may make, give
or take, by proxy or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted in this Indenture to be made, given or taken by Holders, and a
Depositary that is a Holder of a Global Security may provide its proxy or
proxies to the beneficial owners of interests in any Global Security.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the person executing the
same, may also be proved in any other manner which the Trustee deems
sufficient.
(c) The ownership of Securities shall be proved by the Securities
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security of any series shall bind
every future Holder of a Security of such series and the Holder of every
Security of such series issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done, omitted
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security of such
series.
(e) If the Company shall solicit from the Holders of any series of
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or pursuant to a
Board Resolution, fix in advance a record date for the determination of
Holders of Securities of such series entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or
other Act may be given before or after such record date, but only the Holders
of such series of record at the close of business on such record date shall
be deemed to be Holders for the purpose of determining whether Holders of the
requisite proportion of Outstanding Securities of such series have authorized
or agreed or consented to such request, demand,
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authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities of such series shall be computed as of
such record date; provided that no such authorization, agreement or consent
by the Holders of such series on such record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
SECTION 1.06. NOTICES, ETC., TO TRUSTEE AND COMPANY
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to
or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company addressed
to it at the address of its principal office or at any other address
previously furnished in writing to the Trustee by the Company, Attention:
Executive Vice President and Chief Financial Officer.
SECTION 1.07. NOTICES TO HOLDERS; WAIVER
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers
of notice by Holders shall be filed with the Trustee, but such filing shall
not be a condition precedent to the validity of any action taken in reliance
upon such waiver.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient notice for
every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
SECTION 1.08. CONFLICT WITH TRUST INDENTURE ACT
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or
excluded, as the case may be.
SECTION 1.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
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SECTION 1.10. SUCCESSORS AND ASSIGNS
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 1.11. SEPARABILITY CLAUSE
In case any provision in this Indenture or in the Securities of any
series shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 1.12. BENEFITS OF INDENTURE
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 1.13. GOVERNING LAW
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN
IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY HOLDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 1.14. LEGAL HOLIDAYS
In any case where any Interest Payment Date or Stated Maturity of
any Security shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of principal of and
interest on such Security need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date or at the Stated Maturity; and if so made, no
interest shall accrue for the period from and after such Interest Payment
Date or Stated Maturity, as the case may be.
ARTICLE TWO - FORM OF SECURITIES
SECTION 2.01. FORMS GENERALLY
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially such form as shall be established by
or pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have imprinted or otherwise reproduced thereon such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
rules or regulations
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pursuant thereto, or with any rules of any securities exchange or to conform
to general usage, all as determined by the officers executing such
Securities, as evidenced by their execution of the Securities. Securities
may be authenticated and delivered pursuant to such procedures acceptable to
the Trustee ("Procedures") as may be specified from time to time by Company
Order.
Prior to the delivery of a Security of any series in any such form
to the Trustee for authentication, the Company shall deliver to the Trustee
the following:
(a) An order of the Company in accordance with
applicable Procedures requesting the Trustee's authentication and
delivery of all or a portion of the Securities of such series;
(b) The Board Resolution by or pursuant to which
such form of Security has been approved, and the Board Resolution,
if any, by or pursuant to which the terms of the Securities of such
series have been approved, and, if pursuant to a Board Resolution,
an Officers' Certificate describing the action taken;
(c) An Officers' Certificate dated the date such
certificate is delivered to the Trustee, stating that all
conditions precedent provided for in this Indenture relating to the
authentication and delivery of Securities in such form and with
such terms have been complied with; and
(d) An Opinion of Counsel stating that (i) the form
of Securities of such series has been duly authorized and approved
in conformity with the provisions of this Indenture; (ii) the terms
of such Securities have been duly authorized and determined in
conformity with the provisions of this Indenture, or, if such terms
are to be determined pursuant to Procedures, when so determined
such terms shall have been duly authorized and determined in
conformity with the provisions of this Indenture; and (iii)
Securities in such form, when completed by appropriate insertions
and executed and delivered by the Company to the Trustee for
authentication in accordance with this Indenture, authenticated and
delivered by the Trustee in accordance with this Indenture within
the authorization as to aggregate principal amount established from
time to time by the Board of Directors, and sold in the manner
specified in such Opinion of Counsel, will be the legal, valid and
binding obligations of the Company enforceable in accordance with
their terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium, liquidation, receivership,
conservatorship, rehabilitation and other similar laws relating to
or affecting creditors' rights generally, or by general equitable
principles (regardless of whether such enforceability is in a
proceeding in equity or at law);
PROVIDED, HOWEVER, that the Trustee shall be entitled to receive (b), (c) and
(d) only at or prior to the first request of the Company to the Trustee to
authenticate Securities of such series.
Temporary Securities of any series may be issued as permitted by
Section 3.04. The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced
in any other manner permitted by the rules of any securities exchange on
which the Securities may be listed, all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
SECTION 2.02. ADDITIONAL PROVISIONS REQUIRED IN GLOBAL SECURITY.
Any Global Security issued hereunder shall, in addition to the other
provisions contained in a Security of such series, bear a legend in
substantially the following form:
"This Security is a Global Security within the
meaning of the Indenture hereinafter referred to and is registered
in the name of a Depositary or a nominee of a Depositary. This
Security is exchangeable for Securities registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this
Security (other than a transfer of this Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary)
may be registered except in such limited circumstances. Every
Security delivered upon registration of transfer of, or in exchange
for, or in lieu of, this Global Security shall be a Global Security
subject to the foregoing, except in the limited circumstances
described above.
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Unless this certificate is presented by an authorized
representative of The Depositary Trust Company, a New York
corporation ("DTC"), to the Company or its agent for registration
of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment
is to be made to Cede & Co. or to such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein."
SECTION 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
AMERICAN BANK NATIONAL ASSOCIATION
as Trustee
By:
-----------------------------------
Authorized Signatory
ARTICLE THREE - THE SECURITIES
SECTION 3.01. AMOUNT; ISSUABLE IN SERIES
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited in amount.
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The Securities may be issued in one or more series, the terms of each
of which may include any or all of the terms set forth below and shall be
determined in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate,
or established in one or more indentures supplemental hereto, prior to the
issuance of Securities of any series:
(a) the title of the Securities of such series, which
shall distinguish the Securities of the series from all other
Securities;
(b) the limit, if any, upon the aggregate principal
amount of the Securities of such series which may be authenticated
and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series
pursuant to Section 3.04, 3.05, 3.06, 9.06 or 11.06);
(c) the Stated Maturity or Maturities on which the
principal of the Securities of such series is payable;
(d) the Interest Rate or Interest Rates, if any, at
which the Securities of such series shall bear interest or the
method by which such Interest Rate or Interest Rates shall be
determined, the Interest Payment Dates on which such interest shall
be payable and the Regular Record Date for the interest payable on
any Interest Payment Date;
(e) the place or places where the principal of and
interest on the Securities of such series shall be payable, the
place or places where the Securities of such series may be
presented for registration of transfer or exchange, and the place
or places where notices and demands to or upon the Company in
respect of the Securities of such series may be made;
(f) the period or periods within or the date or
dates on which, if any, the price or prices at which, and the terms
and conditions upon which the Securities of such series may be
redeemed, in whole or in part, at the option of the Company;
(g) the obligation, if any, of the Company to
redeem, repay or purchase the Securities of such series pursuant to
any sinking fund, amortization or analogous provisions or at the
option of a Holder thereof, and the period or periods within which,
the price or prices at which, and the terms and conditions upon
which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(h) the period or periods within which, the price or
prices at which, and the terms and conditions upon which Securities
of such series may be repaid, in whole or in part, at the option of
the Holder thereof;
(i) the denominations in which any Securities of
such series shall be issuable, if other than denominations of
$1,000 and any integral multiple thereof;
(j) the modifications, if any, in the Events of
Default or covenants of the Company set forth herein with respect
to the Securities of such series;
(k) the portion of the principal amount of
Securities of such series which shall be payable upon declaration
of acceleration of the maturity thereof;
(l) the additions or changes, if any, to this
Indenture with respect to the Securities of such series as shall be
necessary to permit or facilitate the issuance of the Securities of
such series in bearer form, registrable or not registrable as to
principal, and with or without interest coupons;
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(m) any index used to determine the amount of payments of
principal of, or premium, if any, and interest on, the Securities
of such series and the manner in which such amounts will be
determined;
(n) the issuance of a temporary Global Security
representing all of the Securities of such series and exchange of
such temporary Global Security for definitive Securities of such
series;
(o) whether the Securities of the series shall be
issued in whole or in part in the form of one or more Global
Securities and, in such case, the Depositary for such Global
Securities, which Depositary shall be a clearing agency registered
under the Exchange Act or the basis on which such Global Security
may be exchanged for a definitive Security, if different from that
set forth in Section 3.04;
(p) the provisions, if any, relating to the
conversion or exchange of the Securities of any series into
Securities of another series or into any other debt or equity
securities;
(q) the appointment of a Paying Agent or Agents for
the Securities of such series;
(r) the applicability, if any, of Section 4.02 or
Section 4.03 to the Securities of the series, or other means of
defeasance or covenant defeasance as may be specified for the
Securities of the series; and
(s) any other terms of the Securities of such series
(which terms shall not be inconsistent with the provisions of this
Indenture);
or any of the foregoing, all upon such terms as the Board of Directors may
determine.
With respect to the Securities of any series, the Company shall
incorporate in or add to the general title of such Securities appropriate
words, letters or figures descriptive thereof. Each such Security shall bear
upon its face the designation so determined for the series to which it
belongs.
The principal of and interest on the Securities shall be payable at
the office or agency of the Company maintained for such purpose pursuant to
Section 10.02; provided, however, that principal and interest may be payable
at the option of the Company (i) by check mailed to the address of the Person
entitled thereto as such address shall appear on the Securities Register or
(ii) by wire transfer to an account maintained by such Person.
SECTION 3.02. DENOMINATIONS
The Securities of each series shall be issuable in registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof, unless otherwise specified in the Board Resolution, Officers'
Certificate or supplemental indenture creating such series of Securities.
SECTION 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President, a Vice Chairman or one of its Vice
Presidents under its corporate seal reproduced thereon attested by its
Secretary, one of its Vice Presidents or one of its Assistant Secretaries.
The signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities
or did not hold such offices at the date of such Securities.
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At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
SECTION 3.04. TEMPORARY SECURITIES
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu
of which they are issued, with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive Securities upon
surrender of the temporary Securities at any office or agency of the Company
designated pursuant to Section 10.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of any
series, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities
of the same series of authorized denominations having the same Original Issue
Date and Stated Maturity and bearing the same Interest Rate as such temporary
Securities. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 3.05. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 10.02 being herein
sometimes collectively referred to as the "Securities Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities.
The Trustee is hereby appointed "Securities Registrar" for the purposes of
registration and transfer of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 10.02 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated
Maturity and bearing the same Interest Rate.
At the option of the Holder, Securities may be exchanged for other
Securities of the same issue and series of any authorized denominations, of a
like aggregate principal amount, of the same Original Issue Date and Stated
Maturity and bearing the same Interest Rate, upon surrender of the Securities
to be exchanged at such office or agency, and upon payment, if the Company
shall so require, of the charges hereinafter provided. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
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All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the
same debt and entitled to the same benefits under this Indenture as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or exchange shall (if so required by the Company or the Securities Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Securities Registrar duly executed,
by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 3.04 or 9.06 not involving any
transfer.
If the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such Global Security or if at any time such
Depositary ceases to be a clearing agency registered under the Exchange Act,
the Company agrees to use its best efforts to appoint a replacement for the
Depositary.
Notwithstanding any of the foregoing, any Global Security shall be
exchangeable pursuant to this Section 3.05 for Securities registered in the
names of Persons other than the Depositary for such Security or its nominee
only if (i) such Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such Global Security or if at any time
such Depositary ceases to be a clearing agency registered under the Exchange
Act and, in either case, the Company fails to appoint a replacement for the
Depositary within 90 days, (ii) the Company executes and delivers to the
Trustee a Company Order that such Global Security shall be so exchangeable or
(iii) there shall have occurred and be continuing an Event of Default, or an
event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to the Securities. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Securities registered in such names as such Depositary shall
direct.
Notwithstanding any other provision in this Indenture, a Global
Security may not be transferred except as a whole by the Depositary with
respect to such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary.
Neither the Company nor the Trustee shall be required, pursuant to
the provisions of this Section 305, (a) to issue, transfer or exchange any
Security of any series during a period beginning at the opening of business
15 days before the day of selection for redemption of Securities pursuant to
Article Eleven and ending at the close of business on the day of mailing of
notice of redemption, or (b) to transfer or exchange any Security so selected
for redemption in whole or in part, except, in the case of any Security to be
redeemed in part, any portion thereof not to be redeemed.
SECTION 3.06. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES
If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Company or the Trustee
to save each of them harmless, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a new Security of the
same issue and series of like tenor and principal amount, having the same
Original Issue Date and Stated Maturity and bearing the same Interest Rate as
such mutilated Security, and bearing a number not contemporaneously
outstanding.
If there be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Company or the Trustee
that such Security has been acquired by a bona fide purchaser, the Company
shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of the same issue and series of like tenor and principal amount,
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having the same Original Issue Date and Stated Maturity and bearing the same
Interest Rate as such destroyed, lost or stolen Security, and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.06, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 3.06 in lieu of
any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED
Interest on any Security of any series which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date, shall be
paid to the Person in whose name that Security (or one or more predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of Securities of such series, except that,
unless otherwise provided in the Securities of such series, interest payable
on the Stated Maturity of a Security shall be paid to the Person to whom
principal is paid. The initial payment of interest on any Security of any
series which is issued between a Regular Record Date and the related Interest
Payment Date shall be payable as provided in such Security, Board Resolution,
Officers' Certificate or the supplemental indenture creating the related
series of Securities. At the option of the Company, interest on any Security
may be paid by wire transfer to an account maintained by the person entitled
thereto as specified in the Securities Register.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date for Securities of
such series (herein called "Defaulted Interest") shall forthwith cease to be
payable to the registered Holder on the relevant Regular Record Date; and,
except as hereinafter provided, such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in Section 3.07(a) or (b):
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series in respect of
which interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the date of
the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and
at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such series at
his address as it appears in the Securities Register not less than 10 days
prior to such Special Record Date. The Trustee may, in its discretion, in
the name and at the expense of the Company, cause a similar notice to be
published at least once in an Authorized Newspaper in the Borough of
Manhattan, The City of New York, but such publication shall not be a
condition precedent to the establishment of such Special Record Date. Notice
of the proposed payment of such Defaulted Interest
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and the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the Securities
(or their respective Predecessor Securities) are registered on such Special
Record Date and shall no longer be payable pursuant to Section 3.07(b).
(b) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which Securities of such series
may be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this Section 3.07(b), such payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section 3.07, each
Security delivered under this Indenture upon transfer of or in exchange for
or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 3.08. PERSONS DEEMED OWNERS
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and
(subject to Section 3.07) interest, if any, on such Security and for all
other purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 3.09. CANCELLATION
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and promptly cancelled by it. The
Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section 3.09, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be destroyed
unless otherwise directed by a Company Order.
SECTION 3.10. COMPUTATION OF INTEREST
Except as otherwise specified as contemplated in Section 3.01 for
Securities of any series, interest on the Securities shall be computed on the
basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR - LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 4.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
The Company may elect to have either Section 4.02 or 4.03 be applied
to all outstanding Securities of any series upon compliance with the
conditions set forth below in this Article IV.
SECTION 4.02. LEGAL DEFEASANCE AND DISCHARGE
Upon the Company's exercise under Section 4.01 of the option
applicable to this Section 4.02, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Securities of
a series on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities of such series, which
shall thereafter be deemed to be "outstanding" only for the purposes of
Section 4.05 and the other Sections of this Indenture referred to in (a) and
(b) below, and to have
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satisfied all its other obligations under Securities of such series and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of holders of outstanding Securities of such
series to receive solely from the trust fund described in Section 4.04, and
as more fully set forth in such section, payments in respect of the principal
of and interest on such Securities when such payments are due, (b) the
Company's obligations with respect to such Securities under Sections 3.04,
3.05, 3.06 and 10.02, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article IV. Subject to compliance with this Article
IV, the Company may exercise its option under this Section 4.02
notwithstanding the prior exercise of its option under Section 4.03 with
respect to the Securities of any series.
SECTION 4.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 4.01 of the option
applicable to this Section 4.03, the Company shall be released from its
obligations under the covenants contained in Sections 10.05, 10.07, 10.08 and
10.09 and Article VIII with respect to the outstanding Securities of such
series on and after the date the conditions set forth below are satisfied
(hereinafter, "COVENANT DEFEASANCE"), and such Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of holders thereof (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such
Covenant Defeasance means that, with respect to the outstanding Securities of
such series, the Company need not comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein
to any such covenant or by reason of any reference in any such covenant to
any other provision herein or in any other document, but, except as specified
above, the remainder of this Indenture and such Securities shall be
unaffected thereby. In addition, upon the Company's exercise under Section
4.01 of the option applicable to this Section 4.03, Sections 5.01(c) and
5.01(d) shall not constitute Events of Default.
SECTION 4.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of either
Section 4.02 or Section 4.03 to the outstanding Securities of any series:
(a) (1) The Company shall irrevocably have deposited or caused
to be deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of such Securities, (i) U.S.
Legal Tender in an amount, or (ii) U.S. Government Obligations which through
the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, U.S. Legal Tender in an amount, or (iii) a
combination thereof, in such amounts, as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee to pay and discharge the
principal of and interest on the outstanding Securities of such series on the
stated maturity of such principal or installment of principal or interest;
provided that the Trustee shall have been irrevocably instructed to apply
such U.S. Legal Tender or the proceeds of such U.S. Government Obligations to
said payments with respect to such Securities and (2) the holders of the
Securities must have a valid and perfected exclusive security interest in
such trust;
(b) In the case of an election under Section 4.02, the Company
shall have delivered to the Trustee an opinion of counsel in the United
States reasonably satisfactory to the Trustee confirming that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the date hereof, there has been a change in
the applicable federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance has not occurred;
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(c) In the case of an election under Section 4.03, the Company
shall have delivered to the Trustee an opinion of counsel in the United
States to the effect that the holders of the Outstanding Securities of such
series will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax in the same amount, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such deposit
or, in so far as Section 5.01(e), 5.01(f) or 5.01(g) is concerned, at any
time in the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) In the case of an election under either Section 4.02 or
4.03, the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election under Section 4.02 or 4.03, as applicable, was not made by the
Company with the intent of preferring the Holders over other creditors of the
Company or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(g) The Company shall have delivered to the Trustee an
Officers' Certificate stating that all conditions precedent provided for
relating to either the Legal Defeasance under Section 4.02 or the Covenant
Defeasance under Section 4.03 (as the case may be) have been complied with as
contemplated by this Section 4.04.
SECTION 4.05. DEPOSITED U.S. LEGAL TENDER AND U.S. GOVERNMENT OBLIGATIONS
TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS
Subject to Section 4.06, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee pursuant to
Section 4.04 in respect of the Outstanding Securities of any series shall be
held in trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent as the Trustee may determine, to the Holders of such
Securities of all sums due and to become due thereon in respect of principal
and interest, but such money need not be segregated from other funds except
to the extent required by law.
The Company agrees to pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Legal Tender or
U.S. Government Obligations deposited pursuant to Section 4.04 or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Securities.
Anything in this Article IV to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any U.S. Legal Tender or U.S. Government Obligations
held by it as provided in Section 4.04 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 4.04(a)), are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 4.06. REPAYMENT TO COMPANY
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest
on any Security and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on its
request; and the Holder of such Security shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent
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with respect to such trust money shall thereupon cease; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in
the New York Times and The Wall Street Journal (national edition), notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such notification or
publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 4.07. REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 4.02 or
4.03, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 4.02 or 4.03 until such time as the Trustee or Paying
Agent is permitted to apply such money in accordance with Section 4.02 and
4.03, as the case may be; PROVIDED, HOWEVER, that, if the Company makes any
payment of principal of or interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE FIVE - REMEDIES
SECTION 5.01. EVENTS OF DEFAULT
"Event of Default" with respect to the Securities of a particular
series, unless otherwise set forth in the Board Resolutions creating such
series of Securities, wherever used herein, means any one of the following
events which shall have occurred and be continuing (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of the principal of any Security of that
series as and when the same shall become due and payable, either at its
Maturity or otherwise; or
(b) default in the payment of any installment of interest on any
Security of that series when it becomes due and payable, and the continuance
of such default for a period of 30 days; or
(c) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture in respect of the Securities of
that series (other than a covenant or warranty, a default in performance or
breach of which is elsewhere in this Section 5.01 specifically dealt with),
and continuance of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of each series
affected thereby, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(d) a default under any bond, debenture, note or other evidence of
Debt of the Company or any Subsidiary (including any Securities) or under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Debt of the Company or any Subsidiary,
whether such Debt now exists or shall hereafter be created, which default
shall involve the failure to pay principal of, or interest on, Debt in excess
of $10,000,000 at the stated maturity thereof or shall have resulted in Debt
in excess of $10,000,000 becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable, without
such acceleration having been rescinded, stayed or annulled, or such Debt
having been discharged or, in the case of a Debt contested in good faith by
the Company, a bond, letter of credit, escrow deposit or other cash
equivalent in an amount sufficient to discharge such Debt having been set
aside by the Company, within a period of 60 days after there shall have been
given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee
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by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities a written notice specifying such default and requiring
the Company to cause such acceleration to be rescinded or annulled or cause
such Debt to be discharged and stating that such notice is a "Notice of
Default" hereunder; or
(e) the filing by the Company or any Significant Subsidiary of the
Company (in either case, a "Debtor") of a petition commencing a voluntary
case under section 301 of title 11 of the United States Code, or the
commencement by a Debtor of a case or proceeding under any other Bankruptcy
Law seeking the adjustment, restructuring, or discharge of the debts of such
Debtor, or the liquidation of such Debtor, including without limitation the
making by a Debtor of an assignment for the benefit of creditors; or the
taking of any corporate action by a Debtor in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing; or
(f) the filing against a Debtor of a petition commencing an
involuntary case under section 303 of title 11 of the United States Code,
with respect to which case (i) such Debtor consents or fails to timely object
to the entry of, or fails to seeks the stay and dismissal of, an order of
relief, (ii) an order for relief is entered and is pending and unstayed on
the 60th day after the filing of the petition commencing such case, or if
stayed, such stay is subsequently lifted so that such order for relief is
given full force and effect, or (iii) no order for relief is entered, but the
court in which such petition was filed has not entered an order dismissing
such petition by the 60th day after the filing thereof; or the commencement
under any other Bankruptcy Law of a case or proceeding against a Debtor
seeking the adjustment, restructuring, or discharge of the debts of such
Debtor, or the liquidation of such Debtor, which case or proceeding is
pending without having been dismissed on the 60th day after the commencement
thereof; or
(g) the entry by a court of competent jurisdiction of a judgment,
decree or order appointing a receiver, liquidator, trustee, custodian or
assignee of a Debtor or of the property of a Debtor, or directing the winding
up or liquidation of the affairs or property of a Debtor, and (i) such Debtor
consents or fails to timely object to the entry of, or fails to seek the stay
and dismissal of, such judgment, decree, or order, or (ii) such judgment,
decree or order is in full force and effect and is not stayed on the 60th day
after the entry thereof, or, if stayed, such stay is thereafter lifted so
that such judgment, decree or order is given full force and effect.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT
If an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then and in every such case,
unless the principal amount of all the Securities of such series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Securities of that series then
Outstanding may declare the principal of all the Securities of that series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such
principal shall become and shall be immediately due and payable, anything in
this Indenture or in the Security to the contrary notwithstanding.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article Five provided, the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of such series, by written notice to the Company and the Trustee,
may rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all overdue installments of interest on the Securities of
that series,
(ii) the principal of any Securities of that series which have
become due otherwise than by such declaration of acceleration, with interest
thereon from the date such principal became due at the rate borne by the
Securities,
(iii) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the rate borne by the
Securities, and
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(iv) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(b) all Events of Default with respect to the Securities of that
series, other than the nonpayment of the principal of Securities of that
series which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE
The Company covenants that if default is made in the payment of (a)
any installment of interest on any Security when such interest becomes due
and payable and such default continues for a period of 30 days or (b) the
principal of any Security at the Maturity thereof or otherwise, the Company
will, upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal or interest, if any, or both, as the case may be,
with interest upon the overdue principal and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments of
interest, at the rate per annum borne by the Securities during the period of
such default; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon the Securities
so affected and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other
obligor upon the Securities so affected, wherever situated.
If an Event of Default with respect to the Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.04. TRUSTEE MAY FILE PROOFS OF CLAIM
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) to file and prove a claim for the amount of principal and
interest, if any, owing and unpaid in respect of the Securities and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Holders allowed in such judicial proceeding and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator, custodian or
other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that
the Trustee
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shall consent to the making of such payments directly to the Holders, to pay
to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 5.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities of any series in respect of which such judgment has been recovered.
SECTION 5.06. APPLICATION OF MONEY COLLECTED
Any money collected by the Trustee pursuant to this Article Five with
respect to a series of Securities shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal or interest, if any, upon presentation of
the Securities of such series and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.07;
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest, if any, upon such series of Securities in respect
of which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such series of Securities for principal and interest, if any,
respectively; and
THIRD: The balance, if any, to the Persons entitled thereto.
SECTION 5.07. LIMITATION ON SUITS
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(b) the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities of that series shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such action, suit
or proceeding; and
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(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Securities of such series;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders.
SECTION 5.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 3.07) interest,
if any, on such Security on or after the Stated Maturity expressed in such
Security, and to institute suit for the enforcement of any such payment and
such rights shall not be impaired without the consent of such Holder.
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.06, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 5.11. DELAY OR OMISSION NOT WAIVER
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article Five or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
SECTION 5.12. CONTROL BY HOLDERS
The Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, with
respect to the Securities, provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture and
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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SECTION 5.13. WAIVER OF PAST DEFAULTS
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any series may on behalf of the Holders of
all the Securities of that series waive any past default hereunder with
respect to such series and its consequences, except a default
(a) in the payment of the principal of or interest, if any, on any
Security of such series or
(b) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 5.14. UNDERTAKING FOR COSTS
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard
to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 5.14 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities of any series, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of or interest, if any,
on any Security on or after the Stated Maturity expressed in such Security.
SECTION 5.15. WAIVER OF USURY, STAY OR EXTENSION LAWS
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE SIX - THE TRUSTEE
SECTION 6.01. CERTAIN DUTIES AND RESPONSIBILITIES
(a) With respect to the Securities, except during the continuance
of an Event of Default with respect to the Securities,
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture.
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(b) In case an Event of Default with respect to the Securities of
any series has occurred and is continuing, the Trustee shall, with respect to
the Securities of such series, exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that
(i) this Section 6.01(c) shall not be construed to limit the
effect of Section 6.01(a);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it with respect to the Securities of
any series in good faith in accordance with the direction of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of such
series relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.
No provision of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 6.02. NOTICE OF DEFAULTS
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail
to all Holders of Securities of such series entitled to receive reports
pursuant to Section 7.04(c), notice of such default hereunder known to the
Trustee, unless such default shall have been cured or waived; PROVIDED,
HOWEVER, that, except in the case of a default in the payment of the
principal of or interest, if any, on any Security, the Trustee shall be
protected in withholding such notice if and so long as the Board of
Directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders; and provided,
further, that in the case of any default of the character specified in
Section 5.01(d) with respect to Securities, no such notice to Holders shall
be given until at least 30 days after the occurrence thereof. For the
purpose of this Section 6.02, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to the Securities.
SECTION 6.03. CERTAIN RIGHTS OF TRUSTEE
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
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(d) the Trustee may consult with counsel and the advice of such
counsel or any opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) except with respect to Section 10.01, the Trustee shall have no
duty to inquire as to the performance of the Company's covenants in Article X
hereof. In addition, the Trustee shall not be deemed to have knowledge of
any Default or Event of Default except (i) any Event of Default occurring
pursuant to Section 5.01 (a), 5.01 (b) or 10.01, or (ii) any Default or Event
of Default of which the Trustee shall have received written notification or
obtained actual knowledge.
SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representation as to the validity or sufficiency of
this Indenture or of the Securities. The Trustee shall not be accountable
for the use or application by the Company of Securities or the proceeds
thereof.
SECTION 6.05. MAY HOLD SECURITIES
The Trustee, any Paying Agent, any Securities Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 6.08 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not the Trustee, Paying Agent, Securities Registrar or such other agent.
SECTION 6.06. MONEY HELD IN TRUST
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Company. Upon the written direction of the
Company, the Trustee shall invest funds held by it hereunder either in term
or demand obligations of banking institutions with capital surplus in excess
of $500,000,000 or in a money market fund which invests solely in U.S.
government obligations, and in either case which provides for daily liquidity.
SECTION 6.07. COMPENSATION AND REIMBURSEMENT
The Company agrees
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(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section 6.07, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the payment of principal of or interest,
if any, on the Securities.
SECTION 6.08. DISQUALIFICATION; CONFLICTING INTERESTS
The Trustee shall comply with Section 310(b) of the Trust Indenture
Act.
SECTION 6.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY
There shall at all times be a Trustee hereunder with respect to the
Securities which shall be a Person eligible under the Trust Indenture Act,
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authority. If such person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the
purposes of this Section 6.09 the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. No obligor of the Securities
or Person directly or indirectly controlling, controlled by or under common
control with such obligor shall serve as Trustee upon such Securities. The
Trustee shall at all times satisfy the requirements of Section 310(a)(1) of
the Trust Indenture Act. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.09, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article Six.
SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article Six shall become effective until
the acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by the Act of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of such series, delivered to
the Trustee and to the Company.
(d) If at any time with respect to the Securities:
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(i) the Trustee shall fail to comply with Section 6.08 after
written request therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months or
(ii) the Trustee shall cease to be eligible under Section 6.09
and shall fail to resign after written request therefor by the Company or by
any such Holder or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, (A) the
Company by a Board Resolution may remove the Trustee with respect to the
Securities or (B) subject to Section 5.14, any Holder who has been a bona
fide Holder of a Security for at least six months (or, in the case of clause
(ii), any Holder) may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause
with respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series. If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy,
a successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of that series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment in accordance with Section 6.11, become
the successor Trustee with respect to the Securities of such series and to
that extent supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the Holders
and accepted appointment in the manner hereinafter provided, any Holder who
has been a bona fide Holder of a Security of such series for at least six
months, or the Holder or Holders of at least 10% in aggregate principal
amount of the Outstanding Securities of such series, may, on behalf of
himself (or themselves) and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of the Securities of such series as their names and
addresses appear in the Securities Register. Each notice shall include the
name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
(a) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of any series, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder, subject nevertheless to its lien, if any, provided for in Section
6.07.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in Section 6.11(a) and this Section 6.11(b), as the case may be.
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(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article Six.
SECTION 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
Any Corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any Corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any Corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Corporation shall be otherwise qualified and eligible under
this Article Six, without the execution or filing of any paper or any further
Act on the part of any of the parties hereto. In case any Securities shall
have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
If and when the Trustee shall become a creditor of the Company (or
any other obligor of the Securities), the Trustee shall be subject to the
terms of the Trust Indenture Act regarding collection of claims against the
Company (or such obligor).
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS
The Company will furnish or cause to be furnished to the Trustee:
(a) semiannually, not more than 15 days after each Regular Record
Date with respect to the Securities of any series, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders
of Securities of such series as of such Regular Record Date and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the
time such list is furnished; EXCLUDING from any such list names and addresses
received by the Trustee in its capacity as Securities Registrar.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, (i) the names and addresses of Holders contained in
the most recent list furnished to the Trustee as provided in Section 7.01 and
(ii) the names and addresses of Holders received by the Trustee in its
capacity as Securities Registrar. The Trustee may destroy any list furnished
to it as provided in Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of
the Holders in accordance with Section 7.02, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made
under Section 7.02(b).
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SECTION 7.03. REPORTS BY TRUSTEE
(a) The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required under the
Trust Indenture Act at the time and in the manner provided therein.
(b) A copy of each such report shall, at the time of transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, if any, with the Commission and with the Company. The
Company shall notify the Trustee when, if ever, the Securities are listed on
any stock exchange.
SECTION 7.04. REPORTS BY COMPANY
(a) The Company shall file with the Trustee, within 15 days after
the Company is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company is required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is not required to file information,
documents or reports pursuant to either of such Sections, then to file with
the Trustee and the Commission, in accordance with rules and regulations
prescribed by the commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section
13 of the Exchange Act, in respect of a security listed and registered on a
national securities exchange, as may be prescribed in such rules and
regulations.
(b) The Company shall file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed by the Commission, such
additional information, documents, and reports with respect to compliance by
the Company with the conditions and covenants provided for in this Indenture
as may be required by such rules and regulations.
(c) The Company shall transmit to the Holders within 30 days after
the filing thereof with the Trustee, by first class mail, such summaries of
any information, documents and reports required to be filed by the Company
pursuant to Section 7.04(a) and (b) as may be required by rules and
regulations prescribed by the Commission.
SECTION 7.05. ESTABLISHMENT OF RECORD DATE
The Company may set a record date in the circumstances permitted by
the Trust Indenture Act for the purpose of determining the Holders of
Securities of any series entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote
on any action, authorized or permitted to be given or taken by Holders of
Securities. If not set by the Company prior to the first solicitation of a
Holder of Securities of any series in respect of any such action, or, in the
case of any such vote, prior to such vote, the record date for any such
action or vote shall be the 30th day (or, if later, the date of the most
recent list of Holders of Securities of such series required to be provided
pursuant to Section 7.01) prior to such first solicitation or vote, as the
case may be, notwithstanding the provisions of the Trust Indenture Act. If a
record date is fixed, those persons who were Holders of Securities of such
series at such record date (or their duly designated proxies), and only those
persons, shall be entitled to take such action by vote or consent or to
revoke any vote or consent previously given, whether or not such persons
continue to be Holders after such record date. No such vote or consent shall
be valid or effective for more than 120 days after such record date.
ARTICLE EIGHT - CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
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(a) in case the Company shall consolidate with or merge into
another corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be the Company or a
corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the principal of and interest, if any, on all the Securities and the
performance of every covenant of this Indenture on the part of the Company to
be performed or observed;
(b) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing; and
(c) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance that would not be permitted by this Indenture, the Company or
such successor corporation or Person, as the case may be, shall take such
steps as shall be necessary effectively to secure the Securities equally and
ratably with (or, at the option of the Company, prior to) all indebtedness
secured thereby; and
(d) the Company has delivered to the Trustee an Officers'
Certificate and an opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture
comply with this Article Eight and that all conditions precedent herein
provided for relating to such transaction have been complied with.
SECTION 8.02. SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger by the Company with or into any
other corporation or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety to any Person in
accordance with Section 8.01, the successor corporation formed by such
consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor had been named as the
Company herein, and thereafter, except in the case of a lease to another
Person, the Company shall be discharged from all obligations and covenants
under this Indenture and the Securities.
ARTICLE NINE - SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory
to the Trustee, for any of the following purposes:
(a) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of the
Company herein and in the Securities in accordance with this Indenture; or
(b) to add to the covenants of the Company for the benefit of the
Holders of the Securities, or to surrender any right or power herein
conferred upon the Company; or
(c) to secure the Securities; or
(d) to provide for uncertificated Securities in addition to or in
place of certificated Securities; or
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(e) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make
any other provisions with respect to matters or questions arising under this
Indenture, provided such action shall not adversely affect the interests of
the Holders in any material respect; or
(f) to establish the form or terms of Securities of any series
pursuant to Section 2.01 or 301; or
(g) to add an event that will be an Event of Default under Section
5.01; or
(h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series or to add to or change any of the provisions of this Indenture
necessary to provide for more than one Trustee.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed by the Company and the Trustee without the
consent of the Holders of Outstanding Securities of any series,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS
Subject to Section 5.08, with the consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Securities
of each series affected thereby, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of Securities of such series under this
Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected
thereby,
(a) change the Stated Maturity of the principal of, or any
installment of principal of or interest, if any, on, any Security, or reduce
the principal amount thereof or the interest thereon or the rate of interest
payable on the Securities, or change the place of payment where, or the coin
or currency in which, any Security or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof, or change the redemption provisions in
a manner adverse to any Holder, or
(b) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(c) modify any of the provisions of this Section 9.02 or Section
5.08 or Section 5.13, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, or
(d) make the Securities subordinated in right of payment to any
extent or under any circumstances to any other indebtedness.
It shall not be necessary for any Act of Holders under this Section
9.02 to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
38
<PAGE>
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article Nine or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES
Upon the execution of any supplemental indenture under this Article
Nine, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT
Every supplemental indenture executed pursuant to this Article Nine
shall conform to the requirements of the Trust Indenture Act as then in
effect.
SECTION 9.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article Nine may, and shall, if
required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered
by the Trustee in exchange for outstanding Securities.
ARTICLE TEN - COVENANTS
SECTION 10.01. PAYMENT OF PRINCIPAL AND INTEREST
The Company will duly and punctually pay the principal of and
interest, if any, on the Securities of any series in accordance with the
terms of the Securities of such series and this Indenture.
SECTION 10.02. MAINTENANCE OF OFFICE OR AGENCY
The Company will maintain an office or agency in New York, New York
where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
39
<PAGE>
SECTION 10.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of or interest, if any, on
any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal or interest,
if any, so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
on each due date of the principal of or interest, if any, on any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal or interest
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section
10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of or
interest, if any, on Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of principal
or interest; and
(c) at any time during the continuance of any Default by the
Company, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent for payment in respect
of the Securities.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest
on any Security and remaining unclaimed for one year after such principal or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause
to be published once, in an Authorized Newspaper or mailed to such Holder or
both, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining
will be repaid to the Company.
40
<PAGE>
SECTION 10.04. EXISTENCE
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 10.05. MAINTENANCE OF PROPERTIES
The Company will cause all properties used or useful in the conduct
of its business or the business of any Subsidiary to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith will not be materially impaired; provided, however, that nothing in
this Section 10.05 shall prevent the Company from discontinuing the operation
or maintenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
SECTION 10.06. PAYMENT OF TAXES AND OTHER CLAIMS
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and
(b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings or which would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
SECTION 10.07. STATEMENT BY OFFICERS AS TO DEFAULT; NOTICE OF CERTAIN EVENTS
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in Default in the performance and observance
of any of the Company's obligations under this Indenture and, if the Company
shall be in Default, specifying all such Defaults and the nature and status
thereof of which they may have knowledge.
The Company will deliver to the Trustee within 15 days after the
occurrence thereof notice of any acceleration which with the giving of notice
and lapse of time would be an Event of Default within the meaning of Section
5.01(e).
SECTION 10.08. LIMITATIONS ON LIENS
(a) The Company will not, and will not permit any Restricted
Subsidiary to, hereafter, create, assume or offer to exist any mortgage,
security interest, pledge or lien (herein referred to as a "Lien") of or
upon any Principal Property, or any shares of Capital Stock or evidences of
indebtedness for borrowed money issued by any Restricted Subsidiary and owned
by the Company or any Restricted Subsidiary, whether owned at the date of
this Indenture or thereafter acquired, without making or causing to be made
effective provision, whereby the Securities shall be secured by such Lien
equally and ratably with any and all other indebtedness or obligations
thereby secured, so long as such indebtedness or obligations shall be so
secured; provided, however, that the foregoing shall not apply to any of the
following:
(1) Liens that exist on the date of this Indenture;
41
<PAGE>
(2) Liens on property, shares of Capital Stock or evidences of
indebtedness of any corporation existing at the time such corporation
becomes a Subsidiary;
(3) Liens in favor of the Company or any Subsidiary;
(4) Liens in favor of governmental bodies to secure progress,
advance or other payments pursuant to contract or law or indebtedness
incurred to finance all or a part of construction of or improvements to
property subject to such Liens;
(5) Liens (i) on property, shares of Capital Stock or
evidences of indebtedness for borrowed money existing at the time of
acquisition thereof (including acquisition through merger or
consolidation), and construction and improvement Liens that are entered
into within one year from the date of such construction or improvement;
provided that in the case of construction or improvement the Lien shall
not apply to any property theretofore owned by the Company or any
Restricted Subsidiary except substantially unimproved real property on
which the property so constructed or the improvement is located and (ii)
for the acquisition of any Principal Property which Liens are created
within 180 days after the completion of such acquisition to secure or
provide for the payment of the purchase price of the Principal Property
acquired; provided that any such Lien does not extend to any other
property of the Company or any of its Restricted Subsidiaries (whether
such property is then owned or thereafter acquired).
(6) mechanics', landlords' and similar Liens arising in the
ordinary course of business in respect of boligations not due or being
contested in good faith;
(7) Liens for taxes, assessments, or governmental charges or
levies that are not delinquent or are being contested in good faith;
(8) Liens arising from any legal proceedings that are being
contested in good faith;
(9) any Liens that (i) are incidental to the ordinary conduct
of its business or the ownership of its properties and assets, including
Liens incurred in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or benefits, or to
secure performance of lenders, statutory obligations, taxes and
contracts, (ii) were not incurred in connection with the borrowing of
money or the obtaining of advances or credit and (iii) do not in the
aggregate materially detract from the value of the property of the
Company or any Restricted Subsidiary or materially impair the use
thereof in the operation of its business;
(10) Liens securing industrial development, road, traffic
improvement, sewer, utility or pollution control bonds; and
(11) Liens for the sole purpose of extending, renewing or
replacing (or successively extending, removing or replacing) in whole or
in part any of the foregoing.
(b) Notwithstanding the provisions of paragraph (a) of this Section
10.08, the Company or any Restricted Subsidiary may, without equally and
ratably securing the Securities, create, assume or suffer to exist Liens
which would otherwise be subject to the foregoing restrictions if at the time
of such creation or assumption, and after giving effect thereto, Exempted
Indebtedness does not exceed 15% of Consolidated Net Tangible Assets.
SECTION 10.09. LIMITATION ON SALE AND LEASEBACK
(a) The Company will not, nor will it permit any Restricted
Subsidiary to, enter into any arrangement with any person providing for the
leasing (as lessee) by the Company or any Restricted Subsidiary of any
Principal Property (except for temporary leases for a term, including any
renewal thereof, of not more than three years and except for leases between
the Company and a Restricted Subsidiary or between Restricted Subsidiaries)
42
<PAGE>
which property has been or is to be sold or transferred by the Company or a
Restricted Subsidiary to such person (herein referred to as a "Sale and
Leaseback Transaction") unless either (i) the Company or such Restricted
Subsidiary would be entitled to incur a Lien on such Principal Property
without equally and ratably securing the Securities pursuant to paragraph (a)
of Section 10.08 or (ii) the proceeds of such sale are at least equal to the
fair value of the Principal Property sold and the Company shall apply an
amount equal to the net proceeds of such sale to (A) the retirement of
Secured Debt of the Company or a Restricted Subsidiary or (B) the
acquisition, construction or improvement of a Principal Property, in the case
of either clause (A) or (B) within 180 days of the effective date of any such
Sale and Leaseback Transaction.
(b) Notwithstanding the provisions of paragraph (a) of this Section
10.9, the Company or any Restricted Subsidiary may enter into Sale and
Leaseback Transactions, if at the time of such entering into, and after
giving effect thereto, Exempted Indebtedness does not exceed 15% of
Consolidated Net Tangible Assets.
SECTION 10.10. WAIVER OF CERTAIN COVENANTS
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 10.05, 10.06, 10.08 and 10.09
with respect to the Securities of any series if before the time for such
compliance the Holders of at least a majority in aggregate principal amount
of the Outstanding Securities of such series shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance
with such covenant or condition, but no such waiver shall extend to or affect
such covenant or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
ARTICLE ELEVEN - REDEMPTION OF SECURITIES
SECTION 11.01. APPLICABILITY OF THIS ARTICLE.
Redemption of Securities of any series (whether by operation of a
sinking fund or otherwise) is not permitted by the Company except as
permitted or required by any form of Security of such series issued pursuant
to this Indenture, in which case such redemption shall be made in accordance
with such form of Security and this Article; provided, however, that if any
provision of any such form of Security shall conflict with any provision of
this Article, the provision of such form of Security shall govern. Except as
otherwise set forth in the form of Security for such series, each Security
shall be subject to partial redemption only in the amount of $1,000 or
integral multiples of $1,000.
SECTION 11.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company of less than all of the Securities of any
particular series, the Company shall, at least 20 but not more than 60 days
prior to the date fixed for redemption (unless a shorter notice shall be
satisfactory to the Trustee) notify the Trustee of such date and of the
principal amount of Securities of that series to be redeemed.
SECTION 11.03. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of a particular series are to be
redeemed, the Trustee shall select, in such manner as in its sole discretion
it shall deem appropriate and fair, the Securities or portions thereof of
such series to be redeemed. The Trustee shall promptly notify the Company in
writing of the Securities selected for partial redemption and the principal
amount thereof to be redeemed. For all purposes of this Indenture, unless
the context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Security redeemed or to be
redeemed only in part, to the portion of the principal amount of such
Security which has been or is to be redeemed.
43
<PAGE>
SECTION 11.04. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the fifteenth day, and ont earlier than the
sixtieth day, prior to the date fixed for redemption, to each Holder of
Securities to be redeemed, at his or her address as it appears on the
Securities Register.
With respect to Securities of each series to be redeemed, each notice
of redemption shall state:
(a) the date fixed for redemption for Securities of such series;
(b) the redemption price at which Securities of such series are to
be redeemed;
(c) if less than all outstanding Securities of such particular
series are to be redeemed, the identification (and, in the case of partial
redemption, the respective principal amounts) of the particular Securities to
be redeemed and the method by which the Securities to be redeemed were
selected;
(d) that on the date fixed for redemption, the redemption price at
which such Securities are to be redeemed will become due and payable upon
each such Security or portion thereof, and that interest thereon, if any,
shall cease to accrue on and after said date;
(e) the place or places where such Securities may be surrendered
for payment of the redemption price at which such Securities are to be
redeemed;
(f) that the redemption is for a sinking fund, if such is the case;
and
(g) the CUSIP number of the Securities of such series, if any.
Notice of redemption of Securities of any series to be redeemed at the
election of the Company shall be given by the Company or, at such Company's
request, by the Trustee in the name and at the expense of the Company. The
notice if mailed in the manner herein provided shall be conclusively presumed
to have been duly given, whether or not the Holder receives such notice. In
any case, a failure to give such notice by mail or any defect in the notice
to the Holder of any Security of any series designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
SECTION 11.05. DEPOSIT OF REDEMPTION PRICE.
Prior to the redemption date with respect to the Securities of any
series specified in the notice of redemption given as provided in Section
11.04, the Company will deposit with the Trustee or with one or more paying
agents an amount of money sufficient to redeem on the redemption date all the
Securities of such series so called for redemption at the applicable
redemption price.
SECTION 11.06. PAYMENT OF SECURITIES CALLED FOR REDEMPTION.
If any notice of redemption has been given as provided in Section
11.04, the Securities or portions of Securities with respect to which such
notice has been given shall become due and payable on the date and at the
place or places stated in such notice at the applicable redemption price. On
presentation and surrender of such Securities at a place of payment in said
notice specified, the said Securities or the specified portions thereof shall
be paid and redeemed by the Company at the applicable redemption price.
Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and deliver to the holder
thereof, at the expense of the Company, a new Security or Securities of the
same series, of authorized denominations, in aggregate principal amount equal
to the unredeemed portion of the Security so
44
<PAGE>
presented. If an interest in a Global Security is so surrendered, such new
Security will also be an interest in a Global Security.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed all as of the day and year first above written.
PRICE/COSTCO, INC.
By:
-----------------------------------
Its:
-----------------------------------
Attest:
By:
----------------------------------
AMERICAN BANK NATIONAL ASSOCIATION
By:
-----------------------------------
Its:
-----------------------------------
Attest:
By:
----------------------------------
45
<PAGE>
FOSTER PEPPER & SHEFELMAN
February 21, 1996
Board of Directors
Price/Costco, Inc.
999 Lake Drive
Issaquah, Washington 98027
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933, as
amended, of unsecured notes in the principal amount of $500,000,000 (the "Debt
Securities") of Price/Costco, Inc. (the "Company"), and specifically with
respect to that certain Registration Statement on Form S-3 (the "Registration
Statement") filed by the Company with the Securities and Exchange Commission for
the purpose of such registration, you have asked that we render certain opinions
in connection with the issuance of the Debt Securities.
In connection with the opinions expressed below, we have examined and are
familiar with:
(a) the form of Trust Indenture between the Company and American Bank
National Association, as Trustee;
(b) the resolutions of the Board of Directors of the Company pertaining to
the authorization of the Debt Securities and to the Registration Statement and
related matters adopted at a meeting of the Board on February 14, 1996;
(c) the Registration Statement; and
(d) the Prospectus and the Prospectus Supplement filed as part of the
Registration Statement.
Based upon the foregoing examination, and after consideration of applicable
law, it is our opinion that the Debt Securities to be issued and sold by the
Company pursuant to the Registration Statement have been duly authorized and,
when sold and after receipt of payment therefor, will constitute a valid and
binding obligation of the Company, enforceable in accordance with their terms,
subject, as to enforcement, to bankruptcy, solvency, reorganization and other
laws of general applicability relating to
<PAGE>
Board of Directors
February 21, 1996
Page 2
or affecting the rights of creditors generally, and to general equity
principles.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the references to our firm under the caption
"Legal Matters" in the Prospectus Supplement included as part of the
Registration Statement.
Respectfully submitted,
FOSTER PEPPER & SHEFELMAN
/s/ David R. Wilson
----------------------------------
David R. Wilson
<PAGE>
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands)
<TABLE>
<CAPTION>
52 WEEKS ENDED 12 WEEKS ENDED
-------------------------------------------------------------- --------------------------
SEPTEMBER 1, AUGUST 30, AUGUST 29, AUGUST 28, SEPTEMBER 3, NOVEMBER 20, NOVEMBER 26,
1991 1992 1993 1994 1995 1994 1995
------------ ---------- ---------- ---------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings(1). . . . . . . . . . . . $342,041 $368,855 $336,463 $203,555(3) $368,204 $ 82,250 $ 84,345
Less: Capitalized interest . . . . 4,114 8,487 9,483 7,170 3,275 (748) (1,268)
Add: Interest on debt(2) . . . . . 30,155 44,012 55,599 57,642 71,186 14,887 19,039
Portion of rent under
long-term operating
leases representative of
an interest factor. . . . . . . . 17,972 20,208 23,220 26,940 32,160 7,450 7,295
-------- -------- -------- -------- -------- -------- --------
Total earnings available for
fixed charges . . . . . . . . . . $386,054 $424,588 $405,799 $280,967 $468,275 $103,839 $109,411
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Fixed Charges:
Interest on debt(2) . . . . . . . $ 30,155 $ 44,012 $ 55,599 $ 57,642 $ 71,186 $ 14,887 $ 19,039
Portion of rent under long-
term operating leases
representative of an
interest factor . . . . . . . 17,972 20,208 23,220 26,940 32,160 7,450 7,295
-------- -------- -------- -------- -------- -------- --------
Total fixed charges. . . . . . . . $ 48,127 $ 64,220 $ 78,819 $ 84,582 $103,346 $ 22,337 $ 26,334
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratio of earnings to fixed
charges . . . . . . . . . . . . . 8.0 6.6 5.2 3.3(4) 4.5 4.7 4.2
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
</TABLE>
_____________
(1) Earnings represent income from continuing operations before provision for
income taxes.
(2) Includes amortization of debt expense and capitalized interest.
(3) Includes provision for merger and restructuring expenses of $120,000 pre-
tax ($80,000 or $.36 per share, after tax), related to the merger of The
Price Company and Costco Wholesale Corporation in October 1993. If such
provision for merger and restructuring expenses were excluded, income from
continuing operations before provision for income taxes for fiscal 1994 and
for the twenty-four weeks ended February 13, 1994 would have been $323,555
and $174,179, respectively.
(4) If the $120,000 pre-tax provision for merger and restructuring expenses
were excluded, the ratio of earnings to fixed charges for fiscal 1994 and
the twenty-four weeks ended February 12, 1995 would be 4.7 and 6.0,
respectively.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-3, of our
report dated October 25, 1995, included in Price/Costco, Inc.'s Form 10-K for
the year ended September 3, 1995 and to all references to our firm included
in this Registration Statement.
We are aware that Price/Costco, Inc. has incorporated by reference in
this Registration Statement its Form 10-Q for the quarter ended November 26,
1995, which includes our report dated December 18, 1995 covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, this report is not considered a
part of the Registration Statement prepared or certified by our firm or a
report prepared or certified by our firm within the meaning of Sections 7 and
11 of the Act.
ARTHUR ANDERSEN LLP
Seattle, Washington
February 20, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus and Prospectus
Supplement of Price/Costco, Inc. and to the incorporation by reference
therein of our report dated November 19, 1993, with respect to the
consolidated financial statements and schedules of The Price Company (not
presented separately) included in the Annual Report (Form 10-K) of
Price/Costco, Inc. for the year ended September 3, 1995 filed with the
Securities and Exchange Commission.
Ernst & Young LLP
San Diego, California
February 20, 1996
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------
AMERICAN BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
A National Banking Association 41-0122055
(State of incorporation if not a (IRS Employer
national bank) Identification No.)
101 East Fifth Street
Corporate Trust Department
St. Paul, Minnesota 55101
(Address of principal executive offices) (Zip Code)
AMERICAN BANK NATIONAL ASSOCIATION
101 East Fifth Street
St. Paul, Minnesota 55101
(612) 298-6280
(Exact name, address, and telephone number of agent for service)
-------------------------------
Price Costco, Inc.
(Exact name of obligor as specified in its charter)
Delaware 33-0572969
(State of incorporation or other (IRS Employer Identification
jurisdiction) incorporation or organization)
999 Lake Drive
Issaquah, Washington 98027
(Address of principal executive offices) (Zip Code)
-------------------------------
Debt Securities
(Title of Indenture securities)
<PAGE>
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
-Comptroller of the Currency
Treasury Department
Washington, DC
-Federal Deposit Insurance Corporation
Washington, DC
-The Board of Governors of the Federal Reserve System
Washington, DC
(b) The Trustee is authorized to exercise corporate trust powers.
GENERAL
Item 2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS. If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe
each such affiliation.
None
See Note following item 16.
ITEMS 3-15 ARE NOT APPLICABLE BECAUSE TO THE BEST OF THE TRUSTEE'S KNOWLEDGE THE
OBLIGOR IS NOT IN DEFAULT UNDER ANY INDENTURE FOR WHICH THE TRUSTEE ACTS AS
TRUSTEE.
Item 16. LIST OF EXHIBITS. Listed below are all the exhibits filed as a part
of this statement of eligibility and
qualification. The exhibits listed below are
incorporated by reference from a previous filing.
Exhibit 1. Copy of Articles of Association of the trustee now
in effect.
Exhibit 2. a. A copy of the certificate of the Comptroller
of Currency dated June 1, 1965, authorizing
American Bank National Association to act as
fiduciary.
b. A copy of the certificate of authority of the
trustee to commence business issued June 9,
1903, by the Comptroller of the Currency to
American Bank National Association.
<PAGE>
Exhibit 3. A copy of the authorization of the trustee to
exercise corporate trust powers issued by the
Federal Reserve Board.
Exhibit 4. Copy of By-laws of the trustee as now in effect.
Exhibit 5. Copy of each Indenture referred to in Item 4. Not
applicable.
Exhibit 6. The consent of the trustee required by Section
321(b) of the Act.
Exhibit 7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligor within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligor, or affiliates, are based
upon information furnished to the Trustee by the obligor. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, a national banking association organized and existing under the laws of
the United States, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City of
Saint Paul and State of Minnesota on the 15th day of February, 1996.
AMERICAN BANK NATIONAL ASSOCIATION
[SEAL]
/s/ Frank P. Leslie III
-------------------------------------
Frank P.Leslie III
Vice President
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, American Bank National Association, hereby consents that
reports of examination of the undersigned by Federal, State, Territorial or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon its request therefor.
Dated: February 15, 1996
AMERICAN BANK NATIONAL ASSOCIATION
/s/ Frank P. Leslie III
-------------------------------------
Frank P. Leslie III
Vice President
