<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 7, 1998
REGISTRATION NO. 333-66981
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SUNDSTRAND CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-1840610
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
OF INCORPORATION OR ORGANIZATION)
P.O. BOX 7003 MARY ANN HYNES
4949 HARRISON AVENUE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ROCKFORD, ILLINOIS 61125-7003 SUNDSTRAND CORPORATION
(815) 226-6000 P.O. BOX 7003
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE 4949 HARRISON AVENUE
NUMBER, ROCKFORD, ILLINOIS 61125-7003
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL (815) 226-6305
EXECUTIVE (NAME, ADDRESS, INCLUDING ZIP CODE, AND
OFFICES) TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR
SERVICE)
</TABLE>
Copy to:
EDWARD S. BEST
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(312) 782-0600
------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement, as determined
in light of market conditions.
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. [ ]
------------------------
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED DECEMBER 7, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER , 1998)
$250,000,000
SUNDSTRAND CORPORATION
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
------------------------
THE COMPANY: Sundstrand Corporation. Our executive offices are located at
4949 Harrison Avenue, Rockford, Illinois 61125, and our telephone number is
(815) 226-6000.
TERMS: We plan to offer and sell the Notes with various terms, including
the following:
- - Ranking as our senior indebtedness
- - Stated maturities of 9 months or more from date of issue
- - Redemption and/or repayment provisions, if applicable, whether mandatory, at
our option or at the option of the Noteholders
- - Payments in U.S. dollars or one or more foreign currencies
- - Minimum denominations of $1,000 or other specified denominations for foreign
currencies
- - Book-entry (through The Depository Trust Company) or certificated form
- - Interest payments on fixed rate Notes on each June 1 and December 1
- - Interest payments on floating rate Notes on a monthly, quarterly, semiannual
or annual basis
- - Interest at fixed or floating rates, or no interest at all. The floating
interest rate may be based on one or more of the following indices plus or
minus a spread and/or multiplied by a spread multiplier:
- CD rate
- CMT rate
- Commercial paper rate
- Eleventh district cost of funds rate
- Federal funds rate
- LIBOR
- Prime rate
- Treasury rate
- - Such other interest rate basis or interest rate formula as may be specified in
the applicable Pricing Supplement
The final terms for each Note, which may be different from the terms
described in this Prospectus Supplement, will be specified in the applicable
Pricing Supplement. If we sell other securities under the accompanying
Prospectus, the aggregate amount of Notes that we may offer or sell under this
Prospectus Supplement would be reduced.
INVESTING IN THE NOTES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" ON PAGE
S-2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus Supplement or the accompanying Prospectus or any Pricing Supplement
is truthful or complete. Any representation to the contrary is a criminal
offense.
We may sell the Notes to the Agents as principal for resale at varying or
fixed offering prices or through the Agents as agents using their reasonable
best efforts on our behalf. Unless otherwise specified in the applicable Pricing
Supplement, the price to the public for the Notes will be 100% of their
principal amount. We will pay commissions to Agents, ranging from .125% to .750%
of the principal amount of each Note sold through such Agents, depending upon
the stated maturity of such Note. If we sell all of the Notes, we expect to
receive proceeds of between $248,125,000 and $249,687,500, after paying the
Agents' discounts and commissions of between $312,500 and $1,875,000 and before
deducting expenses payable by us, including reimbursement of certain of the
Agents' expenses. We may also sell the Notes without the assistance of the
Agents (whether acting as principal or as agent).
------------------------
MERRILL LYNCH & CO.
FIRST CHICAGO CAPITAL MARKETS, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
------------------------
The date of this Prospectus Supplement is December , 1998.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
---------------------
Risk Factors................................................ S-1
Description of Notes........................................ S-4
Special Provisions Relating to Foreign Currency Notes....... S-23
United States Federal Income Tax Considerations............. S-26
Supplemental Plan of Distribution........................... S-42
PROSPECTUS
----------
About This Prospectus....................................... 1
Where You Can Find More Information......................... 1
The Company................................................. 1
Use of Proceeds............................................. 2
Ratio of Earnings to Fixed Charges.......................... 2
Description of Debt Securities.............................. 2
Plan of Distribution........................................ 7
Legal Matters............................................... 8
Experts..................................................... 8
</TABLE>
------------------------
You should rely only on the information contained in this Prospectus
Supplement. We have not, and the Agents have not, authorized any other person to
provide you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the Agents
are not, making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information appearing
in this Prospectus Supplement is accurate only as of the date on the front cover
of this Prospectus Supplement. Our business, financial condition, results of
operations and prospects may have changed since that date.
------------------------
RISK FACTORS
Your investment in the Notes will include certain risks. In consultation
with your own financial and legal advisers, you should carefully consider, among
other matters, the following discussion of risks before deciding whether an
investment in the Notes is suitable for you. Notes are not an appropriate
investment for you if you are unsophisticated with respect to the significant
components of the Notes.
STRUCTURE RISKS
General
If you invest in Notes indexed to one or more interest rate, currency or
other index or formula, there will be significant risks not associated with a
conventional fixed rate or floating rate debt security. Such risks include
fluctuation of interest rates, exchange rates, indices or formulas and the
possibility that you will receive a lower (or no) amount of principal, premium
or interest and at different times than you expected. We have no control over a
number of matters, including economic, financial and political events, that are
important in determining the existence, magnitude and longevity of such risks
and their results. In addition, if an index or formula used to determine any
amounts payable in respect of the Notes contains a multiplier or leverage
factor, the effect of any change in such index or formula will be magnified. In
recent years, the values of certain indices and formulas have been volatile, and
volatility in those and other indices and formulas may be
<PAGE> 4
expected in the future. However, past experience is not necessarily indicative
of what may occur in the future.
Redemption
If the Notes are redeemable at our option or are otherwise subject to
mandatory redemption, we may (in the case of optional redemption) or must (in
the case of mandatory redemption) choose to redeem the Notes at times when
prevailing interest rates may be relatively low. Accordingly, you generally will
not be able to reinvest the redemption proceeds in a comparable security at an
effective interest rate as high as that of the Notes.
Uncertain Trading Markets
We cannot assure you that a trading market for the Notes will ever develop
or be maintained. Many factors independent of our creditworthiness affect the
trading market and the value of the Notes. These factors include:
- the complexity and volatility of any index or formula applicable to the
Notes,
- the method of calculating the principal, premium and interest in respect
of the Notes,
- the time remaining to the maturity of the Notes,
- the outstanding amount of the Notes,
- the redemption features of the Notes,
- the amount of other debt securities linked to any index or formula
applicable to the Notes, and
- the level, direction and volatility of market interest rates generally.
In addition, certain of the Notes have a more limited trading market and
experience more price volatility because they were designed for specific
investment objectives or strategies. There may be a limited number of buyers
when you decide to sell such Notes. This may affect the price you receive for
such Notes or your ability to sell such Notes at all. You should not purchase
any of the Notes unless you understand and know you can bear these investment
risks.
EXCHANGE RATES AND EXCHANGE CONTROLS
If you invest in Notes that are denominated or payable in a currency other
than U.S. dollars ("Foreign Currency Notes"), there will be significant risks
not associated with an investment in a debt security denominated and payable in
U.S. dollars, including the possibility of material changes in the exchange rate
between U.S. dollars and your payment currency and the imposition or
modification of exchange controls by the applicable governments. We have no
control over the factors that generally affect these risks, such as economic,
financial and political events and the supply and demand for the applicable
currencies. Moreover, if payments on Foreign Currency Notes are determined by
reference to a formula containing a multiplier or leverage factor, the effect of
any change in the exchange rates between the applicable currencies will be
magnified. In recent years, the exchange rates between certain currencies have
been highly volatile, and volatility between such currencies or with other
currencies may be expected in the future. Fluctuations between currencies in the
past are not necessarily indicative, however, of fluctuations that may occur in
the future. Depreciation of your payment currency would result in a decrease in
the U.S. dollar equivalent yield of Foreign Currency Notes, in the U.S. dollar
equivalent value of the principal and any premium
S-2
<PAGE> 5
payable at maturity or earlier redemption of Foreign Currency Notes and,
generally, in the U.S. dollar equivalent market value of Foreign Currency Notes.
Governmental exchange controls could affect exchange rates and the
availability of your payment currency on a required payment date. Even if there
are no exchange controls, it is possible that your payment currency will not be
available on a required payment date for circumstances beyond our control. In
such cases, we will be allowed to satisfy our obligations on Foreign Currency
Notes in U.S. dollars.
CREDIT RATINGS
The credit ratings on the Notes may not reflect the potential impact of all
risks related to structure and other factors on the value of the Notes. In
addition, real or anticipated changes in our credit ratings will generally
affect the market value of the Notes.
S-3
<PAGE> 6
DESCRIPTION OF NOTES
We will issue the Notes as a series of Debt Securities under an Indenture,
dated as of December 1, 1998, (the "Indenture"), between us and The First
National Bank of Chicago, as trustee (the "Trustee"). The Indenture is subject
to, and governed by, the Trust Indenture Act of 1939, as amended. The following
summary of certain provisions of the Notes and the Indenture is subject to the
actual provisions of the Notes and the Indenture. Capitalized terms used but not
defined herein shall have the meanings given to them in the accompanying
Prospectus, the Notes or the Indenture, as the case may be. The term "Debt
Securities," as used in this Prospectus Supplement, refers to all debt
securities, including the Notes, issued and issuable from time to time under the
Indenture. The following description of Notes will apply to each Note offered
under this Prospectus Supplement unless otherwise specified in the applicable
Pricing Supplement. For additional terms of the Notes, see "Description of Debt
Securities" in the accompanying Prospectus.
GENERAL
All Debt Securities, including the Notes, issued and to be issued under the
Indenture will be our unsecured general obligations and will rank equally with
all of our other unsecured and unsubordinated indebtedness from time to time
outstanding. The Indenture does not limit the aggregate initial offering price
of Debt Securities that may be issued under the Indenture and Debt Securities
may be issued under the Indenture from time to time in one or more series up to
the aggregate initial offering price from time to time authorized for each
series. We may, from time to time, without the consent of the Holders of the
Notes, provide for the issuance of Notes or other Debt Securities under the
Indenture in addition to the $250,000,000 aggregate initial offering price of
Notes offered under this Prospectus Supplement.
The Notes are currently limited to $250,000,000 in aggregate initial
offering price, or its equivalent in one or more foreign currencies. Each Note
will mature on a day (the "Stated Maturity Date") nine months or more from its
date of issue, as specified in the applicable Pricing Supplement, unless the
principal thereof (or any installment of principal) becomes due and payable
prior to the Stated Maturity Date, whether by the declaration of acceleration of
maturity, notice of redemption at our option, notice of the Holder's option to
elect repayment or otherwise (the Stated Maturity Date or such prior date, as
the case may be, is referred to in this Prospectus Supplement as the "Maturity
Date" with respect to the principal of such Note repayable on such date). Except
as otherwise specified in the applicable Pricing Supplement, interest-bearing
Notes will, as specified in the applicable Pricing Supplement, either be Fixed
Rate Notes or Floating Rate Notes. We may also issue Discount Notes, Indexed
Notes and Amortizing Notes (as such terms are defined in this Prospectus
Supplement).
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in, and payments of principal, premium, if any, and/or
interest, if any, in respect of the Notes will be made in, United States
dollars. The Notes also may be denominated in, and payments of principal,
premium, if any, and/or interest, if any, may be made in, one or more foreign
currencies. See "Special Provisions Relating to Foreign Currency
Notes -- Payment of Principal, Premium, if any, and Interest, if any." The
currency in which a particular Note is denominated (or (i) if such currency
(other than Euro) is no longer legal tender for the payment of public and
private debts in the relevant country, such other currency which is then legal
tender in such country for the payment of such debts or (ii) if such currency is
Euro, such other currency which is then legal tender in the member states of the
European Union that have adopted the single currency in accordance with the
Treaty establishing the European Community, as amended by the Treaty on European
Union) is
S-4
<PAGE> 7
referred to in this Prospectus Supplement as the "Specified Currency" with
respect to such Note. References in this Prospectus Supplement to "United States
dollars," "U.S. dollars" or "$" are to the lawful currency of the United States
of America (the "United States").
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for the Notes in the applicable Specified Currency. At the
present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign currencies and vice versa, and
commercial banks do not generally offer non-United States dollar checking or
savings account facilities in the United States. The Agent from or through which
a Foreign Currency Note is purchased may be prepared to arrange for the
conversion of United States dollars into the Specified Currency in order to
enable the purchaser to pay for such Foreign Currency Note, provided that a
request is made to such Agent on or prior to the fifth Business Day (as defined
in this Prospectus Supplement) preceding the date of delivery of such Foreign
Currency Note, or by such other day as determined by such Agent. Each Agent will
make such conversion on such terms and subject to such conditions, limitations
and charges as such Agent may from time to time establish in accordance with its
regular foreign exchange practices. The purchaser of each such Foreign Currency
Note will bear all costs of exchange. See "Special Provisions Relating to
Foreign Currency Notes."
Interest rates offered by us with respect to the Notes may differ depending
upon, among other factors, the aggregate principal amount of Notes purchased in
any single transaction. We may also offer Notes with different variable terms
other than interest rates concurrently to different investors. Interest rates or
formulas and other terms of Notes are subject to change by us from time to time,
but no such change will affect any Note previously issued or as to which an
offer to purchase has been accepted by us.
Each Note will be issued as a fully registered book-entry note (a
"Book-Entry Note") represented by one or more fully registered global securities
("Global Securities") or as a fully registered certificated note (a
"Certificated Note"). The minimum denominations of each Note other than a
Foreign Currency Note will be $1,000 and integral multiples thereof, unless
otherwise specified in the applicable Pricing Supplement. The applicable Pricing
Supplement will specify the minimum denominations of each Foreign Currency Note.
We will make payments of principal of, and premium, if any, and interest,
if any, on, Book-Entry Notes through the Trustee to the Depositary. See
"Book-Entry Notes." In the case of Certificated Notes, we will make payment of
principal and premium, if any, due on the Maturity Date in immediately available
funds upon presentation and surrender of any such Note (and, in the case of any
repayment on an optional Repayment Date, upon submission of a duly completed
election form in accordance with the provisions described below) at the office
or agency we maintain for such purpose in the Borough of Manhattan, The City of
New York, currently the corporate trust office of the Trustee located at 153
West 51st Street, Suite 4015, New York, New York 10019. Payment of interest, if
any, due on the Maturity Date of a Certificated Note will be made to the person
to whom payment of the principal of such Note and premium, if any, on such Note
shall be made. Payment of interest, if any, due on a Certificated Note on any
Interest Payment Date (as defined in this Prospectus Supplement) other than the
Maturity Date will be made by check mailed to the address of the Holder entitled
to such payment as such address shall appear in our Security Register.
Notwithstanding the foregoing, a Holder of $10,000,000 (or, if the Specified
Currency is other than United States dollars, the equivalent in such Specified
Currency) or more in aggregate principal amount of Certificated Notes will be
entitled to receive interest payments, if any, on any Interest Payment Date
other than the Maturity Date by wire transfer of immediately available funds
S-5
<PAGE> 8
if the Trustee receives appropriate wire transfer instructions in writing not
less than 15 days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such Holder. For special payment terms applicable to Foreign Currency Notes, see
"Special Provisions Relating to Foreign Currency Notes -- Payment of Principal,
Premium, if any, and Interest, if any."
As used in this Prospectus Supplement, "Business Day" means any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close in The City of New York; provided, however, that, with respect to
Foreign Currency Notes, such day is also not a day on which commercial banks are
authorized or required by law, regulation or executive order to close in the
Principal Financial Center (as defined in this Prospectus Supplement) of the
country issuing the Specified Currency (or, if the Specified Currency is Euro,
such day is also a day on which the Trans-European Automated Real-Time Gross
Settlement Express Transfer (TARGET) System is open); provided, further, that,
with respect to Notes as to which LIBOR is an applicable Interest Rate Basis (as
defined in this Prospectus Supplement), such day is also a London Business Day.
"London Business Day" means a day on which commercial banks are open for
business (including dealings in the Designated LIBOR Currency (as defined in
this Prospectus Supplement)) in London.
"Principal Financial Center" means (i) the capital city of the country
issuing the Specified Currency or (ii) the capital city of the country to which
the Designated LIBOR Currency relates, as applicable, except, in the case of (i)
or (ii) above, that with respect to United States dollars, Australian dollars,
Canadian dollars, Deutsche marks, Dutch guilders, Portuguese escudos, South
African rand and Swiss francs, the "Principal Financial Center" shall be The
City of New York, Sydney and (solely in the case of the Specified Currency)
Melbourne, Toronto, Frankfurt, Amsterdam, London (solely in the case of the
Designated LIBOR Currency), Johannesburg and Zurich, respectively.
Book-Entry Notes may be transferred or exchanged only through the
Depositary. See "-- Book-Entry Notes." Registration of transfer or exchange of
Certificated Notes will be made at the office or agency maintained by us for
such purpose in the Borough of Manhattan, The City of New York, currently the
office of the Trustee located at 153 West 51st Street, Suite 4015, New York, New
York 10019. No service charge will be made by us or the Trustee for any such
registration of transfer or exchange of Notes, but we may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with such transfer or exchange (other than exchanges pursuant to
the Indenture not involving any transfer).
The defeasance and covenant defeasance provisions contained in the
Indenture shall apply to the Notes unless otherwise specified in the applicable
Pricing Supplement.
REDEMPTION AT OUR OPTION
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at our
option prior to the Stated Maturity Date only if an Initial Redemption Date is
specified in the applicable Pricing Supplement. If so specified, the Notes will
be subject to redemption at our option on any date on and after the applicable
Initial Redemption Date in whole or from time to time in part in increments of
$1,000 or any other integral multiple of an authorized denomination specified in
such Pricing Supplement (provided that any remaining principal amount of the
Notes shall be at least $1,000 or such other minimum authorized denomination
applicable thereto), at the applicable Redemption Price (as defined in this
Prospectus
S-6
<PAGE> 9
Supplement), together with unpaid interest accrued thereon to the date of
redemption, on written notice given to the Holders of the Notes not more than 60
nor less than 30 calendar days prior to the date of redemption and in accordance
with the provisions of the Indenture. "Redemption Price", with respect to a
Note, means an amount equal to the Initial Redemption Percentage specified in
the applicable Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable) multiplied by the unpaid principal amount
to be redeemed. The Initial Redemption Percentage, if any, applicable to a Note
shall decline at each anniversary of the Initial Redemption Date by an amount
equal to the applicable Annual Redemption Percentage Reduction, if any, until
the Redemption Price is equal to 100% of the unpaid principal amount to be
redeemed. For a discussion of the redemption of Discount Notes, see "-- Discount
Notes."
REPAYMENT AT THE OPTION OF THE HOLDER
The Notes will be repayable by us at the option of the Holders of the Notes
prior to the Stated Maturity Date only if one or more optional Repayment Dates
are specified in the applicable Pricing Supplement. If so specified, the Notes
will be subject to repayment at the option of the Holders of the Notes on any
optional Repayment Date in whole or from time to time in part in increments of
$1,000 or any other integral multiple of an authorized denomination specified in
the applicable Pricing Supplement (provided that any remaining principal amount
of the Notes shall be at least $1,000 or such other minimum authorized
denomination applicable thereto), at a repayment price equal to 100% of the
unpaid principal amount to be repaid, together with unpaid interest accrued on
such Notes to the date of repayment. For any Note to be repaid, the Trustee must
receive such Note, together with the form thereon entitled "Option to Elect
Repayment" duly completed, at its office maintained for such purpose in the
Borough of Manhattan, The City of New York, currently the office of the Trustee
located at 153 West 51st Street, Suite 4015, New York, New York 10019, not more
than 60 nor less than 30 calendar days prior to the date of repayment. Exercise
of such repayment option by the Holder will be irrevocable. For a discussion of
the repayment of Discount Notes, see "-- Discount Notes."
Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, Beneficial Owners (as
defined in this Prospectus Supplement) of Global Securities that desire to have
all or any portion of the Book-Entry Notes represented by such Global Securities
repaid must instruct the Participant (as defined in this Prospectus Supplement)
through which they own their interest to direct the Depositary to exercise the
repayment option on their behalf by delivering the related Global Security and
duly completed election form to the Trustee as described above. In order to
ensure that such Global Security and election form are received by the Trustee
on a particular day, the applicable Beneficial Owner must so instruct the
Participant through which it owns its interest before such Participant's
deadline for accepting instructions for that day. Different firms may have
different deadlines for accepting instructions from their customers.
Accordingly, Beneficial Owners should consult the Participant through which they
own their interest for the respective deadline for such Participant. All
instructions given to Participants from Beneficial Owners of Global Securities
relating to the option to elect repayment shall be irrevocable. In addition, at
the time such instructions are given, each Beneficial Owner shall cause the
Participant through which it owns its interest to transfer such Beneficial
Owner's interest in the Global Security or Securities representing the related
Book-Entry Notes, on the Depositary's records, to the Trustee. See "--
Book-Entry Notes."
If applicable, we will comply with the requirements of Section 14(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
promulgated thereunder, and any other applicable securities laws or regulations
in connection with any such repayment.
S-7
<PAGE> 10
We may at any time purchase Notes at any price or prices in the open market
or otherwise. We may, at our discretion, hold, resell or surrender to the
Trustee for cancellation any Notes we purchase.
INTEREST
General
Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest from its date of issue at the rate per
annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement, until the principal thereof is paid or duly made
available for payment. Unless otherwise specified in the applicable Pricing
Supplement, interest payments in respect of Fixed Rate Notes and Floating Rate
Notes will be made in an amount equal to the interest accrued from and including
the immediately preceding Interest Payment Date in respect of which interest has
been paid or duly made available for payment (or from and including the date of
issue, if no interest has been paid or duly made available for payment) to but
excluding the applicable Interest Payment Date or the Maturity Date, as the case
may be (each, an "Interest Period").
Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date. Unless otherwise
specified in the applicable Pricing Supplement, the first payment of interest on
any such Note originally issued between a Record Date (as hereinafter defined)
and the related Interest Payment Date will be made on the Interest Payment Date
immediately following the next succeeding Record Date to the Holder on such next
succeeding Record Date. Unless otherwise specified in the applicable Pricing
Supplement, a "Record Date" shall be the fifteenth calendar day (whether or not
a Business Day) immediately preceding the related Interest Payment Date.
Fixed Rate Notes
Interest on Fixed Rate Notes will be payable on June 1 and December 1 of
each year or on such other date(s) specified in the applicable Pricing
Supplement (each, an "Interest Payment Date" with respect to Fixed Rate Notes)
and on the Maturity Date. Unless otherwise specified in the applicable Pricing
Supplement, interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months.
If any Interest Payment Date or the Maturity Date of a Fixed Rate Note
falls on a day that is not a Business Day, the required payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day as if made on the date such payment was due, and no interest will accrue on
such payment for the period from and after such Interest Payment Date or the
Maturity Date, as the case may be, to the date of such payment on the next
succeeding Business Day.
Floating Rate Notes
Interest on Floating Rate Notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may, as described
below, include:
- the CD Rate;
- the CMT Rate;
- the Commercial Paper Rate;
S-8
<PAGE> 11
- the Eleventh District Cost of Funds Rate;
- the Federal Funds Rate;
- LIBOR;
- the Prime Rate;
- the Treasury Rate; or
- such other Interest Rate Basis or interest rate formula as may be
specified in the applicable Pricing Supplement.
The applicable Pricing Supplement will specify certain terms with respect
to which each Floating Rate Note is being delivered, including: whether such
Floating Rate Note is a "Regular Floating Rate Note," a "Floating Rate/Fixed
Rate Note" or an "Inverse Floating Rate Note," the Fixed Rate Commencement Date,
if applicable, Fixed Interest Rate, if applicable, Interest Rate Basis or Bases,
Initial Interest Rate, if any, Initial Interest Reset Date, Interest Reset
Dates, Interest Payment Dates, Index Maturity, Maximum Interest Rate and/or
Minimum Interest Rate, if any, and Spread and/or Spread Multiplier, if any, as
such terms are defined below. If one or more of the applicable Interest Rate
Bases is LIBOR or the CMT Rate, the applicable Pricing Supplement will also
specify the Designated LIBOR Currency and Designated LIBOR Page or the
Designated CMT Maturity Index and Designated CMT Telerate Page, respectively, as
such terms are defined below.
The interest rate borne by Floating Rate Notes will be determined as
follows:
- Unless such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note" or an "Inverse Floating Rate Note," or as having an Addendum
attached or having "Other/ Additional Provisions" apply, in each case
relating to a different interest rate formula, such Floating Rate Note
will be designated as a "Regular Floating Rate Note" and, except as
described below or in the applicable Pricing Supplement, will bear
interest at the rate determined by reference to the applicable Interest
Rate Basis or Bases (a) plus or minus the applicable Spread, if any,
and/or (b) multiplied by the applicable Spread Multiplier, if any.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Regular Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
- If such Floating Rate Note is designated as a "Floating Rate/Fixed Rate
Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases
(a) plus or minus the applicable Spread, if any, and/or (b) multiplied by
the applicable Spread Multiplier, if any. Commencing on the Initial
Interest Reset Date, the rate at which interest on such Floating
Rate/Fixed Rate Note shall be payable shall be reset as of each Interest
Reset Date; provided, however, that (y) the interest rate in effect for
the period, if any, from the date of issue to the Initial Interest Reset
Date will be the Initial Interest Rate and (z) the interest rate in
effect (the "Fixed Interest Rate") for the period commencing on the date
specified for such Floating Rate/Fixed Rate Note in the applicable
Pricing Supplement (the "Fixed Rate Commencement Date") to the Maturity
Date shall be the interest rate so specified in the applicable Pricing
Supplement or, if no such rate is specified, the interest rate in effect
for such Floating Rate/Fixed Rate Note on the day immediately preceding
the Fixed Rate Commencement Date.
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- If such Floating Rate Note is designated as an "Inverse Floating Rate
Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the Fixed
Interest Rate minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the applicable
Pricing Supplement, the interest rate thereon will not be less than zero.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Inverse Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
The "Spread" is the number of basis points to be added to or subtracted
from the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The "Spread Multiplier" is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest Rate
Basis or Bases will be multiplied to determine the applicable interest rate on
such Floating Rate Note. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the related Interest Rate Basis
or Bases will be calculated.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or in
the applicable Pricing Supplement, the interest rate in effect on each day shall
be:
- if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date (as defined in this Prospectus
Supplement) immediately preceding such Interest Reset Date; or
- if such day is not an Interest Reset Date, the interest rate determined
as of the Interest Determination Date immediately preceding the most
recent Interest Reset Date.
The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
"Interest Reset Period") and the dates on which such rate of interest will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be, in the case of
Floating Rate Notes which reset:
- daily, each Business Day;
- weekly, the Wednesday of each week (with the exception of weekly reset
Floating Rate Notes as to which the Treasury Rate is an applicable
Interest Rate Basis, which will reset the Tuesday of each week, except as
described below);
- monthly, the third Wednesday of each month (with the exception of monthly
reset Floating Rate Notes as to which the Eleventh District Cost of Funds
Rate is an applicable Interest Rate Basis, which will reset on the first
calendar day of the month); quarterly, the third Wednesday of March,
June, September and December of each year;
- semiannually, the third Wednesday of the two months specified in the
applicable Pricing Supplement; and
- annually, the third Wednesday of the month specified in the applicable
Pricing Supplement;
provided, however, that, with respect to Floating Rate/Fixed Rate Notes, the
rate of interest thereon will not reset after the applicable Fixed Rate
Commencement Date. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset
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Date will be postponed to the next succeeding Business Day, except that in the
case of a Floating Rate Note as to which LIBOR is an applicable Interest Rate
Basis and such Business Day falls in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding Business Day.
The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined by the Calculation
Agent (as defined in this Prospectus Supplement) as of the applicable Interest
Determination Date and calculated on or prior to the Calculation Date (as
defined in this Prospectus Supplement), except with respect to LIBOR and the
Eleventh District Cost of Funds Rate, which will be calculated on such Interest
Determination Date.
- The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Federal Funds Rate and the Prime
Rate will be the second Business Day immediately preceding the applicable
Interest Reset Date.
- The "Interest Determination Date" with respect to the Eleventh District
Cost of Funds Rate will be the last working day of the month immediately
preceding the applicable Interest Reset Date on which the Federal Home
Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the
Index (as defined in this Prospectus Supplement).
- The "Interest Determination Date" with respect to LIBOR will be the
second London Business Day immediately preceding the applicable Interest
Reset Date, unless the Designated LIBOR Currency is British pounds
sterling, in which case the "Interest Determination Date" will be the
applicable Interest Reset Date.
- The "Interest Determination Date" with respect to the Treasury Rate will
be the day in the week in which the applicable Interest Reset Date falls
on which day Treasury Bills (as defined in this Prospectus Supplement)
are normally auctioned (Treasury Bills are normally sold at an auction
held on Monday of each week, unless such Monday is a legal holiday, in
which case the auction is normally held on the immediately succeeding
Tuesday although such auction may be held on the preceding Friday);
provided, however, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the "Interest Determination
Date" will be such preceding Friday; provided, further, that if the
Interest Determination Date would otherwise fall on an Interest Reset
Date, then such Interest Reset Date will be postponed to the next
succeeding Business Day.
- The "Interest Determination Date" pertaining to a Floating Rate Note the
interest rate of which is determined by reference to two or more Interest
Rate Bases will be the most recent Business Day which is at least two
Business Days prior to the applicable Interest Reset Date for such
Floating Rate Note on which each Interest Rate Basis is determinable.
Each Interest Rate Basis will be determined as of such date, and the
applicable interest rate will take effect on the applicable Interest
Reset Date.
Notwithstanding the foregoing, a Floating Rate Note may also have either or
both of the following: (i) a Maximum Interest Rate, or ceiling, that may accrue
during any Interest Period and (ii) a Minimum Interest Rate, or floor, that may
accrue during any Interest Period. In addition to any Maximum Interest Rate that
may apply to any Floating Rate Note, the interest rate on Floating Rate Notes
will in no event be higher than the maximum rate permitted by Illinois law, as
the same may be modified by United States law of general application.
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Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset:
- daily, weekly or monthly, on the third Wednesday of each month or on the
third Wednesday of March, June, September and December of each year, as
specified in the applicable Pricing Supplement;
- quarterly, on the third Wednesday of March, June, September and December
of each year;
- semiannually, on the third Wednesday of the two months of each year
specified in the applicable Pricing Supplement; and
- annually, on the third Wednesday of the month of each year specified in
the applicable Pricing Supplement
(each, an "Interest Payment Date" with respect to Floating Rate Notes) and, in
each case, on the Maturity Date. If any Interest Payment Date other than the
Maturity Date for any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date will be postponed to the next
succeeding Business Day, except that in the case of a Floating Rate Note as to
which LIBOR is an applicable Interest Rate Basis and such Business Day falls in
the next succeeding calendar month, such Interest Payment Date will be the
immediately preceding Business Day. If the Maturity Date of a Floating Rate Note
falls on a day that is not a Business Day, the required payment of principal,
premium, if any, and interest will be made on the next succeeding Business Day
as if made on the date such payment was due, and no interest will accrue on such
payment for the period from and after the Maturity Date to the date of such
payment on the next succeeding Business Day.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one-hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in
or resulting from such calculation on Floating Rate Notes will be rounded, in
the case of United States dollars, to the nearest cent or, in the case of a
foreign currency, to the nearest unit (with one-half cent or unit being rounded
upwards).
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating Rate Notes for which an applicable Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of days
in the year in the case of Floating Rate Notes for which an applicable Interest
Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise specified in
the applicable Pricing Supplement, the interest factor for Floating Rate Notes
for which the interest rate is calculated with reference to two or more Interest
Rate Bases will be calculated in each period in the same manner as if only the
applicable Interest Rate Basis specified in the applicable Pricing Supplement
applied.
Unless otherwise specified in the applicable Pricing Supplement, The First
National Bank of Chicago will be the "Calculation Agent." Upon request of the
Holder of any Floating Rate Note, the Calculation Agent will disclose the
interest rate then in effect and, if determined, the interest rate that will
become effective as a result of a determination made for the next succeeding
Interest Reset Date with respect to such Floating Rate Note. Unless otherwise
specified in the applicable
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Pricing Supplement, the "Calculation Date," if applicable, pertaining to any
Interest Determination Date will be the earlier of (i) the tenth calendar day
after such Interest Determination Date or, if such day is not a Business Day,
the next succeeding Business Day or (ii) the Business Day immediately preceding
the applicable Interest Payment Date or the Maturity Date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
CD RATE. Unless otherwise specified in the applicable Pricing Supplement,
"CD Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date for
negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published in
H.15(519) (as defined in this Prospectus Supplement) under the heading "CDs
(secondary market)" or, if not so published by 3:00 P.M., New York City time, on
the related Calculation Date, the rate on such CD Rate Interest Determination
Date for negotiable United States dollar certificates of deposit of the Index
Maturity specified in the applicable Pricing Supplement as published in H.15
Daily Update (as defined in this Prospectus Supplement), or such other
recognized electronic source used for the purpose of displaying such rate, under
the caption "CDs (secondary market)." If such rate is not yet published in
H.15(519), H.15 Daily Update or another recognized electronic source by 3:00
P.M., New York City time, on the related Calculation Date, then the CD Rate on
such CD Rate Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00 A.M., New York City time, on such CD Rate Interest Determination Date,
of three leading nonbank dealers in negotiable United States dollar certificates
of deposit in The City of New York (which may include the Agents or their
affiliates) selected by the Calculation Agent for negotiable United States
dollar certificates of deposit of major United States money center banks for
negotiable certificates of deposit with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement in an amount that
is representative for a single transaction in that market at that time;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate determined as of such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/ releases/h15/update, or any successor site or
publication.
CMT RATE. Unless otherwise specified in the applicable Pricing Supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed on
the Designated CMT Telerate Page under the caption "...Treasury Constant
Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45
P.M.," under the column for the Designated CMT Maturity Index for (i) if the
Designated CMT Telerate Page is 7051, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified in the applicable Pricing Supplement,
for the week or the month, as applicable, ended immediately preceding the week
or the month, as applicable, in which the related CMT Rate Interest
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Determination Date falls. If such rate is no longer displayed on the relevant
page or is not so displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in H.15(519). If such rate is no longer published or
is not so published by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate on such CMT Rate Interest Determination Date will be
such treasury constant maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) for the
CMT Rate Interest Determination Date with respect to such Interest Reset Date as
may then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in H.15(519). If such information is
not so provided by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate on the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market offered rates as of approximately
3:30 P.M., New York City time, on such CMT Rate Interest Determination Date
reported, according to their written records, by three leading primary United
States government securities dealers in The City of New York (which may include
the Agents or their affiliates) (each, a "Reference Dealer") selected by the
Calculation Agent (from five such Reference Dealers selected by the Calculation
Agent and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent is unable to obtain three such Treasury Note quotations, the
CMT Rate on such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offered rates as of approximately 3:30 P.M., New York
City time, on such CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offered rates obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided, however,
that if fewer than three Reference Dealers so selected by the Calculation Agent
are quoting as mentioned herein, the CMT Rate determined as of such CMT Rate
Interest Determination Date will be the CMT Rate in effect on such CMT Rate
Interest Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the Calculation Agent will
obtain quotations for the Treasury Note with the shorter remaining term to
maturity.
"Designated CMT Telerate Page" means the display on Bridge Telerate, Inc.
(or any successor service) on the page specified in the applicable Pricing
Supplement (or any other page as may replace such page on such service) for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519) or,
if no such page is specified in the applicable Pricing Supplement, page 7052.
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"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated or, if no such maturity is specified in the applicable
Pricing Supplement, 2 years.
COMMERCIAL PAPER RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Commercial Paper Rate (a "Commercial Paper
Rate Interest Determination Date"), the Money Market Yield (as defined in this
Prospectus Supplement) on such date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the caption "Commercial Paper-Nonfinancial" or, if not so
published by 3:00 P.M., New York City time, on the related Calculation Date, the
rate on such Commercial Paper Rate Interest Determination Date for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as published in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying such rate, under the caption "Commercial
Paper-Nonfinancial." If such rate is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 P.M., New York City time,
on the related Calculation Date, then the Commercial Paper Rate on such
Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
United States dollar commercial paper in The City of New York (which may include
the Agents or their affiliates) selected by the Calculation Agent for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
placed for industrial issuers whose bond rating is "Aa", or the equivalent, from
a nationally recognized statistical rating organization; provided, however, that
if the dealers so selected by the Calculation Agent are not quoting as mentioned
in this sentence, the Commercial Paper Rate determined as of such Commercial
Paper Rate Interest Determination Date will be the Commercial Paper Rate in
effect on such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
D X 360
Money Market Yield = ----------------- X 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable Interest Reset Period.
ELEVENTH DISTRICT COST OF FUNDS RATE. Unless otherwise specified in the
applicable Pricing Supplement, "Eleventh District Cost of Funds Rate" means,
with respect to any Interest Determination Date relating to a Floating Rate Note
for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls as set
forth under the caption "11th District" on the display on Bridge Telerate, Inc.
(or any successor service) on page 7058 (or any other page as may replace such
page on such service) ("Telerate Page 7058") as of 11:00 A.M., San Francisco
time, on such Eleventh District Cost of Funds Rate Interest Determination Date.
If such rate does not appear on Telerate Page 7058 on such Eleventh District
Cost of Funds Rate Interest Determination Date, then
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the Eleventh District Cost of Funds Rate on such Eleventh District Cost of Funds
Rate Interest Determination Date shall be the monthly weighted average cost of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
FEDERAL FUNDS RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United States dollar
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)", as such rate is displayed on Bridge Telerate, Inc. (or any
successor service) on page 120 (or any other page that may replace such page on
such service) ("Telerate Page 120"), or, if such rate does not appear on
Telerate Page 120 or is not so published by 3:00 P.M., New York City time, on
the related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date for United States dollar federal funds as published in H.15
Daily Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the caption "Federal Funds (Effective)." If such
rate does not appear on Telerate Page 120 or is not yet published in H.15(519),
H.15 Daily Update or another recognized electronic source by 3:00 P.M., New York
City time, on the related Calculation Date, then the Federal Funds Rate on such
Federal Funds Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged by three
leading brokers of United States dollar federal funds transactions in The City
of New York (which may include the Agents or their affiliates) selected by the
Calculation Agent prior to 9:00 A.M., New York City time, on such Federal Funds
Rate Interest Determination Date; provided, however, that if the brokers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Federal Funds Rate determined as of such Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect on such Federal
Funds Rate Interest Determination Date.
LIBOR. Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
- With respect to any Interest Determination Date relating to a Floating
Rate Note for which the interest rate is determined with reference to
LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (a)
if "LIBOR Telerate" is specified in the applicable Pricing Supplement or
if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, the
rate for deposits in the Designated LIBOR Currency having the Index
Maturity specified in such Pricing Supplement, commencing on such
Interest Reset Date, that appears on the Designated LIBOR Page as of
11:00 A.M., London time, on such LIBOR Interest Determination Date; or
(b) if "LIBOR Reuters" is specified in the applicable Pricing Supplement,
the arithmetic mean of the offered rates (unless the Designated LIBOR
Page by its terms provides only for a single rate, in which case such
single rate shall be used) for deposits in the Designated LIBOR Currency
having the Index Maturity specified in such Pricing Supplement,
commencing on the applicable Interest Reset Date, that appear (or, if
only a single rate is
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required as aforesaid, appears) on the Designated LIBOR Page as of 11:00
A.M., London time, on such LIBOR Interest Determination Date. If fewer
than two such offered rates so appear, or if no such rate so appears, as
applicable, LIBOR on such LIBOR Interest Determination Date will be
determined in accordance with the provisions described in the following
bullet point paragraph.
- With respect to a LIBOR Interest Determination Date on which fewer than
two offered rates appear, or no rate appears, as the case may be, on the
Designated LIBOR Page as specified in preceding bullet point paragraph,
the Calculation Agent will request the principal London offices of each
of four major reference banks (which may include affiliates of the
Agents) in the London interbank market, as selected by the Calculation
Agent, to provide the Calculation Agent with its offered quotation for
deposits in the Designated LIBOR Currency for the period of the Index
Maturity specified in the applicable Pricing Supplement, commencing on
the applicable Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 A.M., London time, on such LIBOR
Interest Determination Date and in a principal amount that is
representative for a single transaction in the Designated LIBOR Currency
in such market at such time. If at least two such quotations are so
provided, then LIBOR on such LIBOR Interest Determination Date will be
the arithmetic mean of such quotations. If fewer than two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00
A.M., in the applicable Principal Financial Center, on such LIBOR
Interest Determination Date by three major banks (which may include
affiliates of the Agents) in such Principal Financial Center selected by
the Calculation Agent for loans in the Designated LIBOR Currency to
leading European banks, having the Index Maturity specified in the
applicable Pricing Supplement and in a principal amount that is
representative for a single transaction in the Designated LIBOR Currency
in such market at such time; provided, however, that if the banks so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR determined as of such LIBOR Interest Determination Date
will be LIBOR in effect on such LIBOR Interest Determination Date.
"Designated LIBOR Currency" means the currency specified in the applicable
Pricing Supplement as to which LIBOR shall be calculated or, if no such currency
is specified in the applicable Pricing Supplement, United States dollars.
"Designated LIBOR Page" means:
- if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
display on the Reuters Monitor Money Rates Service (or any successor
service) on the page specified in such Pricing Supplement (or any other
page as may replace such page on such service) for the purpose of
displaying the London interbank rates of major banks for the Designated
LIBOR Currency; or
- if "LIBOR Telerate" is specified in the applicable Pricing Supplement or
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, the
display on Bridge Telerate, Inc. (or any successor service) on the page
specified in such Pricing Supplement (or any other page as may replace
such page on such service) for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR Currency.
PRIME RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Interest Determination Date
relating to a Floating Rate Note for which
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the interest rate is determined with reference to the Prime Rate (a "Prime Rate
Interest Determination Date"), the rate on such date as such rate is published
in H.15(519) under the caption "Bank Prime Loan" or, if not published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on such
Prime Rate Interest Determination Date as published in H.15 Daily Update, or
such other recognized electronic source used for the purpose of displaying such
rate, under the caption "Bank Prime Loan." If such rate is not yet published in
H.15(519), H.15 Daily Update or another recognized electronic source by 3:00
P.M., New York City time, on the related Calculation Date, then the Prime Rate
shall be the arithmetic mean of the rates of interest publicly announced by each
bank that appears on the Reuters Screen US PRIME 1 Page (as defined in this
Prospectus Supplement) as such bank's prime rate or base lending rate as of
11:00 A.M., New York City time, on such Prime Rate Interest Determination Date.
If fewer than four such rates so appear on the Reuters Screen US PRIME 1 Page
for such Prime Rate Interest Determination Date, then the Prime Rate shall be
the arithmetic mean of the prime rates or base lending rates quoted on the basis
of the actual number of days in the year divided by a 360-day year as of the
close of business on such Prime Rate Interest Determination Date by three major
banks (which may include affiliates of the Agents) in The City of New York
selected by the Calculation Agent; provided, however, that if the banks or trust
companies so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
"Reuters Screen US PRIME 1 Page" means the display on the Reuters Monitor
Money Rates Service (or any successor service) on the "US PRIME 1" page (or such
other page as may replace the US PRIME 1 page on such service) for the purpose
of displaying prime rates or base lending rates of major United States banks.
TREASURY RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is determined
by reference to the Treasury Rate (a "Treasury Rate Interest Determination
Date"), the rate from the auction held on such Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified in the applicable Pricing
Supplement under the caption "AVGE INVEST YIELD" on the display on Bridge
Telerate, Inc. (or any successor service) on page 56 (or any other page as may
replace such page on such service) ("Telerate Page 56") or page 57 (or any other
page as may replace such page on such service) ("Telerate Page 57") or, if not
so published by 3:00 P.M., New York City time, on the related Calculation Date,
the auction average rate of such Treasury Bills (expressed as a bond equivalent
on the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
In the event that the results of the Auction of Treasury Bills having the Index
Maturity specified in the applicable Pricing Supplement are not so published by
3:00 P.M., New York City time, on the related Calculation Date, or if no such
Auction is held, then the Treasury Rate will be the rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) on such Treasury Rate Interest Determination Date of Treasury
Bills having the Index Maturity specified in the applicable Pricing Supplement
as published in H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market" or, if not yet published by 3:00 P.M., New York City
time, on the related Calculation Date, the rate on such Treasury Rate Interest
Determination Date of such Treasury Bills as published in H.15 Daily Update, or
such other recognized electronic source used for the purpose of displaying such
rate, under the caption "U.S. Government Securities/Treasury Bills/Secondary
Market." If
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such rate is not yet published in H.15(519), H.15 Daily Update or another
recognized electronic source, then the Treasury Rate will be calculated by the
Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest
Determination Date, of three primary United States government securities dealers
(which may include the Agents or their affiliates) selected by the Calculation
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement; provided,
however, that if the dealers so selected by the Calculation Agent are not
quoting as mentioned in this sentence, the Treasury Rate determined as of such
Treasury Rate Interest Determination Date will be the Treasury Rate in effect on
such Treasury Rate Interest Determination Date.
OTHER/ADDITIONAL PROVISIONS; ADDENDUM
Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the Interest Payment Dates,
the Stated Maturity Date, any redemption or repayment provisions or any other
term relating to the Notes, may be modified and/or supplemented as specified
under "Other/Additional Provisions" on the face of such Notes or in an Addendum
relating thereto, if so specified on the face of such Notes and described in the
applicable Pricing Supplement.
DISCOUNT NOTES
We may offer Notes ("Discount Notes") that have an Issue Price (as
specified in the applicable Pricing Supplement) that is less than 100% of the
Notes (i.e. par) by more than a percentage equal to the product of 0.25% and the
number of full years to the Stated Maturity Date. Discount Notes may not bear
any interest currently or may bear interest at a rate that is below market rates
at the time of issuance. The difference between the Issue Price of a Discount
Note and par is referred to herein as the "Discount." In the event of
redemption, repayment or acceleration of maturity of a Discount Note, the amount
payable to the Holder of such Discount Note will be equal to the sum of (i) the
Issue Price (increased by any accruals of Discount) and, in the event of any
redemption of such Discount Note (if applicable), multiplied by the Initial
Redemption Percentage (as adjusted by the Annual Redemption Percentage
Reduction, if applicable) and (ii) any unpaid interest accrued thereon to the
date of such redemption, repayment or acceleration of maturity, as the case may
be.
Unless otherwise specified in the applicable Pricing Supplement, for
purposes of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for a
Discount Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined in this
Prospectus Supplement), corresponds to the shortest period between Interest
Payment Dates for the applicable Discount Note (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon rate applicable
to such Discount Note and an assumption that the maturity of such Discount Note
will not be accelerated. If the period from the date of issue to the initial
Interest Payment Date for a Discount Note (the "Initial Period") is shorter than
the compounding period for such Discount Note, a proportionate amount of the
yield for an entire compounding period will be accrued. If the Initial Period is
longer than the compounding period, then such period will be divided into a
regular compounding period and a short period with the short period being
treated as provided in the preceding sentence. The accrual of the applicable
Discount may differ from the accrual of original
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issue discount for purposes of the Code (as defined in this Prospectus
Supplement), certain Discount Notes may not be treated as having original issue
discount within the meaning of the Code and Notes other than Discount Notes may
be treated as issued with original issue discount for federal income tax
purposes. See "United States Federal Income Tax Considerations."
INDEXED NOTES
We may offer Notes ("Indexed Notes") with the amount of principal, premium
and/or interest payable in respect thereof to be determined with reference to
the price or prices of specified commodities or stocks, to the exchange rate of
one or more designated currencies relative to an indexed currency or to other
items, in each case as specified in the applicable Pricing Supplement. In
certain cases, Holders of Indexed Notes may receive a principal payment on the
Maturity Date that is greater than or less than the principal amount of such
Indexed Notes depending upon the relative value on the Maturity Date of the
specified indexed item. Information as to the method for determining the amount
of principal, premium, if any, and/or interest, if any, payable in respect of
Indexed Notes, certain historical information with respect to the specified
indexed item and any material tax considerations associated with an investment
in Indexed Notes will be specified in the applicable Pricing Supplement. See
also "Risk Factors."
AMORTIZING NOTES
We may offer Notes ("Amortizing Notes") with the amount of principal
thereof and interest thereon payable in installments over the term of such
Notes. Unless otherwise specified in the applicable Pricing Supplement, interest
on each Amortizing Note will be computed on the basis of a 360-day year of
twelve 30-day months. Payments with respect to Amortizing Notes will be applied
first to interest due and payable on such Amortizing Notes and then to the
reduction of the unpaid principal amount of such Amortizing Notes. Further
information concerning additional terms and provisions of Amortizing Notes will
be specified in the applicable Pricing Supplement, including a table setting
forth repayment information for such Amortizing Notes.
BOOK-ENTRY NOTES
We have established a depositary arrangement with The Depository Trust
Company (the "Depositary") with respect to the Book-Entry Notes, the terms of
which are summarized below. If there are any additional or differing terms of
the depositary arrangement with respect to the Book-Entry Notes, we will
describe them in the applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes of like tenor and terms up to
$200,000,000 aggregate principal amount will be represented by a single Global
Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary and will be registered in the name of the
Depositary or a nominee of the Depositary. No Global Security may be transferred
except as a whole by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or such nominee to a successor
of the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Book-Entry Notes represented by such Global Security for all
purposes under the Indenture. Except as otherwise provided below, the Beneficial
Owners of the Global Security or Securities representing Book-Entry Notes will
not be entitled to receive physical delivery of Certificated Notes and will not
be considered the Holders of the Book-Entry Notes for any purpose under the
Indenture, and no
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Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each Beneficial Owner must rely on the procedures of
the Depositary and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global Security
or the Indenture. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
Such limits and laws may impair the ability to transfer beneficial interests in
a Global Security representing Book-Entry Notes.
Unless otherwise specified in the applicable Pricing Supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
Certificated Notes of like tenor and terms and of differing authorized
denominations in a like aggregate principal amount, only if:
- the Depositary notifies us that it is unwilling or unable to continue as
Depositary for the Global Securities or we become aware that the
Depositary has ceased to be a clearing agency registered under the
Exchange Act and, in any such case, we shall not have appointed a
successor to the Depositary within 60 calendar days thereafter;
- we, in our sole discretion, determine that the Global Securities shall be
exchangeable for Certificated Notes; or
- an Event of Default shall have occurred and be continuing with respect to
the Notes under the Indenture.
Upon any such exchange, the Certificated Notes shall be registered in the names
of the Beneficial Owners of the Global Security or Securities representing
Book-Entry Notes, which names shall be provided by the Depositary's relevant
Participants (as identified by the Depositary) to the Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership
nominee). One fully registered Global Security will be issued for each
issue of Book-Entry Notes, each in the aggregate principal amount of such
issue, and will be deposited with the Depositary. If, however, the
aggregate principal amount of any issue exceeds $200,000,000, one Global
Security will be issued with respect to each $200,000,000 of principal
amount and an additional Global Security will be issued with respect to any
remaining principal amount of such issue.
The Depositary is a limited purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized Book-Entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants of the Depositary ("Direct Participants")
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. The Depositary is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the Depositary's system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with
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a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be
made by or through Direct Participants, which will receive a credit for
such Book-Entry Notes on the Depositary's records. The ownership interest
of each actual purchaser of each Book-Entry Note represented by a Global
Security ("Beneficial Owner") is in turn to be recorded on the records of
Direct Participants and Indirect Participants. Beneficial Owners will not
receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in a Global Security representing Book-Entry Notes are
to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners of a Global Security
representing Book-Entry Notes will not receive Certificated Notes
representing their ownership interests therein, except in the event that
use of the book-entry system for such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of the Depositary's nominee, Cede & Co. The
deposit of Global Securities with, or on behalf of, the Depositary and
their registration in the name of Cede & Co. effect no change in beneficial
ownership. The Depositary has no knowledge of the actual Beneficial Owners
of the Global Securities representing the Book-Entry Notes; the
Depositary's records reflect only the identity of the Direct Participants
to whose accounts such Book-Entry Notes are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners will
be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the Global Securities representing the Book-Entry Notes. Under
its usual procedures, the Depositary mails an Omnibus Proxy to us as soon
as possible after the applicable record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Book-Entry Notes are credited on the applicable record
date (identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest, if any, payments on the
Global Securities representing the Book-Entry Notes will be made in
immediately available funds to the Depositary. The Depositary's practice is
to credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless the Depositary has reason to believe that it will not receive
payment on such date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
Participant and not of the Depositary, the Trustee or us, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal, premium, if any, and/or interest, if any, to the
Depositary is the responsibility of us and the Trustee, disbursement of
such
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payments to Direct Participants shall be the responsibility of the
Depositary, and disbursement of such payments to the Beneficial Owners
shall be the responsibility of Direct Participants and Indirect
Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes of like tenor and terms are being
redeemed, the Depositary's practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have
its Book-Entry Notes repaid by us, through its Participant, to the Trustee,
and shall effect delivery of such Book-Entry Notes by causing the Direct
Participant to transfer the Participant's interest in the Global Security
or Securities representing such Book-Entry Notes, on the Depositary's
records, to the Trustee. The requirement for physical delivery of
Book-Entry Notes in connection with a demand for repayment will be deemed
satisfied when the ownership rights in the Global Security or Securities
representing such Book-Entry Notes are transferred by Direct Participants
on the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to us or to the Trustee. Under such circumstances, in the
event that a successor securities depository is not obtained, Certificated
Notes are required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through the Depositary (or a successor securities depository). In that
event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from the Depositary, which we believe to
be reliable, but neither we nor any Agent takes any responsibility for its
accuracy.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing the
Specified Currency. The information set forth in this Prospectus Supplement is
directed to prospective purchasers who are United States residents and, with
respect to Foreign Currency Notes, is by necessity incomplete. We and the Agents
disclaim any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal of, and
premium, if any, and interest, if any, on, Foreign Currency Notes. Such persons
should consult their own financial and legal advisors with regard to such
matters. See "Risk Factors -- Exchange Rates and Exchange Controls."
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, IF ANY
Unless otherwise specified in the applicable Pricing Supplement, we are
obligated to make payments of principal of, and premium, if any, and interest,
if any, on, a Foreign Currency Note in the Specified Currency. Any such amounts
payable by us in the Specified Currency will be converted by the exchange rate
agent named in the applicable Pricing Supplement (the "Exchange Rate Agent")
into United States dollars for payment to Holders unless otherwise specified in
the
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applicable Pricing Supplement or the Holder of such Foreign Currency Note
elects, in the manner described in this Prospectus Supplement, to receive such
amounts in the Specified Currency.
Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New York
received by the Exchange Rate Agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment date from
three recognized foreign exchange dealers (one of whom may be the Exchange Rate
Agent) selected by the Exchange Rate Agent and approved by us for the purchase
by the quoting dealer of the Specified Currency for United States dollars for
settlement on such payment date in the aggregate amount of such Specified
Currency payable to all Holders of Foreign Currency Notes scheduled to receive
United States dollar payments and at which the applicable dealer commits to
execute a contract. All currency exchange costs will be borne by the Holders of
such Foreign Currency Notes by deductions from such payments. If three such bid
quotations are not available, payments will be made in the Specified Currency.
Holders of Foreign Currency Notes may elect to receive all or a specified
portion of any payment of principal, premium, if any, and/or interest, if any,
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior to
the applicable Record Date or at least fifteen calendar days prior to the
Maturity Date, as the case may be. Such written request may be mailed or hand
delivered or sent by cable, telex or other form of facsimile transmission.
Holders of Foreign Currency Notes may elect to receive all or a specified
portion of all future payments in the Specified Currency and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the applicable Record
Date or at least fifteen calendar days prior to the Maturity Date, as the case
may be. Holders of Foreign Currency Notes to be held in the name of a broker or
nominee should contact such broker or nominee to determine whether and how an
election to receive payments in the Specified Currency may be made.
Unless otherwise specified in the applicable Pricing Supplement, if the
Specified Currency is other than United States dollars, a Beneficial Owner of
the related Global Security or Securities which elects to receive payments of
principal, premium, if any, and/or interest, if any, in the Specified Currency
must notify the Participant through which it owns its interest on or prior to
the applicable Record Date or at least fifteen calendar days prior to the
Maturity Date, as the case may be, of such Beneficial Owner's election. Such
Participant must notify the Depositary of such election on or prior to the third
Business Day after such Record Date or at least twelve calendar days prior to
the Maturity Date, as the case may be, and the Depositary will notify the
Trustee of such election on or prior to the fifth Business Day after such Record
Date or at least ten calendar days prior to the Maturity Date, as the case may
be. If complete instructions are received by the Participant from the Beneficial
Owner and forwarded by the Participant to the Depositary, and by the Depositary
to the Trustee, on or prior to such dates, then such Beneficial Owner will
receive payments in the Specified Currency.
Payments of the principal of, and premium, if any, and/or interest, if any,
on, Foreign Currency Notes which are to be made in United States dollars will be
made in the manner specified in this Prospectus Supplement with respect to Notes
denominated in United States dollars. See "Description of Notes -- General."
Payments of interest, if any, on Foreign Currency Notes which are to be made in
the Specified Currency on an Interest Payment Date other than the Maturity Date
will be made by check mailed to the address of the Holders of such Foreign
Currency Notes as they appear in the Security Register, subject to the right to
receive such interest payments by wire transfer of
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immediately available funds under the circumstances described under "Description
of Notes -- General." Payments of principal of, and premium, if any, and/or
interest, if any, on, Foreign Currency Notes which are to be made in the
Specified Currency on the Maturity Date will be made by wire transfer of
immediately available funds to an account with a bank designated at least
fifteen calendar days prior to the Maturity Date by each Holder, provided that
such bank has appropriate facilities and that the applicable Foreign Currency
Note is presented and surrendered at the office or agency maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York
(currently the office of the Trustee located at 153 West 51st Street, Suite
4015, New York, New York 10019) in time for the Trustee to make such payments in
such funds in accordance with its normal procedures.
AVAILABILITY OF SPECIFIED CURRENCY
If the Specified Currency for a Foreign Currency Note is not available for
the required payment of principal, premium, if any, and/or interest, if any, in
respect of such Foreign Currency Note due to the imposition of exchange controls
or other circumstances beyond our control, we will be entitled to satisfy our
obligations to the Holder of such Foreign Currency Note by making such payment
in United States dollars on the basis of the Market Exchange Rate (as defined in
this Prospectus Supplement), computed by the Exchange Rate Agent, on the second
Business Day prior to such payment or, if such Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate, or
as otherwise specified in the applicable Pricing Supplement.
The "Market Exchange Rate" for a Specified Currency other than United
States dollars means the noon dollar buying rate in The City of New York for
cable transfers for such Specified Currency as certified for customs purposes
(or, if not so certified, as otherwise determined) by the Federal Reserve Bank
of New York. Any payment made in United States dollars under such circumstances
where the required payment is in a Specified Currency other than United States
dollars will not constitute an Event of Default under the Indenture with respect
to the Notes.
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
JUDGMENTS
If an action based on Foreign Currency Notes were commenced in a federal
court of the United States, it is not clear whether such court would grant
judgment relating to such Notes in United States dollars or in the Specified
Currency. Furthermore, if the judgment were rendered in United States dollars,
it is not clear whether the rate of conversion into United States dollars would
be determined with reference to the date of default, the date judgment is
rendered or some other date. Under current Illinois law, a state court in the
State of Illinois rendering a judgment on a Foreign Currency Note would, unless
otherwise provided in such Foreign Currency Note, require such judgment to be
payable in the Specified Currency in which such Foreign Currency Note is
denominated or, at our option, in United States dollars based upon the spot rate
of exchange on the banking date next preceding the date on which the judgment is
satisfied. Holders of Foreign Currency Notes bear the risk of exchange rate
fluctuations between the time the amount of the judgment is calculated and the
time the paying agent converts the Specified Currency to United States dollars
for payment of the judgment. Although the Notes will be governed by and
construed in accordance with the laws of the State of Illinois, it is not
certain whether the court of any other jurisdiction would determine the judgment
currency on the basis of Illinois law.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the principal United States federal income
tax considerations relating to the purchase, ownership and disposition of Notes
to beneficial owners ("holders") purchasing Notes at their original issuance.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), legislative history, administrative pronouncements, judicial decisions
and final, temporary and proposed Treasury Regulations, changes to any of which
subsequent to the date of this Prospectus Supplement may affect the tax
consequences described herein. Any such change may apply retroactively.
This summary discusses only the principal United States federal income tax
consequences to those holders holding Notes as capital assets within the meaning
of Section 1221 of the Code. It does not address all of the tax consequences
that may be relevant to a holder in light of the holder's particular
circumstances or to holders subject to special rules (including pension plans
and other tax-exempt investors, banks, thrifts, insurance companies, real estate
investment trusts, regulated investment companies, dealers in securities,
currencies and persons so treated for federal income tax purposes, persons whose
functional currency (as defined in Section 985 of the Code) is other than the
United States dollar, and persons who hold Notes as part of a straddle, hedging
or conversion transaction). This summary does not discuss the taxation of notes
which qualify as "applicable high yield discount obligations" under Section
163(i) of the Code. Holders of such obligations may be subject to special rules
which will be set forth in the applicable pricing supplement, if appropriate.
This summary also assumes that a taxpayer obtains any necessary consent of the
Internal Revenue Service (the "IRS") before changing a method of accounting.
Persons considering the purchase of Notes should consult their tax advisors
with regard to the application of United States federal income tax laws to their
particular situations as well as any tax consequences to them arising under the
laws of any state, local or foreign taxing jurisdiction. State, local and
foreign income tax laws may differ substantially from the corresponding federal
income tax laws, and this discussion does not purport to describe any aspect of
the tax laws of any state, local or foreign jurisdiction. Therefore, potential
investors should consult their own tax advisers with respect to the various
state, local and foreign tax consequences of an investment in Notes.
As used herein, the term "United States Holder" means a holder of a Note
who or which is, for United States federal income tax purposes, (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, or (iii) an estate or trust described in Section
7701(a)(30) of the Code. The term also includes certain holders who are former
citizens of the United States whose income and gain from the Notes are subject
to United States taxation. The term "non-United States Holder" means a holder
that is not a United States Holder.
TAXATION OF INTEREST
The taxation of interest on a Note depends on whether it constitutes
"qualified stated interest" (as defined below). Interest on a Note that
constitutes qualified stated interest is includible in a United States Holder's
income as ordinary interest income when actually or constructively received (if
such holder uses the cash method of accounting for federal income tax purposes)
or when accrued (if such holder uses an accrual method of accounting for federal
income tax purposes). Interest that is not qualified stated interest is
includible in a United States Holder's income under the rules governing
"original issue discount," described below, regardless of such holder's method
of accounting. Notwithstanding the foregoing, interest that is payable on a Note
with a maturity of one
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year or less from its issue date (a "Short-Term Note") is included in a United
States Holder's income under the rules described below under "Short-Term Notes."
Fixed Rate Notes
Interest on a Fixed Rate Note will constitute "qualified stated interest"
if the interest is unconditionally payable, or will be constructively received
under Section 451 of the Code, in cash or in property (other than our debt
instruments) at least annually at a single fixed rate.
Floating Rate Notes
Interest on a Floating Rate Note that is unconditionally payable, or will
be constructively received under Section 451 of the Code, in cash or in property
(other than our debt instruments) at least annually will constitute "qualified
stated interest" if the Note is a variable rate debt instrument ("VRDI") under
the rules described below and the interest is payable at a single "qualified
floating rate" or single "objective rate" (each as defined below). If the Note
is a VRDI but the interest is payable other than at a single qualified floating
rate or at a single objective rate, special rules apply to determine the portion
of such interest that constitutes "qualified stated interest." See "--Taxation
of Original Issue Discount -- General Rules for Fixed Rate Notes -- Taxation of
OID on Floating Rate Notes and Indexed Notes -- Notes that are VRDIs" below.
Definition of a Variable Rate Debt Instrument. A Floating Rate Note is a
VRDI if all of the four following conditions are met.
First, the "issue price" (as described below) of the Note must not exceed
the total noncontingent principal payments by more than an amount equal to the
lesser of (i) .015 multiplied by the product of the total noncontingent
principal payments and the number of complete years to maturity from the issue
date (or, in the case of a Note that provides for payment of any amount other
than qualified stated interest before maturity, its weighted average maturity)
and (ii) 15% of the total noncontingent principal payments.
Second, the Note must provide for stated interest (compounded or paid at
least annually) at (a) one or more qualified floating rates, (b) a single fixed
rate and one or more qualified floating rates, (c) a single objective rate or
(d) a single fixed rate and a single objective rate that is a "qualified inverse
floating rate" (as defined below).
Third, the Note must provide that a qualified floating rate or objective
rate in effect at any time during the term of the instrument is set at the
current value of that rate. A current value is the value of the rate on any day
that is no earlier than three months prior to the first day on which that value
is in effect and no later than one year following that first day.
Fourth, the Note may not provide for any principal payments that are
contingent except as provided in the first requirement set forth above.
Definition of a Qualified Floating Rate. Subject to certain exceptions, a
variable rate of interest on a Note is a "qualified floating rate" if variations
in the value of the rate can reasonably be expected to measure contemporaneous
fluctuations in the cost of newly borrowed funds in the currency in which the
Note is denominated. A variable rate is considered a qualified floating rate if
the variable rate equals (i) the product of an otherwise qualified floating rate
and a fixed multiple (i.e., a Spread Multiplier) that is greater than 0.65 but
not more than 1.35 or (ii) an otherwise qualified floating rate (or the product
described in clause (i)) plus or minus a fixed rate (i.e., a Spread). If the
variable rate equals the product of an otherwise qualified floating rate and a
single multiplier greater than 1.35 or less than or equal to 0.65, however, such
rate generally is an objective
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rate, described more fully below. A variable rate is not considered a qualified
floating rate if the variable rate is subject to a cap, floor, governor (i.e., a
restriction on the amount of increase or decrease in the stated interest rate)
or similar restriction that is reasonably expected as of the issue date to cause
the yield on the Note to be significantly more or less than the expected yield
determined without the restriction (other than a cap, floor or governor that is
fixed throughout the term of the Note).
Definition of an Objective Rate. Subject to certain exceptions, an
"objective rate" is a rate (other than a qualified floating rate) that is
determined using a single fixed formula and that is based on objective financial
or economic information that is neither within the control of the issuer (or a
related party) nor unique to the circumstances of the issuer (or a related
party). For example, an objective rate generally includes a rate that is based
on one or more qualified floating rates or on the yield or price of actively
traded personal property (within the meaning of Section 1092(d)(1) of the Code).
Notwithstanding the first sentence of this paragraph, a rate is not an objective
rate if it is reasonably expected that the average value of the rate during the
first half of the Note's term will be either significantly less than or
significantly greater than the average value of the rate during the final half
of the Note's term. The IRS may designate rates other than those specified above
that will be treated as objective rates. As of the date of this Prospectus
Supplement, no such other rates have been designated. An objective rate is a
"qualified inverse floating rate" if (a) the rate is equal to a fixed rate minus
a qualified floating rate and (b) the variations in the rate can reasonably be
expected to reflect inversely contemporaneous variations in the cost of newly
borrowed funds (disregarding any caps, floors, governors or similar restrictions
that would not, as described above, cause a rate to fail to be a qualified
floating rate).
If interest on a Note is stated at a fixed rate for an initial period of
one year or less, followed by a variable rate that is either a qualified
floating rate or an objective rate for a subsequent period, and the value of the
variable rate on the issue date is intended to approximate the fixed rate, the
fixed rate and the variable rate together constitute a single qualified floating
rate or objective rate.
TAXATION OF ORIGINAL ISSUE DISCOUNT -- GENERAL RULES FOR FIXED RATE NOTES
Definition of OID
OID is the excess of a Note's "stated redemption price at maturity" over
its "issue price." A Note's "stated redemption price at maturity" is the sum of
all payments provided by the Note (whether designated as interest or principal)
other than payments of qualified stated interest. The "issue price" and "issue
date" of a Note will be the first price and the first settlement or closing date
(whichever is applicable), respectively, at which a substantial amount of the
Notes in the issuance that includes such Note is sold for money (excluding sales
to bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers).
As described more fully below, United States Holders of Notes with OID that
mature more than one year from their issue date generally are required to
include such OID in income as it accrues in accordance with the constant yield
method described below, irrespective of the receipt of the related cash
payments. A United States Holder's tax basis in a Note is increased by each
accrual of OID and decreased by each payment other than a payment of qualified
stated interest.
The amount of OID with respect to a Note will be treated as zero if the OID
is less than an amount equal to .0025 multiplied by the product of the stated
redemption price at maturity and the number of complete years to maturity (or in
the case of a Note that provides for payment of any amount other than qualified
stated interest prior to maturity, the weighted average maturity of the Note).
If the amount of OID with respect to a Note is less than that amount, the OID
that is not
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included in payments of stated interest is generally included in income as
capital gain as principal payments are made. The amount includible with respect
to a principal payment equals the product of the total amount of OID and a
fraction, the numerator of which is the amount of such principal payment and the
denominator of which is the stated principal amount of the Note.
Inclusion of OID in Income
The amount of OID includible in the income of a United States Holder for
any taxable year is determined under the constant yield method, in four steps.
In the first step, the "yield to maturity" of the Note is computed. The
yield to maturity is the discount rate that, when used in computing the present
value of all interest and principal payments to be made under the Note
(including payments of qualified stated interest) produces an amount equal to
the issue price of the Note. The yield to maturity is constant over the term of
the Note and, when expressed as a percentage, must be calculated to at least two
decimal places.
In the second step, the term of the Note is divided into "accrual periods."
Accrual periods may be of any length and may vary in length over the term of the
Note, provided that each accrual period is no longer than one year and that each
scheduled payment of principal or interest occurs either on the final day of an
accrual period or on the first day of an accrual period.
In the third step, the total amount of OID on the Note is allocated among
accrual periods. In general, the OID allocable to an accrual period equals the
product of the "adjusted issue price" of the Note at the beginning of the
accrual period and the yield to maturity of the Note, less the amount of any
qualified stated interest allocable to the accrual period. The adjusted issue
price of a Note at the beginning of the first accrual period is its issue price.
Thereafter, the adjusted issue price of the Note is its issue price, increased
by the amount of OID previously includible in the gross income of any United
States Holder and decreased by the amount of any payment previously made on the
Note other than a payment of qualified stated interest. For purposes of
computing the adjusted issue price of a Note, the amount of OID previously
includible in the gross income of any United States Holder is determined without
regard to "premium" and "acquisition premium," as those terms are defined below.
In the fourth step, the "daily portions" of OID are determined by
allocating to each day in an accrual period its ratable portion of the OID
allocable to the accrual period.
A United States Holder includes in income in any taxable year the daily
portions of OID for each day during the taxable year that such holder held
Notes. In general, under the constant yield method described above, United
States Holders are required to include in income increasingly greater amounts of
OID in successive accrual periods.
In the case of a Note that is redeemable at our option or repayable by us
at the option of the holder, the maturity and the yield to maturity of the Note
are determined by assuming that we and the holder will exercise or not exercise
the options available to them in a manner that minimizes the yield, in the case
of options available to us, or maximizes the yield, in the case of options
available to the holder. Unless specified to the contrary in the applicable
Pricing Supplement, the Redemption Price payable by us upon the exercise of an
option to redeem is at all times at least equal to the principal amount of the
Note redeemed plus accrued interest and the repayment price payable by us upon
exercise of the holder's option is at all times equal to the principal amount of
the Note so repaid plus accrued interest. Accordingly, the existence of such
options should not generally affect the determination of the maturity and the
yield to maturity of Notes having an issue price equal to 100% of the principal
amount.
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Taxation of OID on Floating Rate Notes and Indexed Notes
The taxation of OID (including interest that does not constitute qualified
stated interest) on a Floating Rate Note or an Indexed Note will depend on
whether the Note is a "VRDI," as that term is defined above under "-- Taxation
of Interest -- Definition of a Variable Rate Debt Instrument."
Notes that are VRDIs. In the case of a VRDI that provides for qualified
stated interest, the amount of qualified stated interest and OID, if any,
includible in income during a taxable year are determined under the rules
applicable to Fixed Rate Notes (described above) by assuming that the variable
rate is a fixed rate equal to (i) in the case of a qualified floating rate or a
qualified inverse floating rate, the value, as of the issue date, of the
qualified floating rate or qualified inverse floating rate, or (ii) in the case
of an objective rate (other than a qualified inverse floating rate), the rate
that reflects the yield that is reasonably expected for the Note. Qualified
stated interest allocable to an accrual period is increased (or decreased) if
the interest actually paid during an accrual period exceeds (or is less than)
the interest assumed to be paid during the accrual period.
If a Note that is a VRDI does not provide for interest at a single variable
rate as described above, the amount of interest and OID accruals are determined
by constructing an equivalent fixed rate debt instrument, as follows.
First, in the case of an instrument that provides for interest at one or
more qualified floating rates or at a qualified inverse floating rate and, in
addition, at a fixed rate, replace the fixed rate with a qualified floating rate
(or qualified inverse floating rate) such that the fair market value of the
instrument, so modified, as of the issue date would be approximately the same as
the fair market value of the unmodified instrument.
Second, determine the fixed rate substitute for each variable rate provided
by the Note. The fixed rate substitute for each qualified floating rate provided
by the Note is the value of that qualified floating rate on the issue date. If
the Note provides for two or more qualified floating rates with different
intervals between interest adjustment dates (for example, the 30-day Commercial
Paper Rate and quarterly LIBOR), the fixed rate substitutes are based on
intervals that are equal in length (for example, the 90-day Commercial Paper
Rate and quarterly LIBOR, or the 30-day Commercial Paper Rate and monthly
LIBOR). The fixed rate substitute for an objective rate that is a qualified
inverse floating rate is the value of the qualified inverse floating rate on the
issue date. The fixed rate substitute for an objective rate (other than a
qualified inverse floating rate) is a fixed rate that reflects the yield that is
reasonably expected for the Note.
Third, construct an equivalent fixed rate debt instrument that has terms
that are identical to those provided under the Note, except that the equivalent
fixed rate debt instrument provides for the fixed rate substitutes determined in
the second step, in lieu of the qualified floating rates or objective rate
provided by the Note.
Fourth, determine the amount of qualified stated interest and OID for the
equivalent fixed rate debt instrument under the rules (described above) for
Fixed Rate Notes. These amounts are taken into account as if the United States
Holder held the equivalent fixed rate debt instrument. See "-- Taxation of
Interest" above.
Fifth, make appropriate adjustments for the actual values of the variable
rates. In this step, qualified stated interest or OID allocable to an accrual
period is increased (or decreased) if the interest actually accrued or paid
during the accrual period exceeds (or is less than) the interest assumed to be
accrued or paid during the accrual period under the equivalent fixed rate debt
instrument.
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Notes that are not VRDIs. Floating Rate Notes or Indexed Notes that are
not VRDIs ("Contingent Notes") are taxable under the rules applicable to
contingent payment debt instruments (the "Contingent Debt Regulations") as
follows. First, we are required to determine, as of the issue date, the
comparable yield for the Contingent Note. The comparable yield is generally the
yield at which we would issue a fixed rate debt instrument with terms and
conditions similar to those of the Contingent Note (including the level of
subordination, term, timing of payments and general market conditions, but not
taking into consideration the riskiness of the contingencies or the liquidity of
the Contingent Note), but not less than the applicable federal rate announced
monthly by the IRS (the "AFR"). In certain cases where Contingent Notes are
marketed or sold in substantial part to tax-exempt investors or other investors
for whom the prescribed inclusion of interest is not expected to have a
substantial effect on their U.S. tax liability, the comparable yield for the
Contingent Note, without proper evidence to the contrary, is presumed to be the
AFR.
Second, solely for tax purposes, we construct a projected schedule of
payments determined under the Contingent Debt Regulations for the Contingent
Note (the "Schedule"). The Schedule is determined as of the issue date and
generally remains in place throughout the term of the Contingent Note. If a
right to a contingent payment is based on market information, the amount of the
projected payment is the forward price of the contingent payment. If a
contingent payment is not based on market information, the amount of the
projected payment is the expected value of the contingent payment as of the
issue date. The Schedule must produce the comparable yield determined as set
forth above. Otherwise, the Schedule must be adjusted under the rules set forth
in the Contingent Debt Regulations.
Third, under the usual rules applicable to OID and based on the Schedule,
the interest income on the Contingent Note for each accrual period is determined
by multiplying the comparable yield of the Contingent Note (adjusted for the
length of the accrual period) by the Contingent Note's adjusted issue price at
the beginning of the accrual period (determined under rules set forth in the
Contingent Debt Regulations). The amount so determined is then allocated on a
ratable basis to each day in the accrual period that the United States Holder
held the Contingent Note.
Fourth, appropriate adjustments are made to the interest income determined
under the foregoing rules to account for any differences between the Schedule
and actual contingent payments. Under the rules set forth in the Contingent Debt
Regulations, differences between the actual amounts of any contingent payments
made in a calendar year and the projected amounts of such payments are generally
aggregated and taken into account, in the case of a positive difference, as
additional interest income, or, in the case of a negative difference, first as a
reduction in interest income for such year and thereafter, subject to certain
limitations, as ordinary loss.
We are required to provide each holder of a Contingent Note with the
Schedule described above. If we do not create a Schedule or the Schedule is
unreasonable, a United States Holder must set its own projected payment schedule
and explicitly disclose the use of such schedule and the reason therefor. Unless
otherwise prescribed by the IRS, the United States Holder must make such
disclosure on a statement attached to the United States Holder's timely filed
federal income tax return for the taxable year in which the Contingent Note was
acquired.
In general, any gain realized by a United States Holder on the sale,
exchange, redemption, or retirement of a Contingent Note is interest income. In
general, any loss on a Contingent Note accounted for under the method described
above is ordinary loss to the extent it does not exceed such holder's prior
interest inclusions on the Contingent Note (net of negative adjustments).
Special rules apply in determining the tax basis of a Contingent Note and the
amount realized on the retirement of a Contingent Note.
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Other Rules
Certain Notes having OID may be redeemed prior to maturity or may be
repayable at the option of the holder. Such Notes may be subject to rules that
differ from the general rules discussed above relating to the tax treatment of
OID. Purchasers of such Notes with a redemption feature should carefully examine
the applicable Pricing Supplement and should consult their tax advisors with
respect to such features since the tax consequences with respect to interest and
OID will depend, in part, on the particular terms and the particular features of
the Note.
The Treasury Regulations relating to the tax treatment of OID contain
certain language ("aggregation rules") stating in general that, with some
exceptions, if more than one type of Note is issued in connection with the same
transaction or related transactions, such Notes may be treated as a single debt
instrument with a single issue price, maturity date, yield to maturity and
stated redemption price at maturity for purposes of calculating and accruing any
OID. Unless otherwise provided in the applicable Pricing Supplement, we do not
expect to treat different types of Notes as being subject to the aggregation
rules for purposes of computing OID.
MARKET DISCOUNT
If a United States Holder acquires a Note having a maturity date of more
than one year from the date of its issuance and has a tax basis in the Note that
is, in the case of a Note that does not have OID, less than its stated
redemption price at maturity, or, in the case of a Note that has OID, less than
its adjusted issue price (as defined above), such difference is treated as
"market discount" for federal income tax purposes, unless such difference is
less than 1/4 of one percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity (from the date of
acquisition).
Under the market discount rules of the Code, a United States Holder is
required to treat any principal payment (or, in the case of a Note that has OID,
any payment that is not qualified stated interest) on, or any gain on the sale,
exchange, retirement, redemption or other disposition of, a Note as ordinary
income to the extent of the market discount that has not previously been
included in income. Thus, partial principal payments are treated as ordinary
income to the extent of accrued market discount that has not previously been
included in income. If such Note is disposed of by the United States Holder in
certain otherwise nontaxable transactions, accrued market discount is includible
as ordinary income by the United States Holder as if such holder had sold the
Note at its then fair market value.
In general, the amount of market discount that has accrued is determined on
a ratable basis. A United States Holder may, however, elect to determine the
amount of accrued market discount on a constant yield to maturity basis. This
election is made on a Note-by-Note basis and is irrevocable.
With respect to Notes with market discount, a United States Holder may not
be allowed to deduct immediately a portion of the interest expense on any
indebtedness incurred or continued to purchase or to carry such Notes. A United
States Holder may elect to include market discount in income currently as it
accrues, in which case the interest deferral rule set forth in the preceding
sentence does not apply. Such an election applies to all debt instruments
acquired by the United States Holder on or after the first day of the first
taxable year to which such election applies and is irrevocable without the
consent of IRS. A United States Holder's tax basis in a Note is increased by the
amount of market discount included in such holder's income under such an
election.
In lieu of the foregoing rules, different rules apply in the case of
Contingent Notes where a holder's tax basis in a Contingent Note is less than
the Contingent Note's adjusted issue price
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(determined under special rules set out in the Contingent Debt Regulations).
Accordingly, prospective purchasers of Contingent Notes should consult with
their tax advisors with respect to the application of the market discount rules
to such Notes.
PREMIUM AND ACQUISITION PREMIUM
If a United States Holder purchases a Note at a "premium," the United
States Holder does not include any OID in gross income. A Note is purchased at a
premium (or "amortizable bond premium") if its adjusted basis, immediately after
its purchase by such holder, exceeds the sum of all amounts payable on the Note
after the purchase date other than payments of qualified stated interest. United
States Holders may elect to amortize the premium over the remaining term of the
Note (where such Note is not callable prior to its maturity date), using a
constant yield method similar to that described above. In the case of Notes that
may be redeemed prior to maturity, the premium is calculated assuming that we or
the United States Holder will exercise or not exercise redemption rights in a
manner that maximizes the United States Holder's yield. A United States Holder
who elects to amortize bond premium must reduce such holder's tax basis in the
Note by the amount of the premium used to offset qualified stated interest
income as set forth above. If this election is made with respect to any Note, it
will also apply to all debt instruments held by the United States Holder at the
beginning of the first taxable year to which the election applies and to all
debt instruments acquired by the United States Holder, and will be binding for
all subsequent taxable years unless the election is revoked with the consent of
the IRS.
If a United States Holder purchases a Note with OID at an "acquisition
premium," the amount of OID that the United States Holder includes in gross
income is reduced to reflect the acquisition premium. A Note is purchased at an
acquisition premium if its adjusted basis, immediately after its purchase is (a)
less than or equal to the sum of all amounts payable on the Note after the
purchase date other than payments of qualified stated interest and (b) greater
than the Note's adjusted issue price (as described above).
If a Note is purchased at an acquisition premium, the United States Holder
reduces the amount of OID otherwise includible in income during an accrual
period by a fraction. The numerator of this fraction is the excess of the
adjusted basis of the Note immediately after its acquisition by the purchaser
over the adjusted issue price of the Note. The denominator of the fraction is
the excess of the sum of all amounts payable on the Note after the purchase
date, other than payments of qualified stated interest, over the Note's adjusted
issue price.
As an alternative to reducing the amount of OID otherwise includible in
income by this fraction, the United States Holder may elect to compute OID
accruals by treating the purchase as a purchase at original issuance and
applying the constant yield method described under "-- Taxation of Original
Issue Discount -- General Rules for Fixed Rate Notes -- Inclusion of OID in
Income" above.
In lieu of the foregoing rules, different rules apply in the case of
Contingent Notes where a holder's tax basis in a Contingent Note is greater than
the Contingent Note's adjusted issue price (determined under special rules set
out in the Contingent Debt Regulations). Accordingly, prospective purchasers of
Contingent Notes should consult with their tax advisors with respect to the
application of the acquisition premium and amortizable bond premium rules to
such Notes.
SHORT-TERM NOTES
In the case of a Note with a maturity of one year or less from its issue
date (a "Short-Term Note"), no interest is treated as qualified stated interest
and therefore all interest is included in
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OID. United States Holders that report income for federal income tax purposes on
an accrual method and certain other United States Holders, including banks and
dealers in securities, are required to include OID in income on such Short-Term
Notes on a straight-line basis, unless an election is made to accrue the OID
according to a constant yield method based on daily compounding.
Any other United States Holder of a Short-Term Note is not required to
accrue OID for federal income tax purposes, unless it elects to do so, with the
consequence that the reporting of such income is deferred until it is received.
In the case of a United States Holder that is not required, and does not elect,
to include OID in income currently, any gain realized on the sale, exchange,
retirement or redemption of a Short-Term Note is ordinary income to the extent
of the OID accrued on a straight-line basis (or, if elected, according to a
constant yield method based on daily compounding) through the date of sale,
exchange or retirement. In addition, such non-electing United States Holders
that are not subject to the current inclusion requirement described in the first
sentence of this paragraph are required to defer deductions for any interest
paid on indebtedness incurred or continued to purchase or carry a Short-Term
Note in an amount not exceeding the deferred interest income with respect to
such Short-Term Note (which includes both the accrued OID and accrued interest
that are payable but that have not been included in gross income), until such
deferred interest income is realized. A United States Holder of a Short-Term
Note may elect to apply the foregoing rules (except for the rule characterizing
gain on sale, exchange or retirement as ordinary) with respect to "acquisition
discount" rather than OID. Acquisition discount is the excess of the stated
redemption price at maturity of the Short-Term Note over the United States
Holder's basis in the Short-Term Note. This election applies to all obligations
acquired by the taxpayer on or after the first day of the first taxable year to
which such election applies, unless revoked with the consent of the IRS. A
United States Holder's tax basis in a Short-Term Note is increased by the amount
included in such holder's income on such a Note.
ELECTION TO TREAT ALL INTEREST AS OID
United States Holders may elect to include in gross income all interest
that accrues on a Note, including any stated interest, acquisition discount,
OID, market discount, de minimis OID, de minimis market discount and unstated
interest (as adjusted by amortizable bond premium and acquisition premium), by
using the constant yield method described above under "-- Taxation of Original
Issue Discount -- General Rules for Fixed Rate Notes -- Inclusion of OID in
Income." Such an election for a Note with amortizable bond premium results in a
deemed election to amortize bond premium for all debt instruments owned and
later acquired by the United States Holder with amortizable bond premium and may
be revoked only with the permission of the IRS. Similarly, such an election for
a Note with market discount results in a deemed election to accrue market
discount in income currently for such Note and for all other debt instruments
acquired by the United States Holder with market discount on or after the first
day of the taxable year to which such election first applies, and may be revoked
only with the permission of the IRS. A United States Holder's tax basis in a
Note is increased by each accrual of the amounts treated as OID under the
constant yield election described in this paragraph.
The application of the foregoing rules may be different in the case of
Contingent Notes. Accordingly, prospective purchasers should consult with their
tax advisors with respect to the application of the market discount, acquisition
premium and amortizable bond premium rules to such Notes.
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INTEGRATION OF NOTES WITH OTHER FINANCIAL INSTRUMENTS
Any United States Holder of Notes that also acquires or has acquired any
financial instrument which, in combination with such Notes, would permit the
calculation of a single yield to maturity or could generally constitute a VRDI
of an equivalent term, may in certain circumstances treat such Notes and such
financial instrument as an integrated debt instrument for purposes of the Code,
with a single determination of issue price and the character and timing of
income, deductions, gains and losses. (For purposes of determining OID, none of
the payments under the integrated debt instrument will be treated as qualified
stated interest.) Moreover, under the Contingent Debt Regulations, the IRS may
require in certain circumstances that a United States Holder who owns Notes
integrate such Notes with a financial instrument held or acquired by such Holder
or a related party. United States Holders should consult their tax advisors as
to such possible integration.
SALE, EXCHANGE, REDEMPTION OR RETIREMENT OF NOTES
A United States Holder generally recognizes gain or loss upon the sale,
exchange, redemption or retirement of a Note equal to the difference between the
amount realized upon such sale, exchange, redemption or retirement and the
United States Holder's adjusted basis in the Note. Such adjusted basis in the
Note generally equals the cost of the Note, increased by OID, acquisition
discount or market discount previously included in respect thereof, and reduced
(but not below zero) by any payments on the Note other than payments of
qualified stated interest and by any premium that the United States Holder has
taken into account. To the extent attributable to accrued but unpaid qualified
stated interest, the amount realized by the United States Holder is treated as a
payment of interest. Subject to the discussion under "-- Foreign Currency Notes"
below, any gain or loss is capital gain or loss, except as provided under "--
Market Discount" and "-- Short-Term Notes," above. Special rules apply in
determining the tax basis of a Contingent Note and the amount realized on the
retirement of a Contingent Note. For non-corporate taxpayers, the maximum tax
rate on adjusted net capital gain is 20%. Adjusted net capital gain is generally
the excess of net long-term capital gain (the net gain on capital assets held
for more than 12 months) over net short-term capital loss (the net loss on
capital assets held for 12 months or less). Net short-term capital gain (net
gain on assets held for 12 months or less) is subject to tax at the same rates
as ordinary income. The distinction between capital gain or loss and ordinary
income or loss is also relevant for purposes of, among other things, limitations
on the deductibility of capital losses.
The application of the foregoing rules may be different in the case of
Contingent Notes. Accordingly, prospective purchasers of Contingent Notes should
consult with their tax advisors with respect to rules governing the sale,
exchange, redemption or retirement of such Notes.
FOREIGN CURRENCY NOTES
The following summary describes special rules that apply, in addition to
the rules described above, to Foreign Currency Notes. The treatment of a debt
instrument, such as a Foreign Currency Note, that provides for interest payments
that are not fixed in amount at the time that the debt instrument is issued
(like the treatment of a Floating Rate Note) depends on whether the debt
instrument qualifies as a VRDI. A Foreign Currency Note qualifying as a VRDI is
subject to the rules discussed above in "-- Taxation of Interest" and "--
Taxation of Original Issue Discount -- General Rules for Fixed Rate Notes" in
addition to the rules discussed below. Foreign Currency Notes not qualifying as
VRDIs may be subject to the rules discussed above in "-- Taxation of Original
Issue Discount -- General Rules for Fixed Rate Notes -- Taxation of OID on
Floating Rate Notes and Indexed Notes -- Notes that are Not VRDIs" in addition
to the rules discussed below.
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Interest Includible In Income Upon Receipt
An interest payment on a Foreign Currency Note that is not required to be
included in income by the United States Holder prior to the receipt of such
payment (e.g., qualified stated interest received by a cash method United States
Holder) is includible in income by the United States Holder based on the United
States dollar value of the foreign currency determined on the date such payment
is received, regardless of whether the payment is in fact converted to United
States dollars at that time. Such United States dollar value is the United
States Holder's tax basis in the foreign currency received.
Interest Includible In Income Prior To Receipt
In the case of interest income on a Foreign Currency Note that is required
to be included in income by the United States Holder prior to the receipt of
payment (e.g., stated interest on a Foreign Currency Note held by an accrual
basis United States Holder or accrued OID or accrued market discount that is
includible in income as it accrues), a United States Holder is required to
include in income the United States dollar value of the amount of interest
income that has accrued and is otherwise required to be taken into account with
respect to a Foreign Currency Note during an accrual period. Unless the United
States Holder makes the election discussed in the next paragraph, the United
States dollar value of such accrued income is determined by translating such
income at the average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the average rate for the
portion of the accrual period within the taxable year. The average rate of
exchange for the accrual period (or partial period) is the simple average of the
exchange rates for each business day of such period (or other method if such
method is reasonably derived and consistently applied). Such United States
Holder recognizes, as ordinary gain or loss, foreign currency exchange gain or
loss with respect to accrued interest income on the date such income is actually
received, reflecting fluctuations in currency exchange rates between the last
day of the relevant accrual period and the date of payment. The amount of gain
or loss recognized equals the difference between the United States dollar value
of the foreign currency payment received in respect of such accrual period
determined based on the exchange rate on the date such payment is received and
the United States dollar value of interest income that has accrued during such
accrual period (as determined above).
Under the so-called "spot rate convention election," a United States Holder
may, in lieu of applying the rules described in the preceding paragraph, elect
to translate accrued interest income into United States dollars at the exchange
rate in effect on the last day of the relevant accrual period for OID, market
discount or accrued interest, or in the case of an accrual period that spans two
taxable years, at the exchange rate in effect on the last day of the taxable
year. Additionally, if a payment of such income is actually received within five
business days of the last day of the accrual period or taxable year, an electing
United States Holder may instead translate such income into United States
dollars at the exchange rate in effect on the day of actual receipt. Any such
election applies to all debt instruments held by the United States Holder at the
beginning of the first taxable year to which the election applies or thereafter
acquired by the United States Holder and is irrevocable without the consent of
the IRS.
Purchase, Sale, Exchange, Redemption or Retirement
A United States Holder that converts United States dollars to a foreign
currency and immediately uses that currency to purchase a Foreign Currency Note
denominated in the same foreign currency normally does not recognize gain or
loss in connection with such conversion and purchase. However, a United States
Holder that purchases a Foreign Currency Note with previously
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owned foreign currency does recognize ordinary income or loss in an amount equal
to the difference, if any, between such holder's tax basis in the foreign
currency and the United States dollar market value of the Foreign Currency Note
on the date of the purchase. A United States Holder's tax basis in a Foreign
Currency Note (and the amount of any subsequent adjustment to such Holder's tax
basis) is the United States dollar value of the foreign currency amount paid for
such Foreign Currency Note (or of the foreign currency amount of the adjustment)
determined on the date of such purchase or adjustment. In the case of an
adjustment resulting from accrual of OID or market discount, such adjustment is
made at the rate at which such OID or market discount is translated into United
States dollars under the rules described above.
Gain or loss realized upon the sale, exchange, redemption or retirement of,
or the receipt of principal on, a Foreign Currency Note, to the extent
attributable to fluctuations in currency exchange rates, is generally ordinary
income or loss. Gain or loss attributable to fluctuations in exchange rates
equals the difference between (i) the United States dollar value of the foreign
currency purchase price for such Note, determined on the date such Note is
disposed of, and (ii) the United States dollar value of the foreign currency
purchase price for such Note, determined on the date such United States Holder
acquired such Note. Any portion of the proceeds of such sale, exchange,
redemption or retirement attributable to accrued interest income may result in
exchange gain or loss under the rules set forth above. Such foreign currency
gain or loss is recognized only to the extent of the overall gain or loss
realized by a United States Holder on the sale, exchange, redemption or
retirement of the Foreign Currency Note. In general, the source of such foreign
currency gain or loss is determined by reference to the residence of the United
States Holder or the "qualified business unit" of such holder on whose books the
Note is properly reflected. Any gain or loss realized by a United States Holder
in excess of such foreign currency gain or loss is capital gain or loss (except
to the extent of any accrued market discount not previously included in such
holder's income or, in the case of a Short-Term Note having OID, to the extent
of any OID not previously included in such holder's income).
The tax basis of a United States Holder in any foreign currency received on
the sale, exchange, redemption or retirement of a Foreign Currency Note is equal
to the United States dollar value of such foreign currency, determined at the
time of such sale, exchange, redemption or retirement. Treasury Regulations
provide a special rule for purchases and sales of publicly traded debt
instruments by a cash method taxpayer under which units of foreign currency paid
or received are translated into United States dollars at the spot rate on the
settlement date of the purchase or sale. Accordingly, no exchange gain or loss
results from currency fluctuations between the trade date and the settlement of
such a purchase or sale. An accrual method taxpayer may elect the same treatment
required of cash method taxpayers with respect to the purchase and sale of
publicly traded debt instruments provided the election is applied consistently.
Such election cannot be changed without consent of the IRS. United States
Holders should consult their tax advisors concerning the applicability to
Foreign Currency Notes of the special rules summarized in this paragraph.
Market discount, acquisition premium and amortizable bond premium of a
Foreign Currency Note are determined in the relevant foreign currency. The
amount of such market discount or acquisition premium that is included in (or
reduces) income currently is to be determined for any accrual period in the
relevant foreign currency and then translated into United States dollars on the
basis of the average exchange rate in effect during such accrual period or with
reference to the spot rate convention election as described above. Exchange gain
or loss realized with respect to such accrued market discount or acquisition
premium is determined and recognized in accordance with the rules relating to
accrued interest described above. The amount of accrued market discount (other
than market discount that is included in income currently) taken into account
upon the
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receipt of any partial principal payment or upon the sale, exchange, redemption,
retirement or other disposition of a Foreign Currency Note is the United States
dollar value of such accrued market discount, determined on the date of receipt
of such partial principal payment or upon the sale, exchange, redemption,
retirement or other disposition, and no portion thereof is treated as exchange
gain or loss. Exchange gain or loss with respect to amortizable bond premium is
determined by treating the portion of premium amortized with respect to any
period as a return of principal. With respect to a United States Holder of a
Foreign Currency Note that does not elect to amortize premium, the amount of
premium, if any, is treated as a capital loss when such Note matures.
The Section 988 Regulations do not discuss the tax consequences of the
acquisition of a Foreign Currency Note that is denominated either in a so-called
hyperinflationary currency or in more than one currency, or that does not
qualify as a VRDI and thus is treated as a Contingent Note. Foreign Currency
Notes containing such features may be subject to rules that differ from the
general rules described above. United States Holders intending to purchase
Foreign Currency Notes with such a feature should examine the applicable Pricing
Supplement and should consult their own tax advisors with respect to the
purchase, ownership and disposition of such a Foreign Currency Note.
NON-UNITED STATES HOLDERS
As used herein, the term "non-United States Holder" means a holder of a
Note that is, for United States federal income tax purposes, (i) a nonresident
alien individual, (ii) a foreign corporation, (iii) a nonresident alien
fiduciary of a foreign estate or trust or (iv) a foreign partnership one or more
of the members of which is, for United States federal income tax purposes, a
nonresident alien individual, a foreign corporation or a nonresident alien
fiduciary of a foreign estate or trust.
Under current United States federal income tax law now in effect, and
subject to the discussion of backup withholding in the following section,
payments of principal and interest (including OID) with respect to a Note by us
or by any paying agent to any non-United States Holder are not subject to United
States federal withholding tax, provided, in the case of interest (including
OID), that (i) such holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of our stock entitled to vote,
(ii) such holder is not for federal income tax purposes a controlled foreign
corporation related, directly or indirectly, to us through stock ownership,
(iii) such holder is not a bank receiving interest described in Section
881(c)(3)(A) of the Code and (iv) either (A) the beneficial owner of the Note
certifies, under penalties of perjury, to us or the paying agent, as the case
may be, that such owner is a non-United States Holder and provides such owner's
name and address, or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "financial institution") and holds the Note, certifies,
under penalties of perjury, to us or the paying agent, as the case may be, that
such certificate has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes the
payor with a copy thereof. A certificate described in this paragraph is
effective only with respect to payments of interest (including OID) made to the
certifying non-United States Holder after the issuance of the certificate in the
calendar year of its issuance and the two immediately succeeding calendar years.
Under temporary Treasury Regulations, the foregoing certification may be
provided by the beneficial owner of a Note on IRS Form W-8.
On October 14, 1997, the IRS published in the Federal Register final
regulations (the "1997 Final Regulations") which affect the United States
taxation of non-United States Holders. The 1997 Final Regulations are currently
expected to become effective for payments after December 31,
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1999, regardless of the issue date of the instrument with respect to which such
payments are made, subject to certain transition rules (see below). The
discussion under this heading and under "-- Backup Withholding and Information
Reporting" below, is not intended to be a complete discussion of the provisions
of the 1997 Final Regulations, and prospective purchasers of the Notes are urged
to consult their tax advisors concerning the tax consequences of their
acquiring, holding and disposing of the Notes in light of the 1997 Final
Regulations.
The 1997 Final Regulations provide documentation procedures designed to
simplify compliance by withholding agents. The 1997 Final Regulations generally
do not affect the documentation rules described above, but add other
certification options. Under one such option, a withholding agent will be
allowed to rely on an intermediary withholding certificate furnished by a
"qualified intermediary" (as defined below) on behalf of one or more beneficial
owners (or other intermediaries) without having to obtain the beneficial owner
certificate described above. "Qualified intermediaries" include (i) foreign
financial institutions or foreign clearing organizations (other than a United
States branch or United States office of such institution or organization) or
(ii) foreign branches or offices of United States financial institutions or
foreign branches or offices of United States clearing organizations, which, as
to both (i) and (ii), have entered into withholding agreements with the IRS. In
addition to certain other requirements, qualified intermediaries must obtain
withholding certificates, such as revised IRS Form W-8 (see below), from each
beneficial owner. Under another option, an authorized foreign agent of a United
States withholding agent will be permitted to act on behalf of the United States
withholding agent, provided certain conditions are met.
For purposes of the certification requirements, the 1997 Final Regulations
generally treat, as the beneficial owners of payments on a Note, those persons
that, under United States tax principles, are the taxpayers with respect to such
payments, rather than persons such as nominees or agents legally entitled to
such payments. In the case of payment to an entity classified as a foreign
partnership under United States tax principles, the partners, rather than the
partnership, generally will be required to provide the required certifications
to qualify for the withholding exemption described above. A payment to a United
States partnership, however, is treated for these purposes as payment to a
United States payee, even if the partnership has one or more foreign partners.
The 1997 Final Regulations provide certain presumptions with respect to
withholding for holders not furnishing the required certifications to qualify
for the withholding exemption described above. In addition, the 1997 Final
Regulations will replace a number of current tax certification forms (including
IRS Form W-8 and IRS Form 4224, discussed below) with a single, revised IRS Form
W-8 (which, in certain circumstances, requires information in addition to that
previously required). Under the 1997 Final Regulations, this Form W-8 will
remain valid until the last day of the third calendar year following the year in
which the certificate is signed.
The 1997 Final Regulations provide transition rules concerning existing
certificates, such as IRS Form W-8 and IRS Form 4224. Valid withholding
certificates that are held on December 31, 1998 will generally remain valid
until the earlier of December 31, 1999 or the date of expiration of the
certificate under the law in effect prior to January 1, 1999. Further,
certificates dated prior to January 1, 1998 will generally remain valid until
the end of 1998, irrespective of the date that their validity expires during
1998. The IRS has announced that the 1997 Final Regulations will be amended to
provide that valid withholding certificates that are held on December 31, 1999
will generally remain valid until the earlier of December 31, 2000 or the
expiration of the certificate under the law in effect prior to January 1, 2000.
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Under the 1997 Final Regulations, withholding of United States federal
income tax with respect to accrued OID may apply to payments on a taxable sale
or other disposition of a Note by a non-United States Holder who does not
provide appropriate certification to the withholding agent with respect to such
transaction.
Notwithstanding the foregoing, interest described in Section 871(h)(4) of
the Code is subject to United States withholding tax at a 30% rate (or such
lower rate as may be provided by an applicable treaty). In general, interest
described in Section 871(h)(4) of the Code includes (subject to certain
exceptions) any interest the amount of which is determined by reference to
receipts, sales or other cash flow of the issuer or a related person, any income
or profits of the issuer or a related person, any change in the value of any
property of the issuer or a related person or any dividends, partnership
distribution or similar payments made by the issuer or a related person.
Interest described in Section 871(h)(4) of the Code may include other types of
contingent interest identified by the IRS in future Treasury Regulations.
If a non-United States Holder is engaged in a trade or business in the
United States and interest (including OID) on the Note is effectively connected
with the conduct of such trade or business, the non-United States Holder,
although exempt from the withholding tax discussed in the preceding paragraphs,
is subject to United States federal income tax on such interest (including OID)
in the same manner as if it were a United States Holder. In lieu of the
certificate described above, such holder must provide a properly executed IRS
Form 4224 annually in order to claim an exemption from withholding tax. In
addition, if such holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% (or such lower rate as may be specified by an
applicable treaty) of its effectively connected earnings and profits for the
taxable year, subject to adjustments. For this purpose, interest (including OID)
on, and any gain recognized on the sale, exchange, redemption, retirement, or
other disposition of, a Note is included in the earnings and profits of such
holder if such interest (including OID) or gain is effectively connected with
the conduct by such holder of a trade or business in the United States.
Generally, any gain or income (other than that attributable to accrued
interest or OID) realized upon the sale, exchange, redemption, retirement or
other disposition of a Note is not subject to federal income tax unless (i) such
gain or income is effectively connected with a trade or business in the United
States of the non-United States Holder or (ii) in the case of a non-United
States Holder who is a nonresident alien individual, the non-United States
Holder is present in the United States for 183 days or more in the taxable year
of such sale, exchange, retirement or other disposition and either (a) such
individual has a "tax home" (as defined in Section 911(d)(3) of the Code) in the
United States or (b) the gain is attributable to an office or other fixed place
of business maintained by such individual in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, information reporting
requirements apply to interest (including OID) and principal payments made to,
and to the proceeds of sales before maturity by, certain Holders of Notes. In
the case of a non-corporate United States Holder, a 31% backup withholding tax
applies if (i) such holder fails to furnish his or her Taxpayer Identification
Number ("TIN") (which, for an individual, would be his or her Social Security
Number) to the payor in the manner required, (ii) such holder furnishes an
incorrect TIN and the payor is so notified by the IRS, (iii) the payor is
notified by the IRS that such holder has failed properly to report payments of
interest and dividends or (iv) in certain circumstances, such holder fails to
certify, under penalties of perjury, that such holder has not been notified by
the IRS that it is subject to backup withholding for failure properly to report
interest and dividend payments. Backup
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withholding does not apply with respect to payments made to certain exempt
recipients, such as a corporation (within the meaning of Section 7701(a) of the
Code and tax-exempt organizations.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
In the case of a non-United States Holder, under Treasury Regulations,
backup withholding and information reporting do not apply to payments of
principal and interest made by us or any of our paying agents on a Note with
respect to which such holder has provided the required certification under
penalties of perjury that such holder is a non-United States Holder or has
otherwise established an exemption.
In general, (i) payments of interest or original issue discount on a Note
collected outside the United States by a custodian, nominee or other agent
acting on behalf of a beneficial owner of a Note and (ii) payments on the sale,
exchange, retirement or redemption of a Note to or through a foreign office of a
broker are not subject to backup withholding or information reporting. However,
if such custodian, nominee, agent or broker is a United States person, a
controlled foreign corporation for United States tax purposes, or a foreign
person 50 percent or more of whose gross income is effectively connected with
the conduct of a United States trade or business for a specified three-year
period, such custodian, nominee, agent or broker may be subject to certain
information reporting (but not backup withholding) requirements with respect to
such payments, unless such custodian, nominee, agent or broker has in its
records documentary evidence that the beneficial owner is not a United States
person and certain conditions are met or the beneficial owner otherwise
establishes an exemption.
In general, the 1997 Final Regulations do not significantly alter the
substantive backup withholding and information reporting requirements described
above. As under current law, backup withholding and information reporting will
not apply to (i) payments to a non-United States Holder of principal, premium
and interest (including OID, if any) and (ii) payments to a non-United States
Holder on the sale, exchange or other disposition of a Note, in each case if
such non-United States Holder provides the required certification to establish
an exemption from the withholding of the United States federal income tax or
otherwise establishes an exemption. Similarly, unless the payor has actual
knowledge that the payee is a United States Holder, backup withholding will not
apply to (i) payments of principal, premium and interest (including OID, if any)
made outside the United States to certain offshore accounts and (ii) payments on
the sale, exchange, redemption, retirement or other disposition of a Note
effected outside the United States. However, information reporting may apply
with respect to such payments by a payor that is, for United States federal
income tax purposes, (i) a United States person, (ii) a controlled foreign
corporation, (iii) a United States branch of a foreign bank or foreign insurance
company, (iv) a foreign partnership controlled by United States persons or
engaged in a United States trade or business or (v) a foreign person 50 percent
or more of whose gross income is effectively connected with the conduct of a
United States trade or business for a specified three-year period, unless such
payor has in its records documentary evidence that the Beneficial owner is not a
United States Holder and certain other conditions are met or the Beneficial
owner otherwise establishes an exemption.
Non-United States Holders of Notes should consult their tax advisors
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from payment to a non-United States Holder under the backup withholding rules
will be allowed as a credit against such non-United States Holder's United
States federal income tax
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liability and may entitle such holder to a refund, provided that the required
information is furnished to the information reporting.
SUPPLEMENTAL PLAN OF DISTRIBUTION
We are offering the Notes on a continuing basis for sale to or through
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, First
Chicago Capital Markets and Nations-Banc Montgomery Securities LLC and such
other agent or agents as we may appoint and identify in the applicable Pricing
Supplement (the "Agents"). The Agents, individually or in a syndicate, may
purchase Notes, as principal, from us from time to time for resale to investors
and other purchasers at varying prices relating to prevailing market prices at
the time of resale as determined by the applicable Agent or, if so specified in
the applicable Pricing Supplement, for resale at a fixed offering price. If
agreed to by us and an Agent, such Agent may also utilize its reasonable best
efforts on an agency basis to solicit offers to purchase the Notes at 100% of
the principal amount thereof, unless otherwise specified in the applicable
Pricing Supplement. We will pay a commission to an Agent, ranging from .125% to
.750% of the principal amount of each Note, depending upon its stated maturity,
sold through such Agent as our agent. Commissions with respect to Notes with
stated maturities in excess of 30 years that are sold through an Agent as our
agent will be negotiated at the time of such sale. We estimate the expenses
payable by us of offering and selling the Notes are approximately $260,000,
including reimbursements of certain of the Agents' expenses.
Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. An Agent may sell Notes it has purchased from us as
principal to certain dealers less a concession equal to all or any portion of
the discount received in connection with such purchase. Such Agent may allow,
and such dealers may reallow, a discount to certain other dealers. After the
initial offering of Notes, the offering price (in the case of Notes to be resold
on a fixed offering price basis), the concession and the reallowance may be
changed.
We reserve the right to withdraw, cancel or modify the offer made hereby
without notice and may reject offers in whole or in part (whether placed
directly with us or through an Agent). Each Agent will have the right, in its
discretion reasonably exercised, to reject in whole or in part any offer to
purchase Notes received by it on an agency basis.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in the Specified Currency in The City of New York on the date of
settlement. See "Description of Notes -- General."
Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange, unless otherwise specified
in the applicable Pricing Supplement. The Agents may from time to time purchase
and sell Notes in the secondary market, but the Agents are not obligated to do
so, and there can be no assurance that there will be a secondary market for the
Notes or that there will be liquidity in the secondary market if one develops.
From time to time, the Agents may make a market in the Notes, but the Agents are
not obligated to do so and may discontinue any market-making activity at any
time.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of Notes. If the Agent creates or the Agents create, as
the
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case may be, a short position in Notes, i.e., if it sells or they sell Notes in
an aggregate principal amount exceeding that set forth in the applicable Pricing
Supplement, such Agent(s) may reduce that short position by purchasing Notes in
the open market. In general, purchases of Notes for the purpose of stabilization
or to reduce a short position could cause the price of Notes to be higher than
it might be in the absence of such purchases.
Neither we nor any of the Agents makes any representation or prediction as
to the direction or magnitude of any effect that the transactions described in
the immediately preceding paragraph may have on the price of Notes. In addition,
neither we nor any of the Agents makes any representation that the Agents will
engage in any such transactions or that such transactions, once commenced, will
not be discontinued without notice.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). We have agreed to
indemnify the Agents against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments the Agents may be required to
make in respect thereof. We have agreed to reimburse the Agents for certain
other expenses.
In the ordinary course of its business, the Agents and their affiliates
have engaged and may in the future engage in investment and commercial banking
transactions with us and certain of our affiliates.
From time to time, we may issue and sell other Securities described in the
accompanying Prospectus, and the amount of Notes offered hereby is subject to
reduction as a result of such sales.
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SUBJECT TO COMPLETION, DATED DECEMBER 7, 1998
PROSPECTUS
$250,000,000
SUNDSTRAND CORPORATION
DEBT SECURITIES
------------------------
Sundstrand Corporation may offer and sell in one or more offerings its debt
securities up to a total principal amount or initial purchase price of
$250,000,000. The debt securities may be offered in one or more separate series
on terms to be determined at the time of sale. The debt securities may be
offered directly to purchasers or through agents, dealers or underwriters or a
syndicate of underwriters. We will provide specific terms of these securities in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
------------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER , 1998
<PAGE> 47
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC") utilizing a "shelf" registration
process. Under this shelf process, we may sell the debt securities described in
this prospectus in one or more offerings up to a total principal amount or
initial purchase price of $250,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading WHERE YOU CAN FIND MORE INFORMATION.
WHERE YOU CAN FIND
MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms.
Our reports, proxy statements and other information may also be inspected
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005; the Chicago Stock Exchange, Incorporated, 440 South LaSalle
Street, Chicago, Illinois 60605; and the Pacific Stock Exchange Incorporated,
301 Pine Street, San Francisco, California 94104.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede the information included and/or
incorporated by reference in this prospectus. We incorporate by reference the
documents listed below and any future filings made with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until we sell
all of the debt securities.
- - Annual Report on Form 10-K for the year ended December 31, 1997;
- - Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30,
1998 and September 30, 1998; and
- - Current Report on Form 8-K filed January 21, 1998.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Sundstrand Corporation
P.O. Box 7003
4949 Harrison Avenue
Rockford, Illinois 61125-7003
(815) 226-6000
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
THE COMPANY
We are engaged in the design, manufacture and sale of a variety of
proprietary, technology-based components and sub-systems for diversified
international aerospace and industrial markets. Our mechanical, hydromechanical,
electromechanical and electronic products require significant research,
development engineering and processing expertise. We employ approximately 10,700
people and have manufacturing facilities in ten states and Puerto
<PAGE> 48
Rico and in England, France, Germany, Singapore, China and India. Our principal
offices are located at 4949 Harrison Avenue, Rockford, Illinois 61125-7003.
USE OF PROCEEDS
Unless we specify otherwise in the applicable prospectus supplement, the
net proceeds from the sale of the debt securities will be used for general
corporate purposes, including working capital, capital expenditures, possible
acquisitions of, or investments in, businesses and assets, the possible
repurchase of our securities and the repayment of indebtedness. We have not
allocated a specific portion of the net proceeds for any particular use at this
time. Until we apply the net proceeds for specific purposes, we may invest such
net proceeds in marketable securities.
RATIO OF EARNINGS
TO FIXED CHARGES
The following is our consolidated ratio of earnings to fixed charges for
each of the years in the five-year period ended December 31, 1997, and the
nine-month periods ended September 30, 1997, and 1998.
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------
1998 1997 1997 1996 1995 1994 1993
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of
Earnings to
Fixed Charges....... 10.0 9.2 9.5 6.4 4.5 5.3 3.9
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges (excluding
capitalized interest). Fixed charges consist of interest on all indebtedness,
amortization of debt discount and expense, and one-third of rental expense
(which is deemed representative of the interest factor).
DESCRIPTION OF DEBT SECURITIES
GENERAL
We provide information to you about the debt securities in up to three
separate documents that progressively provide more detail:
1 This Prospectus
General information that may or may not apply to each series of debt
securities.
2 The Prospectus Supplement
More specific than the prospectus, and to the extent information differs
from the prospectus, you should rely on the different information in this
document.
3 The Pricing Supplement
To the extent not contained in the prospectus supplement, provides final
details about a specific series or tranche of debt securities. To the
extent information differs from the prospectus or the prospectus
supplement, you should rely on the different information in this
document.
The debt securities will be issued under an indenture (we refer to the
indenture, as supplemented from time to time, as the "Indenture") between the
Company and The First National Bank of Chicago, as trustee (the "Trustee"). The
following summary of certain provisions of the debt securities and the Indenture
is not complete and is subject to the detailed provisions of the Indenture. We
have filed a copy of the Indenture as an exhibit to the Registration Statement.
Whenever particular provisions or defined terms in the Indenture are referred to
in this prospectus, such provisions or defined terms are incorporated by
reference in this prospectus. Section references used in this prospectus are
references to the Indenture.
The debt securities will be our direct, unsecured obligations. The debt
securities will rank on a parity with all our other unsecured and unsubordinated
indebtedness.
The Indenture does not limit the amount of the debt securities and provides
that the debt securities may be issued from time to time in one or more series.
(Section 2.01)
2
<PAGE> 49
Unless we indicate otherwise in the applicable prospectus supplement, the
debt securities will be issued in fully registered form only, without coupons,
in denominations of $1,000 and any integral multiple thereof. Principal of and
premium, if any, and interest, if any, will be payable, and the debt securities
may be transferred or exchanged without payment of any charge (other than any
tax or other governmental charge payable in connection therewith), at the office
or agency of the Trustee in New York, New York.
The applicable prospectus supplement will include specific terms relating
to the offering. These terms will include some or all of the following:
- - the designation and aggregate principal amount of the debt securities;
- - the percentage of the principal amount at which the debt securities will be
issued;
- - the date or dates on which the debt securities will mature;
- - the rate or rates (which may be fixed or variable), if any, at which the debt
securities will bear interest, and the date from which any such interest will
accrue;
- - the dates on which any interest will be payable;
- - the currency or currency unit in which the debt securities are issuable and
payable;
- - any terms for redemption or for sinking fund payments;
- - any provisions for defeasance or covenant defeasance;
- - whether the debt securities will be represented by one or more global
securities and, if so, the method of transferring beneficial interests in the
global securities; and
- - other specific terms associated with the debt securities. (Section 2.01)
Debt securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount securities will be
described in the applicable prospectus supplement. "Original Issue Discount
Security" means any security which provides for the declaration of acceleration
of the maturity of an amount less than the principal amount of the security upon
the occurrence of an Event of Default and the continuation of an Event of
Default. (Section 1.01)
CERTAIN COVENANTS OF THE COMPANY
Limitation on Secured Debt. The Indenture provides that, so long as any of
the debt securities remain outstanding, the Company will not, nor will it permit
any Restricted Subsidiary (which term is defined below) to incur, issue, assume
or guarantee any indebtedness for money borrowed or any other indebtedness
evidenced by notes, bonds, debentures or other similar evidence of indebtedness
for money borrowed (referred to in this prospectus as "Debt") if such Debt is
secured by a mortgage, security interest, pledge, lien or other encumbrance
(referred to in this prospectus as a "mortgage") upon any Principal Property
(which term is defined below), or on any shares of stock or Debt of any
Restricted Subsidiary (whether such Principal Property, shares of stock or
indebtedness are now owned or subsequently acquired), except with respect to
each series of debt securities any Debt so secured on the date of issuance of
such series, without in any such case effectively providing that the debt
securities (together with, if the Company determines, any other indebtedness of
or guaranteed by the Company or such Restricted Subsidiary ranking equally with
the debt securities then existing or subsequently created) will be secured
equally and ratably with such Debt so long as such Debt will be so secured,
except that the foregoing restrictions will not apply to:
- - mortgages on property, shares of stock or Debt (referred to in this prospectus
as "property") of any corporation existing at the time such corporation
becomes a Restricted Subsidiary;
- - mortgages on property existing at the time of acquisition thereof or mortgages
to secure all or part of the purchase price of such property or to secure Debt
incurred prior to, at the time of, or within 180 days after, the later of the
acquisition, completion of construction or commencement of
3
<PAGE> 50
commercial operation of such property for the purpose of financing the purchase
price of such property or construction or improvements on such property,
provided that the mortgage will not apply to property previously owned by the
Company or any Restricted Subsidiary other than real property substantially
unimproved for the use intended by the Company or such Restricted Subsidiary;
- - mortgages on property of a Restricted Subsidiary securing Debt owing to the
Company or another Restricted Subsidiary;
- - mortgages on property of a corporation existing at the time such corporation
is merged into or consolidated with the Company or a Restricted Subsidiary or
at the time of a sale, lease or other disposition of the properties of a
corporation or firm as an entirety or substantially as an entirety to the
Company or a Restricted Subsidiary, provided that any such mortgages do not
attach to or affect property previously owned by the Company or such
Restricted Subsidiary;
- - mortgages on property owned or leased by the Company or a Restricted
Subsidiary in favor of the United States of America, any State, any other
country, or any political subdivision of any of the foregoing or in favor of
the holders of securities issued by any such entity, pursuant to any contract
or statute (including mortgages to secure Debt of the pollution control or
industrial revenue bond type) or to secure any indebtedness incurred for the
purpose of financing the cost of construction of the property subject to such
mortgages;
- - mortgages existing at the date of the Indenture;
- - certain landlords' liens;
- - mortgages to secure partial, progress, advance or other payments or any Debt
incurred for the purpose of financing all or part of the purchase price or
cost of construction, development or substantial repair, alteration or
improvement of the property subject to such mortgage if the commitment for
such financing is obtained within one year after the later of completion of or
the placing into operation of such constructed, developed, repaired, altered
or improved property;
- - mortgages arising in connection with contracts with or made at the request of
the United States, any State, or any department, agency or instrumentality of
any of the foregoing;
- - mechanics' and similar liens arising in the ordinary course of business in
respect of obligations not due or being contested in good faith;
- - mortgages arising from deposits with or the giving of any form of security to
any governmental authority required as a condition to the transaction of
business or exercise of any privilege, franchise or license;
- - mortgages for taxes, assessments or governmental charges or levies not yet
delinquent or which, if delinquent, are being contested in good faith;
- - mortgages (including judgment liens) arising from legal proceedings being
contested in good faith and, in the case of judgment liens, so long as
execution thereof is stayed; or
- - any extension, renewal or replacement (or successive extensions, renewals, or
replacements), in whole or in part, of any mortgage referred in any the
foregoing bullet points.
Notwithstanding the above, the Company and its Restricted Subsidiaries may,
without securing the debt securities, issue, assume or guarantee Debt which
would otherwise be subject to the foregoing restrictions, provided that after
giving effect thereto the aggregate amount of such Debt then outstanding (not
including secured Debt permitted under the foregoing exceptions) at such time
does not exceed 10% of the Consolidated Net Tangible Assets (as defined in the
Indenture) of the Company as calculated on the basis of its latest consolidated
quarterly financial statements. (Section 4.05)
Limitation on Sale and Leaseback Transactions. Sale and leaseback
transactions by the Company or any Restricted Subsidiary of any Principal
Property (except for temporary leases for a term of not more than three years
and except for leases between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries) are
4
<PAGE> 51
prohibited unless either: (a) the Company or such Restricted Subsidiary would be
entitled to issue, assume or guarantee Debt secured by the Principal Property
involved at least equal in amount to the Attributable Debt (as defined below) in
respect of such transaction without equally and ratably securing the debt
securities (provided that such Attributable Debt will thereupon be deemed to be
Debt subject to the provisions of Sections 4.05), or (b) the Company within 270
days after the sale or transfer shall have been made by the Company or by any
Restricted Subsidiary, applies an amount equal to the greater of (i) the net
proceeds of the sale of the Principal Property sold and leased back pursuant to
such arrangement and (ii) the fair market value of the Principal Property so
sold and leased back at the time of entering into such arrangement to (x) the
purchase of property, facilities or equipment (other than the property,
facilities or equipment involved in such sale) having a value at least equal to
the net proceeds of such sale or (y) the retirement (other than any mandatory
retirement) of long-term non-subordinated Debt of the Company or long-term Debt
of a Restricted Subsidiary. Attributable Debt is defined as the present value
(discounted at an appropriate rate) of the obligation of a lessee for rental
payments during the remaining term of any lease. (Section 4.06)
Consolidation or Merger. The Indenture generally permits a consolidation
or merger between us and another corporation. It also permits the sale by us of
all or substantially all of our property and assets. If this happens, the
remaining or acquiring corporation will assume all of our responsibilities and
liabilities under the Indentures including the payment of all amounts due on the
debt securities and performance of the covenants in the Indenture. The Indenture
does not permit us to consolidate or merge with or into any other corporation,
or sell all or substantially all of our property or assets, if immediately after
giving effect to such transaction, we or our successor entity would be in
default in the performance of any covenant or condition of the Indenture.
However, we will only consolidate or merge with or into any other
corporation or sell all or substantially all of our assets according to the
terms and conditions of the Indenture. The remaining or acquiring corporation
will be substituted for us in the Indenture with the same effect as if it had
been an original party to the Indenture. Thereafter, the successor corporation
may exercise our rights and powers under the Indenture, in our name or in its
own name. Any act or proceeding required or permitted to be done by our Board of
Directors or any of our officers may be done by the board or officers of the
successor corporation. If we sell all or substantially all of our assets, we
will be released from all our liabilities and obligations under the Indenture
and under the debt securities. (Section 11.01)
CERTAIN DEFINITIONS
The term "Subsidiary" means any corporation which is consolidated in the
Company's accounts and any corporation of which at least a majority of the
outstanding voting stock is directly or indirectly owned by the Company.
(Section 1.01)
The term "Restricted Subsidiary" means any Subsidiary (other than a
Subsidiary principally engaged in certain types of leasing and financing
activities):
(1) substantially all the property of which is located in the United
States,
(2) which owns a Principal Property, and
(3) in which the Company's direct or indirect investment exceeds 2% of
the consolidated assets of the Company. (Section 1.01)
The term "Principal Property" means any manufacturing plant or facility
which is located in the United States and is owned by the Company or any
Restricted Subsidiary, unless our Board of Directors (or a committee thereof)
declares that the plant or facility, together with all other plants and
facilities previously so declared, is not of material importance to our total
business. (Section 1.01)
5
<PAGE> 52
EVENTS OF DEFAULT
An "Event of Default" with respect to any series of debt securities will
mean any of the following:
- - failure to pay interest on any debt securities for 30 days;
- - failure to pay principal of or any premium on any debt securities when due, or
failure to pay any sinking fund payment with respect to any debt securities;
- - failure to perform any of the other covenants or agreements in the Indenture
relating to debt securities of that series that continues for 60 days after
notice to the Company by the Trustee or holders of at least 25% in aggregate
principal amount of Stated Maturity of the debt securities of such series then
outstanding;
- - certain events of bankruptcy, insolvency or reorganization of the Company; or
- - default under other indebtedness of the Company for money borrowed by the
Company having unpaid principal in excess of the greater of (1) $10,000,000 or
(2) 2% of the Company's Consolidated Net Tangible Assets, which indebtedness
will be or be declared due prior to the date it would otherwise become due and
payable and such acceleration not being rescinded or annulled within 60 days
after notice to the Company by the Trustee or holders of at least 25% in
aggregate principal amount at Stated Maturity of the debt securities of such
series then outstanding. (Section 6.01)
Additional Events of Default may be prescribed for the benefit of holders
of certain series of debt securities. (Section 10.01) The Indenture provides
that the Trustee will, with certain exceptions, notify the holders of debt
securities of each series of any Event of Default known to it within 90 days
after the occurrence thereof. (Section 6.07)
If an Event of Default for any series of debt securities occurs and
continues, the Trustee or the holders of at least 25% in aggregate principal
amount of debt securities of such series then outstanding may declare the
principal amount (or, if the debt securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all the debt securities of that series to be due
and payable immediately. If this happens, subject to certain conditions, the
holders of a majority in aggregate principal amount at Stated Maturity of the
debt securities of such series then outstanding can void the declaration.
(Sections 6.01 and 6.06)
Other than its duties in case of an Event of Default, the Trustee is not
obligated to exercise any of the rights or powers in the Indenture at the
request or direction of any of the holders of that series, unless such holders
offer the Trustee reasonable security or indemnity. (Sections 7.01 and 7.02) If
they provide this reasonable security or indemnity, the holders of a majority in
aggregate principal amount at Stated Maturity of the debt securities of each
series affected by an Event of Default and then outstanding will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee under the Indenture or exercising any trust or power
conferred on the Trustee with respect to the debt securities of that series.
(Section 6.06) The Indenture requires the annual filing by the Company with the
Trustee of a certificate as to the absence of any defaults under the Indenture.
(Section 4.07)
No holder of any debt securities of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such holder will have previously given the Trustee written
notice of an Event of Default with respect to debt securities of that series and
unless the holders of at least 25% in aggregate principal amount at Stated
Maturity of the then outstanding debt securities of that series also will have
made written request of, and offered reasonable indemnity to, the Trustee to
institute such proceeding as trustee, and the Trustee will not have received
from the holders of a majority in aggregate principal amount at Stated Maturity
of the outstanding debt securities of that series a direction inconsistent with
such request and the Trustee will have failed to institute such proceeding
within
6
<PAGE> 53
60 days of such request. However, any right of a holder of any debt security to
receive payment of the principal of (and premium, if any) and any interest on
such debt security on or after the due dates expressed in such debt security or
to institute suit for the enforcement of any such payment on or after such dates
will not be impaired or affected without the consent of such holder. (Section
6.04)
DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option, deposit with the Trustee money and/or U.S.
Government Obligations (including interest thereon) sufficient to pay the
principal of (and premium, if any) and interest on the debt securities of a
series on the scheduled due dates for such payments and in such event we may be
either (A) discharged from our obligations in respect of the debt securities of
that series (other than to register transfers or exchanges of debt securities,
to replace stolen, lost or mutilated debt securities, to maintain paying
agencies and to hold monies for payment in trust) or (B) released from our
obligations in respect of the debt securities of that series described above
under LIMITATION ON SECURED DEBT and LIMITATION ON SALE AND LEASEBACK
TRANSACTIONS (and the related event of default relating to our failure to comply
with those obligations). In either case, we may only deposit such funds and be
discharged or released from our obligations if, among other things, we deliver
to the Trustee a legal opinion to the effect that (i) you will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and defeasance or discharge and will be subject to federal income tax on the
same amount and in the same manner and at the same times, as would have been the
case if such deposit and defeasance or discharge had not occurred, and (ii) the
debt securities, if then listed on the New York Stock Exchange, Inc., will not
be delisted as a result of such deposit and such defeasance. In the event of a
defeasance as provided in clause (A) above, holders of debt securities of the
affected series will be able to look only to the trust fund established for
payment of principal of and interest on their debt securities until maturity.
(Section 12.01)
MODIFICATIONS, AMENDMENTS AND WAIVERS IN RESPECT OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in principal amount
of the debt securities of each series affected at the time outstanding, to
execute supplemental indentures adding any provisions to, or changing in any
manner or eliminating any of the provisions of, the Indenture or any
supplemental indenture with respect to the debt securities of such series or
modifying in any manner the rights of the holders of the debt securities of such
series; provided that no such supplemental indenture may (1) extend the stated
Maturity of any debt security, reduce the rate or extend the time of payment of
any interest thereon, reduce the principal amount thereof, reduce any premium
payable upon redemption, reduce the amount of an Original Issue Discount
Security that would be due upon a declaration of acceleration, modify provisions
relating to amount or regularity of mandatory sinking fund payments or make the
principal amount thereof payable in any money other than United States legal
tender for the payment of public and private debts, without the consent of the
holder of each debt security so affected, or (2) reduce the aforesaid percentage
of debt securities of such series, the consent of the holders of which is
required for any such supplemental indenture, without the consent of the holders
of all debt securities of such series then outstanding. (Sections 10.01 and
10.02)
CONCERNING THE TRUSTEE
The Company maintains lines of credit and has customary banking
relationships with The First National Bank of Chicago, the Trustee under the
Indenture.
PLAN OF DISTRIBUTION
The Company may sell debt securities to or through underwriters and also
may sell debt securities directly to other purchasers or through agents. Such
firm may also act as an agent.
7
<PAGE> 54
The distribution of the debt securities may be effected from time to time
in one or more transactions at a fixed price or prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The prospectus supplement will
describe the method of distribution of the debt securities. In connection with a
sale of debt securities, underwriters may receive compensation from the Company
or from purchasers of debt securities for whom they may act as agents, in the
form of discounts, concessions or commissions. Underwriters may sell debt
securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions, or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agents. Underwriters,
dealers and agents that participate in the distribution of debt securities may
be deemed to be underwriters, and any discounts or commissions received by them
and any profit on the resale of debt securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act. Any such
underwriter or agent will be identified, and any such compensation will be
described, in the prospectus supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of debt securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the underwriters, dealers or agents may be required to make in
respect thereof.
LEGAL OPINIONS
Mary Ann Hynes, who is our Vice President, General Counsel and Secretary,
will issue an opinion about the legality of the offered securities for us. Ms.
Hynes owns options to purchase 7,000 shares of Common Stock, of which no such
options are currently exercisable. Mayer, Brown & Platt will advise any
underwriters or agents.
EXPERTS
The consolidated financial statements appearing in our Annual Report (Form
10-K) for the year ended December 31, 1997, have been audited by Ernst & Young,
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated by reference in this prospectus and elsewhere in the
Registration Statement. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
8
<PAGE> 55
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$250,000,000
SUNDSTRAND CORPORATION
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
FIRST CHICAGO CAPITAL MARKETS, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
December , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 56
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the securities registered hereby, other than
underwriting discounts and commissions:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....... $ 27,800
Trustee fees and expenses................................. 5,000
Printing and engraving fees............................... 25,000
Accounting fees and expenses.............................. 25,000
Legal Fees................................................ 50,000
Rating agency fees........................................ 120,000
Miscellaneous............................................. 7,200
--------
Total.......................................... $260,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware provides that a
corporation created thereunder may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding by reason of the fact that he is or was a director or officer
of such corporation or is or was serving at the request of such corporation as a
director or officer of another corporation or other enterprise against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, subject to certain limitations referred to therein.
Article Sixteenth of the Company's Restated Certificate of Incorporation
provides that no director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation Law.
Article VI of the Company's By-Laws provides for indemnification of
directors and officers as follows:
The Corporation shall, to the fullest extent to which it is empowered
to do so by the General Corporation Law of Delaware, or any other
applicable laws, as from time to time in effect, indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer of the Corporation or a division thereof, or is or was
serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding.
The provisions of this Article shall be deemed to be a contract
between the Corporation and each director or officer who serves in any such
capacity at any time while this Article and the relevant provisions of the
General Corporation Law of Delaware or other applicable law, if
II-1
<PAGE> 57
any, are in effect, and any repeal or modification of any such law or of
this Article shall not affect any rights or obligations then existing with
respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought or threatened based in
whole or in part upon any such state of facts.
The Corporation shall, to the fullest extent to which it is empowered
to do so by the General Corporation Law of Delaware, and with respect to
the Employee Retirement Income Security Act of 1974, or any other
applicable laws, as from time to time in effect, indemnify any officer,
director or employee of the Corporation or an affiliated corporation, who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was
serving at the request of the Corporation as an individual Trustee,
Committee member, administrator or fiduciary of a pension or other benefit
plan for employees of the Corporation, or of an affiliated corporation or
other enterprise.
Persons who are not covered by the foregoing provisions of this
Article and who are or were employees or agents of the Corporation or a
division thereof, or are or were serving at the request of the Corporation
as employees or agents of another corporation, partnership, joint venture,
trust or other enterprise, may be indemnified to the extent authorized at
any time or from time to time by the Board of Directors of the Corporation.
The indemnification provided or permitted by this Article shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled by law or otherwise, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
Article.
The Corporation shall, to the fullest extent to which it is empowered
to do so by the General Corporation Law of Delaware, or any other
applicable laws, as from time to time in effect, pay expenses, including
attorneys' fees, incurred in defending any action, suit or proceeding, in
advance of the final disposition of such action, suit or proceeding, to any
person who is or was a party or is threatened to be made a party to any
such threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation, upon
receipt of an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation as authorized by applicable
laws.
ITEM 16. EXHIBITS
A list of exhibits is set forth in the Exhibit Index appearing elsewhere in
this Registration Statement and is incorporated herein by reference.
II-2
<PAGE> 58
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to the Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933
(the"Securities Act"); (ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement; provided, however, that
paragraphs (a)(1)(i) and(a)(1)(ii) 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 (the "Exchange Act") that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, 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 the 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) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act 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 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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
(d)(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon
II-3
<PAGE> 59
Rule 430A and contained in the form of prospectus filed by 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,
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-4
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
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 Rockford, Illinois on December 7, 1998.
SUNDSTRAND CORPORATION
By: /s/ PAUL DONOVAN
------------------------------------
Name: Paul Donovan
Title: Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and as of December 7, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Chairman of the Board, President and Chief Executive Officer
- ----------------------------
Robert H. Jenkins
/s/ PAUL DONOVAN Executive Vice President and Chief Financial Officer
- ----------------------------
Paul Donovan
* Vice President and Controller
- ----------------------------
DeWayne J. Fellows
* Director
- ----------------------------
Richard A. Abdoo
* Director
- ----------------------------
J.P. Bolduc
* Director
- ----------------------------
Ilene S. Gordon
* Director
- ----------------------------
Gerald Grinstein
* Director
- ----------------------------
Charles Marshall
* Director
- ----------------------------
Klaus H. Murmann
* Director
- ----------------------------
Ward Smith
* Director
- ----------------------------
Berger G. Wallin
*By: /s/ PAUL DONOVAN
----------------------
Paul Donovan
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 61
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement*
1.2 Form of Distribution Agreement
4.1 Form of Indenture between the Company and The First National
Bank of Chicago, as Trustee
4.2 Form of Debt Security (included in Exhibit 4.1 as Schedule A
to the Indenture)
5.1 Opinion of Mary Ann Hynes**
12.1 Computation of Ratio of Earnings to Fixed Charges**
23.1 Consent of Ernst & Young LLP
23.2 Consent of Mary Ann Hynes (included in Exhibit 5.1)**
24.1 Powers of Attorney**
25.1 Statement of Eligibility on Form T-1 of The First National
Bank of Chicago**
</TABLE>
- ---------------
* Incorporated by reference to similarly numbered exhibit to Registration
Statement on Form S-3 of the Registrant (No. 333-00801).
** Previously filed.
<PAGE> 1
EXHIBIT 1.2
SUNDSTRAND CORPORATION
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
December __, 1998
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
NationsBanc Montgomery Securities LLC
100 North Tryon Street
Mail Code NC 1007-07-01
Charlotte, North Carolina 28255
Attention: Continuously Offered Products
Dear Sirs:
Sundstrand Corporation, a Delaware corporation (the "Company"), confirms
its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, First Chicago Capital Markets, Inc. and NationsBanc Montgomery
Securities LLC (each, an "Agent", and collectively, the "Agents") with respect
to the issue and sale by the Company of its Medium-Term Notes Due Nine Months or
More From Date of Issue (the "Notes"). The Notes are to be issued pursuant to
an Indenture, dated as of December 1, 1998, as amended or modified from time to
time (the "Indenture"), between the Company and The First National Bank of
Chicago, as trustee (the "Trustee"). As of the date hereof, the Company has
authorized the issuance and sale of up to U.S. $250,000,000 aggregate initial
offering price of Notes (or its equivalent, based upon the exchange rate on the
applicable trade date in such foreign or composite currencies as the Company
shall designate at the time of issuance) to or through the Agents pursuant to
the terms of this Agreement. It is understood, however, that the Company may
from time to time authorize the issuance of additional Notes and that such
additional Notes may be sold, but are not required to be sold, to or through the
Agents pursuant to the terms of
<PAGE> 2
this Agreement, all as though the issuance of such additional Notes were
authorized as of the date hereof.
This Agreement provides both for the sale of Notes by the Company to one or
more Agents as principal for resale to investors and other purchasers and for
the sale of Notes by the Company directly to investors (as may from time to time
be agreed to by the Company and the applicable Agent), in which case the
applicable Agent will act as an agent of the Company in soliciting offers for
the purchase of Notes.
The Company has filed with the Securities and Exchange Commission (the
"Commission") registration statements on Form S-3 (Nos. 333-00801 and 333-66981)
for the registration of debt securities, including the Notes, under the
Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof
from time to time in accordance with Rule 415 of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations"). Such
registration statements, including the pre-effective amendments thereto, have
been declared effective by the Commission and the Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"),
and the Company has filed such post-effective amendments to the registration
statements as may be required prior to its acceptance of any offer for the
purchase of Notes and each such post-effective amendment has been declared
effective by the Commission. Such registration statements (as so amended, if
applicable) are collectively referred to herein as the "Registration Statement";
and the final prospectus and all applicable amendments or supplements thereto
(including the final prospectus supplement and pricing supplement relating to
the offering of Notes), in the form first furnished to the applicable Agent(s)
for use in confirming sales of Notes, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall also be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to any acceptance by the Company of an
offer for the purchase of Notes; provided, further, that if the Company files a
registration statement with the Commission pursuant to Rule 462(b) of the 1933
Act Regulations (the "Rule 462(b) Registration Statement"), then, after such
filing, all references to the "Registration Statement" shall also be deemed to
include the Rule 462(b) Registration Statement. A "preliminary prospectus"
shall be deemed to refer to any prospectus used before the Registration
Statement became effective and any prospectus furnished by the Company after the
registration statement became effective and before any acceptance by the Company
of an offer for the purchase of Notes which omitted information to be included
upon pricing in a form of prospectus filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations. For purposes of this Agreement, all
references to the Registration Statement, Prospectus or preliminary prospectus
or to any amendment or supplement thereto shall be deemed to include any copy
filed with the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval system ("EDGAR").
2
<PAGE> 3
All references in this Agreement to financial statements and schedules and
other information which is "disclosed", "contained," "included" or "stated" (or
other references of like import) in the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to include all such financial statements
and schedules and other information which is incorporated by reference in the
Registration Statement, Prospectus or preliminary prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to the
Registration Statement, Prospectus or preliminary prospectus shall be deemed to
include the filing of any document under the 1934 Act which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be.
SECTION 1. Appointment as Agent.
(a) Appointment. Subject to the terms and conditions stated herein and
subject to the reservation by the Company of the right to sell Notes directly on
its own behalf, the Company hereby agrees that Notes will be sold exclusively to
or through the Agents. The Company agrees that it will not appoint any other
agents to act on its behalf, or to assist it, in the placement of the Notes.
(b) Sale of Notes. The Company shall not sell or approve the
solicitation of offers for the purchase of Notes in excess of the amount which
shall be authorized by the Company from time to time or in excess of the
aggregate initial offering price of Notes registered pursuant to the
Registration Statement. The Agents shall have no responsibility for maintaining
records with respect to the aggregate initial offering price of Notes sold, or
of otherwise monitoring the availability of Notes for sale, under the
Registration Statement.
(c) Purchases as Principal. The Agents shall not have any obligation to
purchase Notes from the Company as principal. However, absent an agreement
between an Agent and the Company that such Agent shall be acting solely as an
agent for the Company, such Agent shall be deemed to be acting as principal in
connection with any offering of Notes by the Company through such Agent.
Accordingly, the Agents, individually or in a syndicate, may agree from time to
time to purchase Notes from the Company as principal for resale to investors and
other purchasers determined by such Agents. Any purchase of Notes from the
Company by an Agent as principal shall be made in accordance with Section 3(a)
hereof.
(d) Solicitations as Agent. If agreed upon between an Agent and the
Company, such Agent, acting solely as an agent for the Company and not as
principal, will solicit offers for the purchase of Notes. Such Agent will
communicate to the Company, orally, each offer for the purchase of Notes
solicited by it on an agency basis other than those offers rejected by such
Agent. Such Agent shall have the right, in its discretion reasonably exercised,
to reject any offer for the purchase of Notes, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein. The
Company may accept or reject any offer for the purchase of Notes, in whole or in
part. Such Agent shall make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer for the purchase of Notes
has been solicited by it on an agency basis and accepted by the Company. Such
Agent shall not have
3
<PAGE> 4
any liability to the Company in the event that any such purchase is not
consummated for any reason. If the Company shall default on its obligation to
deliver Notes to a purchaser which is prepared to consummate the purchase of the
Notes and whose offer has been solicited by such Agent on an agency basis and
accepted by the Company, the Company shall (i) hold such Agent harmless against
any loss, claim or damage arising from or as a result of such default by the
Company and (ii) pay to such Agent any commission to which it would otherwise be
entitled absent such default.
(e) Reliance. The Company and the Agents agree that any Notes purchased
from the Company by one or more Agents as principal shall be purchased, and any
Notes the placement of which an Agent arranges as an agent of the Company shall
be placed by such Agent, in reliance on the representations, warranties,
covenants and agreements of the Company contained herein and on the terms and
conditions and in the manner provided herein.
SECTION 2. Representations and Warranties.
(a) The Company represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Company of an offer for the
purchase of Notes (whether to such Agent as principal or through such Agent as
agent), as of the date of each delivery of Notes (whether to such Agent as
principal or through such Agent as agent) (the date of each such delivery to
such Agent as principal is referred to herein as a "Settlement Date"), and as of
any time that the Registration Statement or the Prospectus shall be amended or
supplemented (each of the times referenced above is referred to herein as a
"Representation Date"), as follows:
(i) Due Incorporation, Good Standing and Due Qualification of
the Company. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Prospectus and to enter into this Agreement and consummate the transactions
contemplated in the Prospectus; the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify or be in good standing would not result in
a material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise (a "Material Adverse Effect").
(ii) Due Incorporation, Good Standing and Due Qualification of
Significant Subsidiaries. Each significant subsidiary (as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the 1933 Act), if
any (each, a "Significant Subsidiary"), has been duly organized and is
validly existing as a corporation in good
4
<PAGE> 5
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus and is duly qualified
as a foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would not
result in a Material Adverse Effect; all of the issued and outstanding
shares of capital stock of each Significant Subsidiary has been duly
authorized and is validly issued, fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and none of the outstanding shares of capital stock of any
Significant Subsidiary was issued in violation of preemptive or other
similar rights of any securityholder of such Significant Subsidiary.
(iii) Registration Statement and Prospectus. The Company meets
the requirements for use of Form S-3 under the 1933 Act; the Registration
Statement (or any Rule 462(b) Registration Statement) has become effective
under the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement (or any Rule 462(b) Registration Statement) has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with; the Indenture
has been duly qualified under the 1939 Act; at the respective times that
the Registration Statement (including any Rule 462(b) Registration
Statement) and any post-effective amendment thereto (including the filing
of the Company's most recent Annual Report on Form 10-K with the Commission
(the "Annual Report on Form 10-K")) became effective and at each
Representation Date, the Registration Statement (including any Rule 462(b)
Registration Statement) and any amendments thereto complied and will comply
in all material respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations") and did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; each preliminary prospectus and
prospectus filed as part of the Registration Statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under
the 1933 Act, complied when so filed in all material respects with the 1933
Act Regulations; each preliminary prospectus and the Prospectus delivered
to the applicable Agent(s) for use in connection with the offering of Notes
are identical to any electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T; and at the date hereof, at the date of the Prospectus and
each amendment or supplement thereto and at each Representation Date,
neither the Prospectus nor any amendment or supplement thereto included or
will include an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this subsection shall not apply to statements in
5
<PAGE> 6
or omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished to the Company
in writing by the Agents expressly for use in the Registration Statement or
the Prospectus.
(iv) Incorporated Documents. The documents incorporated by
reference in the Prospectus, when they became effective or were filed with
the Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Securities Exchange Act of 1934, as
amended (the "1934 Act"), as applicable, and the 1933 Act Regulations and
the rules and regulations of the Commission under the 1934 Act (the "1934
Act Regulations"), and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and any further documents so filed and incorporated by reference in the
Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an Agent
expressly for use in the Prospectus relating to such Notes.
(v) Independent Accountants. The accountants who certified the
financial statements and any supporting schedules thereto included in the
Registration Statement and the Prospectus are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(vi) Financial Statements. The consolidated financial
statements of the Company included in the Registration Statement and the
Prospectus, together with the related schedules and notes, as well as those
financial statements, schedules and notes of any other entity included in
the Registration Statement and the Prospectus, present fairly the
consolidated financial position of the Company and its subsidiaries, or
such other entity, as the case may be, at the dates indicated and the
consolidated statement of operations, stockholders' equity and cash flows
of the Company and its subsidiaries, or such other entity, as the case may
be, for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved; the
supporting schedules, if any, included in the Registration Statement and
the Prospectus present fairly in accordance with GAAP the information
required to be stated therein; the selected financial data and the summary
financial information included in the Registration
6
<PAGE> 7
Statement and the Prospectus present fairly the information shown therein
and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement and the
Prospectus; and any pro forma consolidated financial statements of the
Company and its subsidiaries and the related notes thereto included in the
Registration Statement and the Prospectus present fairly the information
shown therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.
(vii) No Material Changes. Neither the Company nor any of its
subsidiaries has sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, there has not been any material decrease in the capital
stock or material increase in the long-term debt of the Company or any of
its subsidiaries (other than decreases in the capital stock of the Company
as a result of stock repurchases in the ordinary course of business) or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus.
(viii) Authorization, etc. of this Agreement, the Indenture and
the Notes. This Agreement has been duly authorized, executed and delivered
by the Company; the Indenture has been duly authorized, executed and
delivered by the Company and will be a valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a proceeding
in equity or at law), and except further as enforcement thereof may be
limited by requirements that a claim with respect to any debt securities
issued under the Indenture that are payable in a foreign or composite
currency (or a foreign or composite currency judgment in respect of such
claim) be converted into U.S. dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States;
the Notes have been duly authorized by the Company for offer, sale,
issuance and delivery pursuant to this Agreement and, when issued,
authenticated and delivered in the manner provided for in the Indenture and
delivered against payment of the consideration therefor, will constitute
valid and legally binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as enforcement thereof
may be limited by
7
<PAGE> 8
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general
equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law), and except further as enforcement thereof
may be limited by requirements that a claim with respect to any Notes
payable in a foreign or composite currency (or a foreign or composite
currency judgment in respect of such claim) be converted into U.S. dollars
at a rate or exchange prevailing on a date determined pursuant to
applicable law or by governmental authority to limit, delay or prohibit the
making of payments outside the United States; the Notes will be
substantially in a form previously certified to the Agents and contemplated
by the Indenture; and each holder of Notes will be entitled to the benefits
of the Indenture.
(ix) Descriptions of the Indenture and the Notes. The
Indenture and the Notes conform and will conform in all material respects
to the statements relating thereto contained in the Prospectus and are
substantially in the form filed or incorporated by reference, as the case
may be, as an exhibit to the Registration Statement.
(x) Absence of Defaults and Conflicts. Neither the Company
nor any of its subsidiaries is in violation of the provisions of its
charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject (collectively, "Agreements and Instruments"),
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement, the
Indenture, the Notes and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company in connection with
the transactions contemplated by the Prospectus, the consummation of the
transactions contemplated in the Prospectus (including the issuance and
sale of the Notes and the use of proceeds therefrom as described in the
Prospectus) and the compliance by the Company with its obligations
hereunder and under the Indenture, the Notes and such other agreements or
instruments have been duly authorized by all necessary corporate action and
do not and will not, whether with or without the giving of notice or the
passage of time or both, conflict with or constitute a breach of, or
default or event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any of its subsidiaries
(a "Repayment Event"), or result in the creation or imposition of any lien,
charge or encumbrance upon any assets, properties or operations of the
Company or any of its subsidiaries pursuant to, any Agreements and
Instruments, nor will such action result in
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any violation of the provisions of the charter or by-laws of the Company or
any of its subsidiaries or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets, properties or
operations, except for any such violations (other than violations of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries) that would not result in a Material Adverse Effect.
(xi) Absence of Proceedings. Other than as set forth or
contemplated in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate reasonably be expected
to have a Material Adverse Effect; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xii) Environmental Laws. Except as otherwise stated in the
Registration Statement and the Prospectus and except as would not, singly
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect, (A) neither the Company nor any of its subsidiaries is in violation
of any applicable statute, law, rule, regulation, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation
thereof including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of hazardous materials or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of hazardous materials (collectively, "Environmental Laws"), (B)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (C)
there are no events or circumstances that may reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to hazardous
materials or any Environmental Laws.
(xiii) No Filings, Regulatory Approvals etc. No filing with,
or approval, authorization, consent, license, registration, qualification,
order or decree of, any court or governmental authority or agency, domestic
or foreign, is necessary or required for the due authorization, execution
and delivery by the Company of this Agreement, the Indenture and the Notes
or for the performance by the Company of the transactions contemplated in
this Agreement, the Indenture or the Prospectus, except such as have
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been previously made, obtained or rendered, as applicable.
(xiv) Investment Company Act. The Company is not, and upon
the issuance and sale of the Notes as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the ("1940 Act").
(xv) Commodity Exchange Act. The Notes, upon issuance, will
be excluded or exempted under, or beyond the purview of, the Commodity
Exchange Act, as amended (the "Commodity Exchange Act"), and the rules and
regulations of the Commodity Futures Trading Commission under the Commodity
Exchange Act (the "Commodity Exchange Act Regulations").
(xvi) Ratings. The Medium-Term Note Program under which the
Notes are issued (the "Program"), as well as the Notes, are rated Baa1 by
Moody's Investors Service, Inc. and A- by Standard & Poor's Ratings
Services, or such other rating as to which the Company shall have most
recently notified the Agents pursuant to Section 4(a) hereof.
(b) Additional Certifications. Any certificate signed by any officer of
the Company or any of its subsidiaries and delivered to one or more Agents or to
counsel for the Agents in connection with an offering of Notes to one or more
Agents as principal or through an Agent as agent shall be deemed a
representation and warranty by the Company to such Agent or Agents as to the
matters covered thereby on the date of such certificate and, unless subsequently
amended or supplemented, at each Representation Date subsequent thereto.
SECTION 3. Purchases as Principal; Solicitations as Agent.
(a) Purchases as Principal. Notes purchased from the Company by the
Agents, individually or in a syndicate, as principal shall be made in accordance
with terms agreed upon between such Agent or Agents and the Company (which
terms, unless otherwise agreed, shall, to the extent applicable, include those
terms specified in Exhibit A hereto and shall be agreed upon orally, with
written confirmation prepared by such Agent or Agents and mailed to the
Company). An Agent's commitment to purchase Notes as principal shall be deemed
to have been made on the basis of the representations and warranties of the
Company herein contained and shall be subject to the terms and conditions herein
set forth. Unless the context otherwise requires, references herein to "this
Agreement" shall include the applicable agreement of one or more Agents to
purchase Notes from the Company as principal. Each purchase of Notes, unless
otherwise agreed, shall be at a discount from the principal amount of each such
Note equivalent to the applicable commission set forth in Schedule A hereto.
The Agents may engage the
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services of any broker or dealer in connection with the resale of the Notes
purchased by them as principal and may allow all or any portion of the discount
received from the Company in connection with such purchases to such brokers or
dealers. At the time of each purchase of Notes from the Company by one or more
Agents as principal, such Agent or Agents shall specify the requirements for the
officers' certificate, opinion of counsel and comfort letter pursuant to
Sections 7(b), 7(c) and 7(d) hereof.
If the Company and two or more Agents enter into an agreement pursuant to
which such Agents agree to purchase Notes from the Company as principal and one
or more of such Agents shall fail at the Settlement Date to purchase the Notes
which it or they are obligated to purchase (the "Defaulted Notes"), then the
nondefaulting Agents shall have the right, within 24 hours thereafter, to make
arrangements for one of them or one or more other Agents or underwriters to
purchase all, but not less than all, of the Defaulted Notes in such amounts as
may be agreed upon and upon the terms herein set forth; provided, however, that
if such arrangements shall not have been completed within such 24-hour period,
then:
(i) if the aggregate principal amount of Defaulted Notes does
not exceed 10% of the aggregate principal amount of Notes to be so
purchased by all of such Agents on the Settlement Date, the nondefaulting
Agents shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective initial
underwriting obligations bear to the underwriting obligations of all
nondefaulting Agents; or
(ii) if the aggregate principal amount of Defaulted Notes
exceeds 10% of the aggregate principal amount of Notes to be so purchased
by all of such Agents on the Settlement Date, such agreement shall
terminate without liability on the part of any nondefaulting Agent.
No action taken pursuant to this paragraph shall relieve any defaulting Agent
from liability in respect of its default. In the event of any such default
which does not result in a termination of such agreement, either the
nondefaulting Agents or the Company shall have the right to postpone the
Settlement Date for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or the Prospectus or in any other
documents or arrangements.
(b) Solicitations as Agent. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed by the Company and an Agent, such Agent, as an agent of the
Company, will use its reasonable efforts to solicit offers for the purchase of
Notes upon the terms set forth in the Prospectus. The Agents are not authorized
to appoint sub-agents with respect to Notes sold through them as agent. All
Notes sold through an Agent as agent will be sold at 100% of their principal
amount unless otherwise agreed upon between the Company and such Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers for the purchase of Notes through an Agent, as an agent
of the Company, commencing at any time
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for any period of time or permanently. As soon as practicable after receipt of
instructions from the Company, such Agent will suspend solicitation of offers
for the purchase of Notes from the Company until such time as the Company has
advised such Agent that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent, as an
agent of the Company, as set forth in Schedule A hereto.
(c) Administrative Procedures. The purchase price, interest rate or
formula, maturity date and other terms of the Notes specified in Exhibit A
hereto (as applicable) shall be agreed upon between the Company and the
applicable Agent(s) and specified in a pricing supplement to the Prospectus
(each, a "Pricing Supplement") to be prepared by the Company in connection with
each sale of Notes. Except as otherwise specified in the applicable Pricing
Supplement, the Notes will be issued in denominations of U.S. $1,000 or any
larger amount that is an integral multiple of U.S. $1,000. Administrative
procedures with respect to the issuance and sale of the Notes (the "Procedures")
are set forth in Exhibit C hereto, which procedures shall not be amended without
the consent of the Company, the Agents and the Trustee. The Agents and the
Company agree to perform, and the Company agrees to cause the Trustee to agree
to perform, their respective duties and obligations specifically provided to be
performed by them in the Procedures.
SECTION 4. Covenants of the Company.
The Company covenants and agrees with each Agent as follows:
(a) Notice of Certain Events. The Company will notify the Agents
immediately, and confirm such notice in writing, of (i) the effectiveness of any
post-effective amendment to the Registration Statement or the filing of any
amendment or supplement to the Prospectus (other than any amendment or
supplement thereto providing solely for the determination of the variable terms
of the Notes or relating solely to the offering of securities other than the
Notes), (ii) the receipt of any comments from the Commission, (iii) any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, (iv)
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement, or of any order preventing or suspending the use of
any preliminary prospectus, or of the initiation of any proceedings for that
purpose or (v) any change in the rating assigned by any nationally recognized
statistical rating organization to the Program or any debt securities (including
the Notes) of the Company, or the public announcement by any nationally
recognized statistical rating organization that it has under surveillance or
review, with possible negative implications, its rating of the Program or any
such
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debt securities, or the withdrawal by any nationally recognized statistical
rating organization of its rating of the Program or any such debt securities.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
(b) Filing or Use of Amendments. The Company will give the Agents
advance notice of its intention to file or prepare any additional registration
statement with respect to the registration of additional Notes, any amendment to
the Registration Statement (including any filing under Rule 462(b) of the 1933
Act Regulations) or any amendment or supplement to the prospectus included in
the Registration Statement at the time it became effective or to the Prospectus
(other than an amendment or supplement thereto providing solely for the
determination of the variable terms of the Notes or relating solely to the
offering of securities other than the Notes), whether pursuant to the 1933 Act,
the 1934 Act or otherwise, will furnish to the Agents copies of any such
document a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such document to which the Agents or
counsel for the Agents shall object.
(c) Delivery of the Registration Statement. The Company has furnished to
each Agent and to counsel for the Agents, without charge, signed and conformed
copies of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference therein
and documents incorporated or deemed to be incorporated by reference therein)
and signed and conformed copies of all consents and certificates of experts.
The Registration Statement and each amendment thereto furnished to the Agents
will be identical to any electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(d) Delivery of the Prospectus. The Company will deliver to each Agent,
without charge, as many copies of each preliminary prospectus as such Agent may
reasonably request, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to each Agent,
without charge, such number of copies of the Prospectus (as amended or
supplemented) as such Agent may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Agents will be identical to
any electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(e) Preparation of Pricing Supplements. The Company will prepare, with
respect to any Notes to be sold to or through one or more Agents pursuant to
this Agreement, a Pricing Supplement with respect to such Notes in a form
previously approved by the Agents. The Company will deliver such Pricing
Supplement no later than 11:00 a.m., New York City time, on the business day
following the date of the Company's acceptance of the offer for the purchase of
such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3)
under the 1933 Act not later than the close of business of the Commission on the
fifth business day after the date on which such Pricing Supplement is first
used.
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(f) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (m) of this Section 4, if at any time during the term of
this Agreement any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Agents or counsel for
the Company, to amend the Registration Statement in order that the Registration
Statement will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or to amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, or if it shall be necessary, in the
opinion of either such counsel, to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company shall give immediate notice,
confirmed in writing, to the Agents to cease the solicitation of offers for the
purchase of Notes in their capacity as agents and to cease sales of any Notes
they may then own as principal, and the Company will promptly prepare and file
with the Commission, subject to Section 4(b) hereof, such amendment or
supplement as may be necessary to correct such statement or omission or to make
the Registration Statement and Prospectus comply with such requirements, and the
Company will furnish to the Agents, without charge, such number of copies of
such amendment or supplement as the Agents may reasonably request. In addition,
the Company will comply with the 1933 Act, the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations so as to permit the completion of the
distribution of each offering of Notes.
(g) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (m) of this Section 4, on the date on which
there shall be released to the general public interim financial statement
information related to the Company with respect to each of the first three
quarters of any fiscal year or preliminary financial statement information with
respect to any fiscal year, the Company shall furnish such information to the
Agents, confirmed in writing. The Company shall also cause the Prospectus to be
amended or supplemented to include financial information with respect thereto
and corresponding information for the comparable period of the preceding fiscal
year, as well as such other information and explanations as shall be necessary
for an understanding thereof or as shall be required by the 1933 Act or the 1933
Act Regulations.
(h) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (m) of this Section 4, on the date on which
there shall be released to the general public financial information included in
or derived from the audited consolidated financial statements of the Company for
the preceding fiscal year, the Company shall furnish such information to the
Agents, confirmed in writing. The Company shall also cause the Prospectus to be
amended or supplemented to include such audited consolidated financial
statements and the report or reports, and consent or consents to such inclusion,
of the independent accountants with respect thereto, as well as such other
information and explanations
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as shall be necessary for an understanding of such consolidated financial
statements or as shall be required by the 1933 Act or the 1933 Act Regulations.
(i) Earnings Statements. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
(j) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods prescribed by the 1934 Act and the 1934 Act
Regulations.
(k) Restriction on Offers and Sales of Securities. Unless otherwise
agreed upon between one or more Agents acting as principal and the Company,
between the date of the agreement by such Agent(s) to purchase the related Notes
from the Company and the Settlement Date with respect thereto, the Company will
not, without the prior written consent of such Agent(s), issue, sell, offer or
contract to sell, grant any option for the sale of, or otherwise dispose of, any
debt securities of the Company (other than the Notes that are to be sold
pursuant to such agreement or commercial paper in the ordinary course of
business).
(l) Use of Proceeds. The Company will use the net proceeds received by
it from the issuance and sale of the Notes in the manner specified in the
Prospectus.
(m) Suspension of Certain Obligations. The Company shall not be required
to comply with the provisions of subsections (f), (g) or (h) of this Section 4
during any period from the time (i) the Agents shall have suspended solicitation
of offers for the purchase of Notes in their capacity as agents pursuant to a
request from the Company and (ii) no Agent shall then hold any Notes purchased
from the Company as principal, as the case may be, until the time the Company
shall determine that solicitation of offers for the purchase of Notes should be
resumed or an Agent shall subsequently purchase Notes from the Company as
principal.
(n) Notice of Use of Proceeds. In the event that an amount in excess of
10% in the aggregate of the final net proceeds from any sale of Notes is used to
pay indebtedness owed to affiliates of any Agent, the Company shall inform the
Agent of such use of proceeds, and any such sale of Notes will be made in
accordance with Rule 2710(c)(8) of the NASD Conduct Rules.
SECTION 5. Conditions of Agents' Obligations.
The obligations of one or more Agents to purchase Notes from the Company as
principal and to solicit offers for the purchase of Notes as an agent of the
Company, and the obligations of any purchasers of Notes sold through an Agent as
an agent of the Company, will be subject to the accuracy of the representations
and warranties on the part of the Company herein contained
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or contained in any certificate of an officer of the Company or any of its
subsidiaries delivered pursuant to the provisions hereof, to the performance and
observance by the Company of its covenants and other obligations hereunder, and
to the following additional conditions precedent:
(a) Effectiveness of Registration Statement. The Registration Statement
(including any Rule 462(b) Registration Statement) has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings for that
purpose shall have been instituted or shall be pending or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Agents.
(b) Legal Opinions. On the date hereof, the Agents shall have received
the following legal opinions, dated as of the date hereof and in form and
substance satisfactory to the Agents:
(1) Opinion of Counsel for the Company. The favorable opinion
of Mary Ann Hynes, Vice President, General Counsel and Secretary of the
Company, to the effect set forth in Exhibit B hereto and to such further
effect as the Agents may reasonably request.
(2) Opinion of Counsel for the Agents. The favorable opinion
of Mayer, Brown & Platt, counsel for the Agents, with respect to the
matters set forth in paragraphs (1), (4), (5), (6), (7), (12), (13) and
(15) and the penultimate paragraph of Exhibit B hereto.
(c) Officer's Certificate. On the date hereof, there shall not have
been, since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Agents shall have received a
certificate of the President or a Vice President of the Company and of the chief
financial officer and chief accounting officer of the Company, dated as of the
date hereof, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties of the Company herein contained
are true and correct with the same force and effect as though expressly made at
and as of the date of such certificate, (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the date of such certificate, and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted, are pending or, to the best
of such officer's knowledge, are threatened by the Commission.
(d) Comfort Letter of Ernst & Young LLP. On the date hereof, the Agents
shall have
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received a letter from Ernst & Young LLP, dated as of the date hereof and in
form and substance satisfactory to the Agents, to the effect provided in the
American Institute of Certified Public Accountants Statement on Auditing
Standards No. 72.
(e) Additional Documents. On the date hereof, counsel to the Agents
shall have been furnished with such documents and opinions as such counsel may
require for the purpose of enabling such counsel to pass upon the issuance and
sale of Notes as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations and warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of Notes as herein
contemplated shall be satisfactory in form and substance to the Agents and to
counsel to the Agents.
If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
applicable Agent or Agents by notice to the Company at any time and any such
termination shall be without liability of any party to any other party except as
provided in Section 10 hereof and except that Sections 8, 9, 11, 14 and 15
hereof shall survive any such termination and remain in full force and effect.
SECTION 6. Delivery of and Payment for Notes Sold through an Agent as Agent.
Delivery of Notes sold through an Agent as an agent of the Company shall be
made by the Company to such Agent for the account of any purchaser only against
payment therefor in immediately available funds. In the event that a purchaser
shall fail either to accept delivery of or to make payment for a Note on the
date fixed for settlement, such Agent shall promptly notify the Company and
deliver such Note to the Company and, if such Agent has theretofore paid the
Company for such Note, the Company will promptly return such funds to such
Agent. If such failure has occurred for any reason other than default by such
Agent in the performance of its obligations hereunder, the Company will
reimburse such Agent on an equitable basis for its loss of the use of the funds
for the period such funds were credited to the Company's account.
SECTION 7. Additional Covenants of the Company.
The Company further covenants and agrees with each Agent as follows:
(a) Reaffirmation of Representations and Warranties. Each acceptance by
the Company of an offer for the purchase of Notes (whether to one or more Agents
as principal or through an Agent as agent), and each delivery of Notes (whether
to one or more Agents as principal or through an Agent as agent), shall be
deemed to be an affirmation that the representations and warranties of the
Company herein contained and contained in any certificate theretofore delivered
to the Agents pursuant hereto are true and correct at the time of such
acceptance or sale, as the case may be, and an undertaking that such
representations and warranties will be true and correct at the time of delivery
to such Agent(s) or to the purchaser or its agent, as the case may be, of the
Notes relating to such acceptance or sale, as the case may be, as though made at
and as of each such time (it being understood that such representations and
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warranties shall relate to the Registration Statement and Prospectus as amended
and supplemented to each such time).
(b) Subsequent Delivery of Certificates. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for the determination of the
variable terms of the Notes or relating solely to the offering of securities
other than the Notes), (ii) (if required in connection with the purchase of
Notes from the Company by one or more Agents as principal) the Company sells
Notes to one or more Agents as principal or (iii) the Company sells Notes in a
form not previously certified to the Agents by the Company, the Company shall
furnish or cause to be furnished to the Agent(s), forthwith a certificate dated
the date of filing with the Commission or the date of effectiveness of such
amendment or supplement, as applicable, or the date of such sale, as the case
may be, in form satisfactory to the Agent(s) to the effect that the statements
contained in the certificate referred to in Section 5(c) hereof which were last
furnished to the Agents are true and correct at the time of the filing or
effectiveness of such amendment or supplement, as applicable, or the time of
such sale, as the case may be, as though made at and as of such time (except
that such statements shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented to such time) or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to in
Section 5(c) hereof, modified as necessary to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of delivery
of such certificate (it being understood that, in the case of clause (ii) above,
any such certificate shall also include a certification that there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise since the date of the agreement by
such Agent(s) to purchase Notes from the Company as principal).
(c) Subsequent Delivery of Legal Opinions. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for the determination of the
variable terms of the Notes or relating solely to the offering of securities
other than the Notes), (ii) (if required in connection with the purchase of
Notes from the Company by one or more Agents as principal) the Company sells
Notes to one or more Agents as principal or (iii) the Company sells Notes in a
form not previously certified to the Agents by the Company, the Company shall
furnish or cause to be furnished forthwith to the Agent(s) and to counsel to the
Agents the written opinion of Mary Ann Hynes, General Counsel of the Company, or
other counsel satisfactory to the Agent(s), dated the date of filing with the
Commission or the date of effectiveness of such amendment or supplement, as
applicable, or the date of such sale, as the case may be, in form and substance
satisfactory to the Agent(s), of the same tenor as the opinion referred to in
Section 5(b)(1) hereof, but modified, as necessary, to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such opinion or, in lieu of such opinion, counsel last
furnishing such opinion to the Agents shall furnish the Agent(s) with a letter
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substantially to the effect that the Agent(s) may rely on such last opinion to
the same extent as though it was dated the date of such letter authorizing
reliance (except that statements in such last opinion shall be deemed to relate
to the Registration Statement and the Prospectus as amended and supplemented to
the time of delivery of such letter authorizing reliance).
(d) Subsequent Delivery of Comfort Letters. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information (other than by an amendment or
supplement relating solely to the issuance and/or offering of securities other
than the Notes) or (ii) (if required in connection with the purchase of Notes
from the Company by one or more Agents as principal) the Company sells Notes to
one or more Agents as principal, the Company shall cause Ernst & Young LLP (or
other accountants satisfactory to the Agents) forthwith to furnish to the
Agent(s) a letter, dated the date of filing with the Commission or the date of
effectiveness of such amendment or supplement, as applicable, or the date of
such sale, as the case may be, in form satisfactory to the Agent(s), of the same
tenor as the letter referred to in Section 5(d) hereof but modified to relate to
the Registration Statement and Prospectus as amended and supplemented to the
date of such letter.
SECTION 8. Indemnification.
(a) Indemnification of the Agents. The Company agrees to indemnify and
hold harmless each Agent and each person, if any, who controls such Agent within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arising out of an untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
8(d) hereof) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by such Agent),
reasonably incurred in
19
<PAGE> 20
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by the Agents
expressly for use in the Registration Statement (or any amendment thereto) or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) Indemnification of Company, Directors and Officers. Each Agent
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 8(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Agents expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 8(a) hereof,
counsel to the indemnified parties shall be selected by the applicable Agent(s)
and, in the case of parties indemnified pursuant to Section 8(b) hereof, counsel
to the indemnified shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
20
<PAGE> 21
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or 9 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 8(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 9. Contribution.
If the indemnification provided for in Section 8 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the applicable
Agent(s), on the other hand, from the offering of the Notes that were the
subject of the claim for indemnification or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
applicable Agent(s), on the other hand, in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
applicable Agent(s), on the other hand, in connection with the offering of the
Notes that were the subject of the claim for indemnification shall be deemed to
be in the same respective proportions as the total net proceeds from the
offering of such Notes (before deducting expenses) received by the Company and
the total discount or commission received by each applicable Agent, as the case
may be, bears to the aggregate initial offering price of such Notes.
The relative fault of the Company, on the one hand, and the applicable
Agent(s), on the other hand, shall be determined by reference to, among other
things, whether any untrue or
21
<PAGE> 22
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
applicable Agent(s) and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Agents agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
(even if the applicable Agent(s) were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 9. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any applicable untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 9, (i) no Agent shall be
required to contribute any amount in excess of the amount by which the total
discount or commission received by such Agent in connection with the offering of
the Notes that were the subject of the claim for indemnification exceeds the
amount of any damages which such Agent has otherwise been required to pay by
reason of any applicable untrue or alleged untrue statement or omission or
alleged omission and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. In addition, in connection with an offering of Notes
purchased from the Company by two or more Agents as principal, the respective
obligations of such Agents to contribute pursuant to this Section 9 are several,
and not joint, in proportion to the aggregate principal amount of Notes that
each such Agent has agreed to purchase from the Company.
For purposes of this Section 9, each person, if any, who controls an Agent
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as such Agent, and each director of
the Company, each officer of the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Company.
SECTION 10. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The preparation, filing, printing and delivery of the Registration
Statement as
22
<PAGE> 23
originally filed and all amendments thereto and any preliminary prospectus, the
Prospectus and any amendments or supplements thereto;
(b) The preparation, printing and delivery of this Agreement and the
Indenture;
(c) The preparation, issuance and delivery of the Notes, including any
fees and expenses relating to the eligibility and issuance of Notes in
book-entry form and the cost of obtaining CUSIP or other identification numbers
for the Notes;
(d) The fees and disbursements of the Company's accountants, counsel and
other advisors or agents (including any calculation agent or exchange rate
agent) and of the Trustee and its counsel;
(e) The reasonable fees and disbursements of counsel to the Agents
incurred in connection with the establishment of the Program and incurred from
time to time in connection with the transactions contemplated hereby;
(f) The fees charged by nationally recognized statistical rating
organizations for the rating of the Program and the Notes;
(g) The fees and expenses incurred in connection with any listing of
Notes on a securities exchange;
(h) The filing fees incident to, and the reasonable fees and
disbursements of counsel to the Agents in connection with, the review, if any,
by the National Association of Securities Dealers, Inc. (the "NASD"); and
(i) Any advertising and other out-of-pocket expenses of the Agents
incurred with the approval of the Company.
SECTION 11. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Company or any of its subsidiaries
submitted pursuant hereto or thereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the Agents
or any controlling person of an Agent, or by or on behalf of the Company, and
shall survive each delivery of and payment for the Notes.
SECTION 12. Termination.
(a) Termination of this Agreement. This Agreement (excluding any
agreement by one or more Agents to purchase Notes from the Company as principal)
may be terminated for any reason, at any time by either the Company or an Agent,
as to itself, upon the giving of 30 days' prior written notice of such
termination to the other party hereto.
23
<PAGE> 24
(b) Termination of Agreement to Purchase Notes as Principal. The
applicable Agent(s) may terminate any agreement by such Agent(s) to purchase
Notes from the Company as principal, immediately upon notice to the Company, at
any time prior to the Settlement Date relating thereto, if (i) there has been,
since the date of such agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
there has occurred any material adverse change in the financial markets in the
United States or, if such Notes are denominated and/or payable in, or indexed
to, one or more foreign or composite currencies, in the international financial
markets, or any outbreak of hostilities or escalation thereof or other calamity
or crisis or any change or development or event involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of such
Agent(s), impracticable to market such Notes or enforce contracts for the sale
of such Notes, or (iii) trading in any securities of the Company has been
suspended or materially limited by the Commission or a national securities
exchange, or if trading generally on the New York Stock Exchange or the American
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by either of said exchanges or by such
system or by order of the Commission, the NASD or any other governmental
authority, or (iv) a banking moratorium has been declared by either Federal or
New York authorities or by the relevant authorities in the country or countries
of origin of any foreign or composite currency in which such Notes are
denominated and/or payable, or (v) the rating assigned by any nationally
recognized statistical rating organization to the Program or any debt securities
(including the Notes) of the Company as of the date of such agreement shall have
been lowered or withdrawn since that date or if any such rating organization
shall have publicly announced that it has under surveillance or review its
rating of the Program or any such debt securities, or (vi) there shall have come
to the attention of such Agent(s) any facts that would cause such Agent(s) to
believe that the Prospectus, at the time it was required to be delivered to a
purchaser of such Notes, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time of such
delivery, not misleading.
(c) General. In the event of any such termination, neither party will
have any liability to the other party hereto, except that (i) the Agents shall
be entitled to any commissions earned in accordance with the third paragraph of
Section 3(b) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by it from the Company as principal or (b) an offer to
purchase any of the Notes has been accepted by the Company but the time of
delivery to the purchaser or his agent of such Notes relating thereto has not
occurred, the covenants set forth in Sections 4 and 7 hereof shall remain in
effect until such Notes are so resold or delivered, as the case may be, and
(iii) the covenant set forth in Section 4(i) hereof, the provisions of Section
10
24
<PAGE> 25
hereof, the indemnity and contribution agreements set forth in Sections 8 and 9
hereof, and the provisions of Sections 11, 14 and 15 hereof shall remain in
effect.
SECTION 13. Notices.
Unless otherwise provided herein, all notices required under the terms and
provisions hereof shall be in writing, either delivered by hand, by mail or by
telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Sundstrand Corporation
P.O. Box 7003
4949 Harrison Avenue
Rockford, Illinois
Attention: Vice President and General Counsel
Telecopy No.: (815) 226-6087
If to the Agents:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
Attention: MTN Product Management
Telecopy No.: (212) 449-2234
First Chicago Capital Markets, Inc.
One First National Plaza
Mail Suite 0595
Chicago, Illinois 60670
Attention: Corporate Securities Structuring
Telecopy No.: (312) 732-4172
NationsBanc Montgomery Securities LLC
100 North Tryon Street
Mail Code NC 1007-07-01
Charlotte, North Carolina 28255
Attention: Continuously Offered Products
Telecopy No.: (704) 388-9939
or at such other address as such party may designate from time to time by notice
duly given
25
<PAGE> 26
in accordance with the terms of this Section 13.
SECTION 14. Parties.
This Agreement shall inure to the benefit of and be binding upon the Agents
and the Company and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons, officers and directors referred to in Sections 8 and 9
hereof and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and their
respective successors, and said controlling persons, officers and directors and
their heirs and legal representatives, and for the benefit of no other person,
firm or corporation. No purchaser of Notes shall be deemed to be a successor by
reason merely of such purchase.
SECTION 15. GOVERNING LAW; FORUM.
THIS AGREEMENT AND ALL THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY THE COMPANY AGAINST ANY AGENT IN CONNECTION WITH OR ARISING UNDER
THIS AGREEMENT SHALL BE BROUGHT SOLELY IN THE STATE OR FEDERAL COURT OF
APPROPRIATE JURISDICTION LOCATED IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW
YORK.
SECTION 16. Effect of Headings.
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
SECTION 17. Counterparts.
This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts hereof shall constitute
a single instrument.
26
<PAGE> 27
If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Distribution Agreement, along with all counterparts, will become a binding
agreement among the Agents and the Company in accordance with its terms.
Very truly yours,
SUNDSTRAND CORPORATION
By:
-------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
----------------------------
Authorized Signatory
FIRST CHICAGO CAPITAL MARKETS, INC.
By:
----------------------------
Title:
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
----------------------------
Title:
27
<PAGE> 28
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company shall
pay the applicable Agent, on a discount basis, a commission for the sale of each
Note equal to the principal amount of such Note multiplied by the appropriate
percentage set forth below:
<TABLE>
<CAPTION>
Percent of
Maturity Range Principal Amount
----------------
<S> <C>
From 9 months to less than 1 year............................ .125%
From 1 year to less than 18 months........................... .150
From 18 months to less than 2 years.......................... .200
From 2 years to less than 3 years............................ .250
From 3 years to less than 4 years............................ .350
From 4 years to less than 5 years............................ .450
From 5 years to less than 6 years............................ .500
From 6 years to less than 7 years............................ .550
From 7 years to less than 10 years........................... .600
From 10 years to less than 15 years.......................... .625
From 15 years to less than 20 years.......................... .700
From 20 years to 30 years.................................... .750
Greater than 30 years........................................ 1/
--
</TABLE>
- ------------------
1/ As agreed to by the Company and the applicable Agent at the time of sale.
- -
Schedule A, Page 1
<PAGE> 29
EXHIBIT A
PRICING TERMS
Principal Amount: $_______
(or principal amount of foreign or composite currency)
Interest Rate or Formula:
If Fixed Rate Note,
Interest Rate:
Interest Payment Dates:
If Floating Rate Note,
Interest Rate Basis(es):
If LIBOR,
* LIBOR Reuters Page:
* LIBOR Telerate Page:
Designated LIBOR Currency:
If CMT Rate,
Designated CMT Telerate Page:
If Telerate Page 7052:
* Weekly Average
* Monthly Average
Designated CMT Maturity Index:
Index Maturity:
Spread and/or Spread Multiplier, if any:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Payment Dates:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date, if any:
Fixed Interest Rate, if any:
Day Count Convention:
Calculation Agent:
Redemption Provisions:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
Repayment Provisions:
Optional Repayment Date(s):
Original Issue Date:
Exhibit A, Page 1
<PAGE> 30
Stated Maturity Date:
Specified Currency:
Exchange Rate Agent:
Authorized Denomination:
Purchase Price: ___%, plus accrued interest, if any, from ___________
Price to Public: ___%, plus accrued interest, if any, from __________
Issue Price:
Settlement Date and Time:
Additional/Other Terms:
Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:
Officers' Certificate pursuant to Section 7(b) of the Distribution
Agreement.
Legal Opinion pursuant to Section 7(c) of the Distribution Agreement.
Comfort Letter pursuant to Section 7(d) of the Distribution Agreement.
Exhibit A, Page 2
<PAGE> 31
EXHIBIT B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)(1)
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware, with corporate power
and authority to own its properties and conduct its business as described in the
Prospectus and to enter into the Distribution Agreement and consummate the
transactions contemplated in the Prospectus.
(2) The Company is duly qualified as a foreign corporation for the
transaction of business and is in good standing in all jurisdictions in which
the failure to be so qualified would have a Material Adverse Effect.
(3) Each of [NAMES OF SIGNIFICANT SUBSIDIARIES] have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, with corporate power
and authority to own their respective properties and conduct their respective
businesses as described in the Prospectus or, if not so described, as presently
conducted; except as stated in the Prospectus, all of the issued and outstanding
shares of capital stock of each such subsidiary has been duly authorized and are
validly issued, fully paid and non-assessable and, to the best of my knowledge,
are owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and
none of the outstanding shares of capital stock of any such subsidiary were
issued in violation of preemptive or other similar rights of any securityholder
of such subsidiary.
(4) The Distribution Agreement has been duly authorized, executed and
delivered by the Company.
(5) The Indenture has been duly authorized, executed and delivered by the
Company and (assuming due authorization, execution and delivery thereof by the
applicable Trustee) constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally or by general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at law), and
except further as enforcement thereof may be limited by requirements that a
claim with respect to any debt securities issued under the Indenture that are
payable in a foreign or composite currency (or a foreign or composite currency
judgment in respect of such claim) be converted into U.S. dollars at a rate of
exchange prevailing on a date determined pursuant to applicable law or by
governmental authority to limit, delay or prohibit the making of payments
outside the United States.
Exhibit B, Page 1
<PAGE> 32
(6) The Notes have been duly authorized by the Company for offer, sale,
issuance and delivery pursuant to the Distribution Agreement and, when issued,
authenticated and delivered in the manner provided for in the Indenture and
delivered against payment of the consideration therefor, will constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a proceeding in
equity or at law), and except further as enforcement thereof may be limited by
requirements that a claim with respect to any Notes payable in a foreign or
composite currency (or a foreign or composite currency judgment in respect of
such claim) be converted into U.S. dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States; and
the Notes, in the forms certified on the date hereof, are in the form
contemplated by, and each registered holder thereof is entitled to the benefits
of, the Indenture.
(7) The Indenture and the Notes, in the forms certified on the date
hereof, conform in all material respects to the statements relating thereto
contained in the Prospectus and are in substantially the form filed or
incorporated by reference, as the case may be, as an exhibit to the Registration
Statement.
(8) The information in the Prospectus under "Description of Debt
Securities", "Description of Notes", "Special Provisions Relating to Foreign
Currency Notes" and "Certain Federal Income Tax Considerations," to the extent
that such information constitutes matters of law, summaries of legal matters,
the Company's charter and bylaws or legal proceedings, or legal conclusions, has
been reviewed by me and is correct in all material respects.
(9) To the best of my knowledge, neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws and no default by the
Company or any of its subsidiaries exists in the due performance or observance
of any material obligation, agreement, covenant or condition contained in any
Agreement and Instrument that is described or referred to in the Registration
Statement or the Prospectus or filed or incorporated by reference as an exhibit
to the Registration Statement.
(10) The execution, delivery and performance of the Distribution
Agreement, the Indenture and the Notes and any other agreement or instrument
entered into or issued or to be entered into or issued by the Company in
connection with the transactions contemplated in the Prospectus, the
consummation of the transactions contemplated in the Prospectus (including the
issuance and sale of the Notes and the use of the proceeds therefrom as
described in the Prospectus) and the compliance by the Company with its
obligations thereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or default or
Repayment Event under, or result in the creation or imposition of any lien,
charge or
Exhibit B, Page 2
<PAGE> 33
encumbrance upon any assets, properties or operations of the Company or any of
its subsidiaries pursuant to, any Agreement and Instrument known to me, nor will
such action result in any violation of the provisions of the charter or by-laws
of the Company or any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to me, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its subsidiaries or any of their assets, properties
or operations.
(11) To the best of my knowledge and other than as set forth or
contemplated in the Prospectus, there are no legal or governmental proceedings,
other than routine litigation arising in the ordinary course, pending to which
the Company or any of its subsidiaries is a party or of which any property of
the Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect; and, to the best of my knowledge,
no such proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(12) The Registration Statement has been declared effective under the 1933
Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and to the
best of my knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been initiated or are pending or threatened by the Commission.
(13) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or supplement to
the Registration Statement and Prospectus, excluding the documents incorporated
by reference therein, as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom and the Trustee's Statement of Eligibility on Form T-1 (the
"Form T-1"), as to which I express no opinion), complied as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(14) The documents incorporated by reference in the Prospectus (other than
the financial statements and supporting schedules included therein or omitted
therefrom, as to which I express no opinion), when they were filed with the
Commission, complied as to form in all material respects with the requirements
of the 1934 Act and the 1934 Act Regulations.
(15) The Indenture has been duly qualified under the 1939 Act.
(16) The Company is not, and upon the issuance and sale of the Notes and
the application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" within the meaning of the 1940 Act.
(17) The Notes, in the forms certified on the date hereof, will be
excluded or exempted under, or beyond the purview of, the Commodity Exchange Act
and the Commodity Exchange Act Regulations.
Exhibit B, Page 3
<PAGE> 34
(18) No filing with, or approval, authorization, consent, license,
registration, qualification, order or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the due
authorization, execution and delivery by the Company of the Distribution
Agreement, the Indenture and the Notes or for the performance by the Company of
the transactions contemplated in the Distribution Agreement, the Indenture or
the Prospectus, except such as have been previously made, obtained or rendered,
as applicable.
Nothing has come to my attention that would lead me to believe that the
Registration Statement or any post-effective amendment thereto (except for
financial statements, supporting schedules and other financial data included
therein or omitted therefrom and for the Form T-1, as to which I make no
statement), at the time the Registration Statement or any post-effective
amendment thereto (including the filing of the Company's Annual Report on Form
10-K with the Commission) became effective [or at the date of any agreement of
the applicable Agent(s) to purchase Notes from the Company as principal],
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements, supporting schedules and other financial data
included therein or omitted therefrom, as to which I make no statement), at the
time the Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the date hereof, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering my opinion, I may rely (A) as to matters of fact (but not as
to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
Exhibit B, Page 4
<PAGE> 35
EXHIBIT C
SUNDSTRAND CORPORATION
ADMINISTRATIVE PROCEDURES
FOR FIXED RATE AND FLOATING RATE MEDIUM-TERM NOTES
(Dated as of December , 1998)
Medium-Term Notes Due Nine Months or More From Date of Issue (the "Notes")
are to be offered on a continuous basis by Sundstrand Corporation, a Delaware
corporation (the "Company"), to or through Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, First Chicago Capital Markets, Inc. and
NationsBanc Montgomery Securities LLC (each, an "Agent" and, collectively, the
"Agents") pursuant to a Distribution Agreement, dated December __, 1998 (the
"Distribution Agreement"), by and among the Company and the Agents. The
Distribution Agreement provides both for the sale of Notes by the Company to one
or more of the Agents as principal for resale to investors and other purchasers
and for the sale of Notes by the Company directly to investors (as may from time
to time be agreed to by the Company and the related Agent or Agents), in which
case each such Agent will act as an agent of the Company in soliciting purchases
of Notes.
Unless otherwise agreed by the related Agent or Agents and the Company,
Notes will be purchased by the related Agent or Agents as principal. Such
purchases will be made in accordance with terms agreed upon by the related Agent
or Agents and the Company (which terms shall be agreed upon orally, with written
confirmation prepared by the related Agent or Agents and mailed to the Company).
If agreed upon by any Agent or Agents and the Company, the Agent or Agents,
acting solely as agent or agents for the Company and not as principal, will use
reasonable efforts to solicit offers to purchase the Notes. Only those
provisions in these Administrative Procedures that are applicable to the
particular role to be performed by the related Agent or Agents shall apply to
the offer and sale of the relevant Notes.
The Notes will be issued as a series of debt securities under an Indenture,
dated as of December 1, 1998, as amended, supplemented or modified from time to
time (the "Indenture"), between the Company and The First National Bank of
Chicago, as trustee (together with any successor in such capacity, the
"Trustee"). The Company has filed a Registration Statement with the Securities
and Exchange Commission (the "Commission") registering debt securities (which
includes the Notes) (the "Registration Statement," which term shall include any
additional registration statements filed in connection with the Notes). The
most recent base prospectus deemed part of the Registration Statement, as
supplemented with respect to the Notes, is herein referred to as "Prospectus."
The most recent supplement to the Prospectus setting forth the purchase price,
interest rate or formula, maturity date and other terms of the Notes (as
applicable) is herein referred to as the "Pricing Supplement."
Exhibit C, Page 1
<PAGE> 36
The Notes will either be issued (a) in book-entry form and represented by
one or more fully registered Notes without coupons (each, a "Global Note")
delivered to the Trustee, as agent for The Depository Company ("DTC"), and
recorded in the book-entry system maintained by DTC, or (b) in certificated form
(each, a "Certificated Note") delivered to the investor or other purchaser
thereof or a person designated by such investor or other purchaser.
General procedures relating to the issuance of all Notes are set forth in
Part I hereof. Additionally, Notes issued in book-entry form will be issued in
accordance with the procedures set forth in Part II hereof and Certificated
Notes will be issued in accordance with the procedures set forth in Part III
hereof. Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture or the Notes, as the case may be.
PART I: PROCEDURES OF GENERAL
APPLICABILITY
Date of Issuance/
Authentication: Each Note will be dated as of the date of its
authentication by the Trustee. Each Note shall also bear
an original issue date (each, an "Original Issue Date").
The Original Issue Date shall remain the same for all
Notes subsequently issued upon transfer, exchange or
substitution of an original Note regardless of their
dates of authentication.
Maturities: Each Note will mature on a date nine months or more from
its original Issue Date (the "Stated Maturity Date")
selected by the investor or other purchaser and agreed to
by the Company.
Registration: Unless otherwise provided in the applicable Pricing
Supplement, Notes will be issued only in fully registered
form.
Denominations: Unless otherwise provided in the applicable Pricing
Supplement, the Notes will be issued in denominations of
$1,000 and integral multiples thereof.
Exhibit C, Page 2
<PAGE> 37
Interest Rate Bases
applicable to
Floating Rate
Notes: Unless otherwise provided in the applicable Pricing
Supplement, Floating Rate Notes will bear interest at a
rate or rates determined by reference to the CD Rate, the
CMT Rate, the Commercial Paper Rate, the Eleventh
District Cost of Funds Rate, the Federal Funds Rate,
LIBOR, the Prime Rate, the Treasury Rate, or such other
interest rate basis or formula as may be set forth in
applicable Pricing Supplement, or by reference to two or
more such rates, as adjusted by the Spread and/or Spread
Multiplier, if any, applicable to such Floating Rate
Notes.
Redemption/Repayment: The Notes will be subject to redemption by the Company in
accordance with the terms of the Notes, which will be
fixed at the time of sale and set forth in the applicable
Pricing Supplement. If no Initial Redemption Date is
indicated with respect to a Note, such Note will not be
redeemable prior to its Stated Maturity Date.
The Notes will be subject to repayment at the option of
the Holders thereof in accordance with the terms of the
Notes, which will be fixed at the time of sale and set
forth in the applicable Pricing Supplement. If no
Optional Repayment Date is indicated with respect to a
Note, such Note will not be repayable at the option of
the Holder prior to its Stated Maturity Date.
Calculation of
Interest: In case of Fixed Rate Notes, interest (including payments
for partial periods) will be calculated and paid on the
basis of a 360-day year of twelve 30-day months.
The interest rate on each Floating Rate Note will be
calculated by reference to the specified Interest Rate
Basis or Bases plus or minus the applicable Spread, if
any, and/or multiplied by the applicable Spread
Multiplier, if any.
Unless otherwise provided in the applicable Pricing
Supplement, interest on each Floating Rate Note will be
calculated by multiplying its principal amount by an
accrued interest factor. Such accrued interest factor is
computed by adding the interest factor calculated for
each day in the period for which accrued interest is
being calculated. Unless otherwise provided in the
applicable Pricing Supplement, the interest factor for
each such
Exhibit C, Page 3
<PAGE> 38
day is computed by dividing the interest rate applicable
to such day by 360 if the CD Rate, Commercial Paper Rate,
Eleventh District Cost of Funds Rate, Federal Funds Rate,
LIBOR or Prime Rate is an applicable Interest Rate Basis,
or by the actual number of days in the year if the CMT
Rate or Treasury Rate is an applicable Interest Rate
Basis. As provided in the applicable Pricing Supplement,
the interest factor for Notes for which the interest rate
is calculated with reference to two or more Interest Rate
Bases will be calculated in each period in the same
manner as if only the lowest, highest or average of the
applicable Interest Rate Bases applied.
Interest: General. Each Note will bear interest in accordance with
its terms. Unless otherwise provided in the applicable
Pricing Supplement, interest on each Note will accrue
from and including the Original Issue Date of such Note
for the first interest period or from the most recent
Interest Payment Date (as defined below) to which
interest has been paid or duly provided for all
subsequent interest periods to but excluding applicable
Interest Payment Date or the Stated Maturity Date or date
of earlier redemption or repayment, as the case may be
(the Stated Maturity Date or date of earlier redemption
or repayment is referred to herein as the "Maturity Date"
with respect to the principal repayable on such date).
If an Interest Payment Date or the Maturity Date with
respect to any Fixed Rate Note falls on a day that is not
a Business Day (as defined below), the required payment
to be made on such day need not be made on such day, but
may be made on the next succeeding Business Day with the
same force and effect as if made on such day, and no
interest shall accrue on such payment for the period from
and after such day to the next succeeding Business Day.
If an Interest Payment Date other than the Maturity Date
with respect to any Floating Rate Note would otherwise
fall on a day that is not a Business Day, such Interest
Payment Date will be postponed to the next succeeding
Business Day, except that in the case of a Note for which
LIBOR is an applicable Interest Rate Basis, if such
Business Day falls in the next succeeding calendar month,
such Interest Payment Date will be the immediately
preceding Business Day. If the Maturity Date with
respect to any Floating Rate Note falls on a day that is
not a Business Day, the required payment to be made on
such day need not be made on such day, but may be made on
the next
Exhibit C, Page 4
<PAGE> 39
succeeding Business Day with the same force and effect as
if made on such day, and no interest shall accrue on such
payment for the period from and after the Maturity Date
to the next succeeding Business Day. Unless otherwise
provided in the applicable Pricing Supplement, "Business
Day" means any day, other than a Saturday or Sunday, that
is neither a legal holiday nor a day on which banking
institutions are authorized or required by law,
regulation or executive order to close in The City of New
York; provided, however, that, with respect to Notes the
payment of which is to be made in a currency other than
U.S. dollars or composite currencies (such currency or
composite currency in which a Note is denominated is the
"Specified Currency"), such day is also not a day on
which banking institutions are authorized or required by
law, regulation or executive order to close in the
Principal Financial Center (as defined below) of the
country issuing such Specified Currency (or, in the case
of European Currency Units ("ECUs"), is not a day that
appears as an ECU non-settlement day on the display
designated as "ISDE" on the Reuter Monitor Money Rates
Service (or a day so designated by the ECU Banking
Association) or, if ECU non-settlement days do not appear
on that page (and are not so designated), is not a day on
which payments in ECU cannot be settled in the
international interbank market); provided, further, that,
with respect to Notes for which LIBOR is an applicable
Interest Rate Basis, such day is also a London Business
Day (as defined below).
"London Business Day" means (i) if the currency
(including composite currencies) specified in the
applicable Pricing Supplement as the currency (the "Index
Currency") for which LIBOR is calculated is other than
ECU, any day on which dealings in such Index Currency are
transacted in the London interbank market or (ii) if the
Index Currency is ECU, any day that does not appear as an
ECU non-settlement day on the display designated as
"ISDE" on the Reuter Monitor Money Rates Service (or a
day so designated by the ECU Banking Association) or, if
ECU non-settlement days do not appear on that page (and
are not so designated), is not a day on which payments in
ECU cannot be settled in the international interbank
market. It being understood that if no such currency or
composite currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Principal Financial Center" means the capital city of
the country issuing the currency or composite currency in
which any payment in respect of the Notes is to be made
or, solely with respect to the calculation of LIBOR,
Exhibit C, Page 5
<PAGE> 40
the Index Currency, except that with respect to U.S.
dollars, Australian dollars, Deutsche marks, Dutch
guilders, Italian lire, Swiss francs and ECUs, the
Principal Financial Center shall be The City of New York,
Sydney, Frankfurt, Amsterdam, Milan, Zurich and
Luxembourg, respectively.
Regular Record Dates. Unless otherwise provided in the
applicable Pricing Supplement, the "Regular Record Date"
for a Note shall be the date 15 calendar days (whether or
not a Business Day) preceding the applicable Interest
Payment Date.
Interest Payment Dates. Interest payments will be made
on each Interest Payment Date commencing with the first
Interest Payment Date following the Original Issue Date;
provided, however, the first payment of interest on any
Note originally issued between a Regular Record Date and
an Interest Payment Date will occur on the Interest
Payment Date following the next succeeding Regular Record
Date.
Unless otherwise provided in the applicable Pricing
Supplement, interest payments on Fixed Rate Notes will
be made semiannually in arrears on June 1 and December 1
of each year and on the Maturity Date, while interest
payments on Floating Rate Notes will be made as
specified in the applicable Pricing Supplement.
Exhibit C, Page 6
<PAGE> 41
Acceptance and
Rejection of Offers
from Solicitation
as Agents: If agreed upon by any Agent and the Company, then such
Agent acting solely as agent for the Company and not as
principal will solicit purchases of the Notes. Each
Agent will communicate to the Company, orally or in
writing, each reasonable offer to purchase Notes
solicited by such Agent on an agency basis, other than
those offers rejected by such Agent. Each Agent has the
right, in its discretion reasonably exercised, to reject
any proposed purchase of Notes, as a whole or in part,
and any such rejection shall not be a breach of such
Agent's agreement contained in the Distribution
Agreement. The Company has the sole right to accept or
reject any proposed purchase of Notes, in whole or in
part, and any such rejection shall not a breach of the
Company's agreement contained in the Distribution
Agreement. Each Agent has agreed to make reasonable
efforts to assist the Company in obtaining performance by
each purchaser whose offer to purchase Notes has been
solicited by such Agent and accepted by the Company.
Preparation of
Pricing Supplement: If any offer to purchase a Note is accepted by the
Company, the Company will promptly prepare a Pricing
Supplement reflecting the terms of such Note. Information
to be included in the Pricing Supplement shall include:
1. the name of the Company;
2. the title of the Notes;
3. the date of the Pricing Supplement and the date of the
Prospectus to which the Pricing Supplement relates;
4. the name of the Offering Agent (as defined below);
5. whether such Notes are being sold to the Offering
Agent as principal or to an investor or other
purchaser through the Offering Agent acting as agent
for the Company;
6. with respect to Notes sold to the Offering Agent as
principal, whether such Notes will be resold by the
Offering Agent to investors and other purchasers at
(i) a fixed public offering price of a specified
percentage of
Exhibit C, Page 7
<PAGE> 42
their principal amount or (ii) at varying prices
related to prevailing market prices at the time of
resale to be determined by the Offering Agent;
7. with respect to Notes sold to an investor or other
purchaser through the Offering Agent acting as agent
for the Company, whether such Notes will be sold at
(i) 100% of their principal amount or (ii) a
specified percentage of their principal amount;
8. the Offering Agent's discount or commission;
9. Net proceeds to the Company;
10. the Principal Amount, Specified Currency, Original
Issue Date, Stated Maturity Date, Interest Payment
Date(s), Authorized Denomination, Initial Redemption
Date, if any, Initial Redemption Percentage, if any,
Annual Redemption Percentage Reduction, if any,
Optional Repayment Date(s), if any, Exchange Rate
Agent, if any, Default Rate, if any, and, in the case
of Fixed Rate Notes, the Interest Rate, and whether
such Fixed Rate Note is an Original Issue Discount
Note (and, if so, the Issue Price), and, in the case
of Floating Rate Notes, the Interest Category, the
Interest Rate Basis or Bases, the Day Count
Convention, Index Maturity (if applicable), Initial
Interest Rate, if any, Maximum Interest Rate, if any,
Minimum Interest Rate, if any, Initial Interest Reset
Date, Interest Reset Dates, Spread and/or Spread
Multiplier, if any, and Calculation Agent; and
11. any other additional provisions of the Notes material
to investors or other purchasers of the Notes not
otherwise specified in the Prospectus.
The Company shall use its reasonable best efforts to send
such Pricing Supplement by telecopy or overnight express
(for delivery by the close of business on the applicable
trade date, but in no event later than 11:00 a.m. New
York City time, on the Business Day following the
applicable trade date) to the Agent which made or
presented the offer to purchase the applicable Note (in
such capacity, the "Offering Agent") and the Trustee at
the following applicable address: if to Merrill Lynch &
Co., to:
Exhibit C, Page 8
<PAGE> 43
Tritech Services, 44B Colonial Drive, Piscataway, New
Jersey 08854, Attention: Prospectus Operations/ Nachman
Kimerling, (732) 885-2768, telecopier: (732)
885-2774/5/6; if to First Chicago Capital Markets, Inc.,
Attention: John Roche, (312) 732-7885, telecopier:
(312) 732-3008]; NationsBanc Montgomery Securities LLC,
100 North Tryon Street, NC 1007-07-01, Charlotte, North
Carolina, 28255, Attention: Lynn T. McConnell, (704)
386-6616, telecopier: (704) 388-9939; and if to the
Trustee, to: The First National Bank of Chicago,
Attention: Amy Movitz, (312) 407-8857, telecopier: (312)
407-1708. For record keeping purposes, one copy of such
Pricing Supplement shall also be mailed or telecopied to
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, World Financial Center, North Tower,
10th Floor, New York, New York, 10281-1310, Attention:
MTN Product Management, (212) 449-7476, telecopier: (212)
449-2234, with a copy to Mayer, Brown & Platt, 190 South
LaSalle Street, Chicago, Illinois 60603, Attention:
Edward S. Best.
In each instance that a Pricing Supplement is prepared,
the Offering Agent will provide a copy of such Pricing
Supplement to each investor or purchaser of the relevant
Notes or its agent. Pursuant to Rule 434 ("Rule 434") of
the Securities Act of 1933, as amended, the Pricing
Supplement may be delivered separately from the
Prospectus. Outdated Pricing Supplements (other than
those retained for files) will be destroyed.
Settlement: The receipt of immediately available funds by the Company
in payment for a Note and the authentication and delivery
of such Note shall, with respect to such Note, constitute
"settlement". Offers accepted by the Company will be
settled in three Business Days, or at such time as the
purchaser, the applicable Agent and the Company shall
agree, pursuant to the timetable for settlement set forth
in Parts II and III hereof under "Settlement Procedure
Timetable" with respect to Global Notes and Certificated
Notes, respectively (each such date fixed for settlement
is hereinafter referred to as a "Settlement Date"). If
procedures A and B of the applicable Settlement
Procedures with respect to a particular offer are not
completed on or before the time set forth under the
applicable "Settlement Procedures Timetable", such offer
shall not be settled until the Business Day following the
completion of settlement procedures A and B or such later
date as the purchaser and the Company shall agree.
Exhibit C, Page 9
<PAGE> 44
The foregoing settlement procedures may be modified with
respect to any purchase of Notes by an Agent as principal
if so agreed by the Company and such Agent.
Procedure for Changing
Rates or Other
Variable Terms: When a decision has been reached to change the interest
rate or any other variable term on any Notes being sold
by the Company, the Company will promptly advise the
Agents and the Trustee by facsimile transmission and the
Agents will forthwith suspend solicitation of offers to
purchase such Notes. The Agents will telephone the
Company with recommendations as to the changed interest
rates or other variable terms. At such time as the
Company notifies the Agents and the Trustee of the new
interest rates or other variable terms, the Agents may
resume solicitation of offers to purchase such Notes.
Until such time, only "indications of interest" may be
recorded. Immediately after acceptance by the Company of
an offer to purchase Notes at a new interest rate or new
variable term, the Company, the Offering Agent and the
Trustee shall follow the procedures set forth under the
applicable "Settlement Procedures".
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to suspend
solicitation of offers to purchase Notes at any time.
Upon receipt of such instructions, the Agents will
forthwith suspend solicitation of offers to purchase from
the Company until such time as the Company has advised
the Agents that solicitation of offers to purchase may be
resumed. If the Company decides to amend or supplement
the Registration Statement or the Prospectus (other than
to establish or change interest rates or formulas,
maturities, prices or other similar variable terms with
respect to the Notes), it will promptly advise the Agents
and will furnish the Agents and their counsel with copies
of the proposed amendment or supplement. Copies of such
amendment or supplement will be delivered or mailed to
the Agents, their counsel and the Trustee in quantities
which such parties may reasonably request at the
following respective addresses: Merrill Lynch & Co.,
World Financial Center, North Tower, 10th Floor, New
York, New York 10281-1310, Attention: MTN Product
Management, (212) 449-7476, telecopier: (212) 449-2234;
First Chicago Capital
Exhibit C, Page 10
<PAGE> 45
Markets, Inc., Address, Attention: Corporate Securities
Structuring, (312) 732-8270, telecopier: (312) 732-4172;
NationsBanc Montgomery Securities LLC, 100 North Tryon
Street, NC 1007-07-01, Charlotte, North Carolina, 28255,
Attention: Lynn T. McConnell, (704) 386-6616, telecopier:
(704) 388-9939; and if to the Trustee, to: The First
National Bank of Chicago, Attention: Amy Movitz, (312)
407-8857, telecopier: (312) 407-1708. For record keeping
purposes, one copy of each such amendment or supplement
shall also be mailed or telecopied to Mayer, Brown &
Platt, 190 South LaSalle Street, Chicago, Illinois 60603,
Attention: Edward S. Best, Esq., (312) 701-7100,
telecopier: (312) 701-7711.
In the event that at the time the solicitation of offers
to purchase from the Company is suspended (other than to
establish or change interest rates or formulas,
maturities, prices or other similar variable terms with
respect to the Notes) there shall be any offers to
purchase Notes that have been accepted by the Company
which have not been settled, the Company will promptly
advise the Offering Agent and the Trustee whether such
offers may be settled and whether copies of the
Prospectus as theretofore amended and/or supplemented as
in effect at the time of the suspension may be delivered
in connection with the settlement of such offers. The
Company will have the sole responsibility for such
decision and for any arrangements which may be made in
the event that the Company determines that such offers
may not be settled or that copies of such Prospectus may
not be so delivered.
Delivery of Prospectus
and applicable
Pricing Supplement: A copy of the most recent Prospectus and the applicable
Pricing Supplement, which pursuant to Rule 434 may be
delivered separately from the Prospectus, must accompany
or precede the earlier of (a) the written confirmation of
a sale sent to an investor or other purchaser or its
agent and (b) the delivery of Notes to an investor or
other purchaser or its agent.
Exhibit C, Page 11
<PAGE> 46
Authenticity of
Signatures: The Agents will have no obligation or liability to the
Company or the Trustee in respect of the authenticity of
the signature of any officer, employee or agent of the
Company or the Trustee on any Note.
Documents Incorporated
by Reference: The Company shall supply the Agents with an adequate
supply of all documents incorporated by reference in the
Registration Statement and the Prospectus.
PART II: PROCEDURES FOR NOTES ISSUED
IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in book-entry form for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Company and the Trustee to DTC, dated December 7, 1998, and a
Certificate Agreement, dated May 26, 1989, between the Trustee and DTC, as
amended (the "Certificate Agreement"), and its obligations as a participant in
DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes issued in book-entry form having the
same Original Issue Date, Specified Currency, Interest
Rate, Default Rate, Interest Payment Dates, redemption
and/or repayment terms, if any, and Stated Maturity Date
(collectively, the "Fixed Rate Terms") will be
represented initially by a single Global Note; and all
Floating Rate Notes issued in book-entry form having the
same Original Issue Date, Specified Currency, Interest
Category, formula for the calculation of interest
(including the Interest Rate Basis or Bases, which may be
the CD Rate, the CMT Rate, the Commercial Paper Rate, the
Eleventh District Cost of Funds Rate, the Federal Funds
Rate, LIBOR, the Prime Rate or the Treasury Rate or any
other interest rate basis or formula, and Spread and/or
Spread Multiplier, if any), Day Count Convention, Initial
Interest Rate, Default Rate, Index Maturity (if
applicable), Minimum Interest Rate, if any, Maximum
Interest Rate, if any, redemption and/or repayment terms,
if any, Interest Payment Dates, Initial Interest Reset
Date, Interest Reset Dates and Stated Maturity Date
(collectively, the "Floating Rate Terms") will be
represented initially by a single Global Note.
Exhibit C, Page 12
<PAGE> 47
For other variable terms with respect to the Fixed Rate
Notes and Floating Rate Notes, see the Prospectus and the
applicable Pricing Supplement.
Owners of beneficial interests in Global Notes will be
entitled to physical delivery of Certificated Notes equal
in principal amount to their respective beneficial
interests only upon certain limited circumstances
described in the Prospectus.
Identification: The Company has arranged with the CUSIP Service Bureau of
Standard & Poor's Corporation (the "CUSIP Service
Bureau") for the reservation of one series of CUSIP
numbers, which series consists of approximately 900 CUSIP
numbers which have been reserved for and relating to
Global Notes and the Company has delivered to each of the
Trustee and DTC such list of such CUSIP numbers. The
Company will assign CUSIP numbers to Global Notes as
described below under Settlement Procedure B. DTC will
notify the CUSIP Service Bureau periodically of the CUSIP
numbers that the Company has assigned to Global Notes.
The Trustee will notify the Company at any time when
fewer than 100 of the reserved CUSIP numbers remain
unassigned to Global Notes, and, if it deems necessary,
the Company will reserve and obtain additional CUSIP
numbers for assignment to Global Notes. Upon obtaining
such additional CUSIP numbers, the Company will deliver a
list of such additional numbers to the Trustee and DTC.
Notes issued in book-entry form in excess of $200,000,000
(or the equivalent thereof in one or more foreign or
composite currencies) aggregate principal amount and
otherwise required to be represented by the same Global
Note will instead be represented by two or more Global
Notes which shall all be assigned the same CUSIP number.
Registration: Unless otherwise specified by DTC, each Global Note will
be registered in the name of Cede & Co., as nominee for
DTC, on the register maintained by the Trustee under the
Indenture. The beneficial owner of a Note issued in
book-entry form (i.e., an owner of a beneficial interest
in a Global Note) (or one or more indirect participants
in DTC designated by such owner) will designate one or
more participants in DTC (with respect to such Note
issued in book-entry form, the "Participants") to act as
agent for such beneficial owner in connection with the
book-entry system maintained by DTC, and DTC will record
in book-entry form, in accordance with instructions
provided by such Participants, a credit balance with
respect to such Note issued in
Exhibit C, Page 13
<PAGE> 48
book-entry form in the account of such Participants. The
ownership interest of such beneficial owner in such Note
issued in book-entry form will be recorded through the
records of such Participants or through the separate
records of such Participants and one or more indirect
participants in DTC.
Transfers: Transfers of beneficial ownership interests in a Global
Note will be accomplished by book entries made by DTC
and, in turn, by Participants (and in certain cases, one
or more indirect participants in DTC) acting on behalf of
beneficial transferors and transferees of such Global
Note.
Exchanges: The Trustee may deliver to DTC and the CUSIP Service
Bureau at any time a written notice specifying (a) the
CUSIP numbers of two or more Global Notes outstanding on
such date that represent Global Notes having the same
Fixed Rate Terms or Floating Rate Terms, as the case may
be (other than Original Issue Dates), and for which
interest has been paid to the same date; (b) a date,
occurring at least 30 days after such written notice is
delivered and at least 30 days before the next Interest
Payment Date for the related Notes issued in book-entry
form, on which such Global Notes shall be exchanged for a
single replacement Global Note; and (c) a new CUSIP
number, obtained from the Company, to be assigned to such
replacement Global Note. Upon receipt of such a notice,
DTC will send to its Participants (including the Trustee)
a written reorganization notice to the effect that such
exchange will occur on such date. Prior to the specified
exchange date, the Trustee will deliver to the CUSIP
Service Bureau written notice setting forth such exchange
date and the new CUSIP number and stating that, as of
such exchange date, the CUSIP numbers of the Global Notes
to be exchanged will no longer be valid. On the
specified exchange date, the Trustee will exchange such
Global Notes for a single Global Note bearing the new
CUSIP number and the CUSIP numbers of the exchanged Notes
will, in accordance with CUSIP Service Bureau procedures,
be canceled and not immediately reassigned.
Notwithstanding the foregoing, if the Global Notes to be
exchanged exceed $200,000,000 (or the equivalent thereof
in one or more foreign or composite currencies) in
aggregate principal amount, one replacement Note will be
authenticated and issued to represent each $200,000,000
(or the equivalent thereof in one or more foreign or
composite currencies) in aggregate principal amount of
the exchanged Global Notes and an additional Global Note
or Notes will be
Exhibit C, Page 14
<PAGE> 49
authenticated and issued to represent any remaining
principal amount of such Global Notes (See
"Denominations" below).
Denominations: Unless otherwise provided in the applicable Pricing
Supplement, Notes issued in book-entry form will be
issued in denominations of $1,000 and integral multiples
thereof. Global Notes will not be denominated in excess
of $200,000,000 (or the equivalent thereof in one or more
foreign or composite currencies) aggregate principal
amount. If one or more Notes are issued in book-entry
form in excess of $200,000,000 (or the equivalent thereof
in one or more foreign or composite currencies) aggregate
principal amount and would, but for the preceding
sentence, be represented by a single Global Note, then
one Global Note will be issued to represent each
$200,000,000 (or the equivalent thereof in one or more
foreign or composite currencies) in aggregate principal
amount of such Notes issued in book-entry form and an
additional Global Note or Notes will be issued to
represent any remaining aggregate principal amount of
such Note or Notes issued in book-entry form. In such a
case, each of the Global Notes representing Notes issued
in book-entry form shall be assigned the same CUSIP
number.
Payments of Principal
and Interest: Payments of Interest Only. Promptly after each Regular
Record Date, the Trustee will deliver to the Company and
DTC a written notice specifying by CUSIP number the
amount of interest to be paid on each Global Note on the
following Interest Payment Date (other than an Interest
Payment Date coinciding with the Maturity Date) and the
total of such amounts. DTC will confirm the amount
payable on each Global Note on such Interest Payment Date
by reference to the daily bond reports published by
Standard & Poor's Corporation. On such Interest Payment
Date, the Company will pay to the Trustee in immediately
available funds an amount sufficient to pay the interest
then due and owing on the Global Notes, and upon receipt
of such funds from the Company, the Trustee in turn will
pay to DTC such total amount of interest due on such
Global Notes (other than on the Maturity Date) which is
payable in U.S. dollars, at the times and in the manner
set forth below under "Manner of Payment". The Trustee
shall make payment of that amount of interest due and
owing on any Global Notes that Participants have elected
to receive in foreign or composite currencies directly to
such Participants.
Exhibit C, Page 15
<PAGE> 50
Notice of Interest Rates. Promptly after each Interest
Determination Date or Calculation Date, as the case may
be, for Floating Rate Notes issued in book-entry form,
the Trustee will notify each of Moody's Investors
Service, Inc. and Standard & Poor's Corporation of the
interest rates determined as of such Interest
Determination Date.
Payments at Maturity. On or about the first Business Day
of each month, the Trustee will deliver to the Company
and DTC a written list of principal, premium, if any, and
interest to be paid on each Global Note maturing or
otherwise becoming due in the following month. The
Trustee, the Company and DTC will confirm the amounts of
such principal, premium, if any, and interest payments
with respect to each such Global Note on or about the
fifth Business Day preceding the Maturity Date of such
Global Note. On the Maturity Date, the Company will pay
to the Trustee in immediately available funds an amount
sufficient to make the required payments, and upon
receipt of such funds the Trustee in turn will pay to DTC
the principal amount of Global Notes, together with
premium, if any, and interest due on the Maturity Date,
which are payable in U.S. dollars, at the times and in
the manner set forth below under "Manner of Payment".
The Trustee shall make payment of the principal, premium,
if any, and interest to be paid on the Maturity Date of
each Global Note that Participants have elected to
receive in foreign or composite currencies directly to
such Participants. Promptly after (i) payment to DTC of
the principal, premium, if any, and interest due on the
Maturity Date of such Global Note which are payable in
U.S. dollars and (ii) payment of the principal, premium,
if any, and interest due on the Maturity Date of such
Global Note to those Participants who have elected to
receive such payments in foreign or composite currencies,
the Trustee will cancel such Global Note and deliver it
to the Company with an appropriate debit advice. On the
first Business Day of each month, the Trustee will
deliver to the Company a written statement indicating the
total principal amount of outstanding Global Notes as of
the close of business on the immediately preceding
Business Day.
Manner of Payment. The total amount of any principal,
premium, if any, and interest due on Global Notes on any
Interest Payment Date or the Maturity Date, as the case
may be, which is payable in U.S. dollars shall be paid by
the Company to the
Exhibit C, Page 16
<PAGE> 51
Trustee in funds available for use by the Trustee no
later than 10:00 a.m., New York City time, on such date.
The Company will make such payment on such Global Notes
to an account specified by the Trustee. Upon receipt of
such funds, the Trustee will pay by separate wire
transfer (using Fedwire message entry instructions in a
form previously specified by DTC) to an account at the
Federal Reserve Bank of New York previously specified by
DTC, in funds available for immediate use by DTC, each
payment in U.S. dollars of principal, premium, if any,
and interest due on Global Notes on such date.
Thereafter on such date, DTC will pay, in accordance with
its SDFS operating procedures then in effect, such
amounts in funds available for immediate use to the
respective Participants in whose names the beneficial
interests in such Global Notes are recorded in the
book-entry system maintained by DTC. Neither the Company
nor the Trustee shall have any responsibility or
liability for the payment in U.S. dollars by DTC of the
principal of, or premium, if any, or interest on, the
Global Notes. The Trustee shall make all payments of
principal, premium, if any, and interest on each Global
Note that Participants have elected to receive in foreign
or composite currencies directly to such Participants.
Withholding Taxes. The amount of any taxes required
under applicable law to be withheld from any interest
payment on a Global Note will be determined and withheld
by the Participant, indirect participant in DTC or other
Person responsible for forwarding payments and materials
directly to the beneficial owner of such Global Note.
Settlement
Procedures: Settlement Procedures with regard to each Note in
book-entry form sold by an Agent, as agent of the
Company, or purchased by an Agent, as principal, will be
as follows:
A. The Offering Agent will advise the Company by
telephone, confirmed by facsimile, of the following
settlement information:
1. Principal amount, Authorized Denomination, and
Specified Currency.
2. Exchange Rate Agent, if any.
3. (a) Fixed Rate Notes:
Exhibit C, Page 17
<PAGE> 52
(i) Interest Rate.
(ii) Interest Payment Dates.
(iii) Whether such Note is being issued with
Original Issue Discount and, if so, the
terms thereof.
(b) Floating Rate Notes:
(i) Interest Category.
(ii) Interest Rate Basis or Bases.
(iii) Initial Interest Rate.
(iv) Spread and/or Spread Multiplier, if any.
(v) Initial Interest Reset Date or Interest
Reset Dates.
(vi) Interest Payment Dates.
(vii) Index Maturity, if any.
(viii) Maximum and/or Minimum Interest Rates, if
any.
(ix) Day Count Convention.
(x) Calculation Agent.
4. Price to public, if any, of such Note (or whether such
Note is being offered at varying prices relating to
prevailing market prices at time of resale as determined
by the Offering Agent).
5. Trade Date.
6. Settlement Date (Original Issue Date).
7. Stated Maturity Date.
Exhibit C, Page 18
<PAGE> 53
8. Redemption provisions, if any.
9. Repayment provisions, if any.
10. Default Rate, if any.
11. Net proceeds to the Company.
12. The Offering Agent's discount or commission.
13. Whether such Note is being sold to the Offering Agent as
principal or to an investor or other purchaser through the
Offering Agent acting as agent for the Company.
14. Such other information specified with respect to such Note
(whether by Addendum or otherwise).
B. The Company will assign a CUSIP number to the Global Note
representing such Note and then advise the Trustee by facsimile
transmission or other electronic transmission of the above
settlement information received from the Offering Agent, such
CUSIP number and the name of the Offering Agent. The Company
will also advise the Offering Agent of the CUSIP number
assigned to the Global Note.
C. The Trustee will communicate to DTC and the Offering Agent
through DTC's Participant Terminal System a pending deposit
message specifying the following settlement information:
1. The information set forth in the Settlement Procedure A.
2. Identification numbers of the participant accounts
maintained by DTC on behalf of the Trustee and the
Offering Agent.
3. Identification of the Global Note as a Fixed Rate Global
Note or Floating Rate Global Note.
4. Initial Interest Payment Date for such Note, number of
days by which such date succeeds the
Exhibit C, Page 19
<PAGE> 54
related record date for DTC purposes (or, in the case of
Floating Rate Notes which reset daily or weekly, the date
five calendar days preceding the Interest Payment Date)
and, if then calculable, the amount of interest payable on
such Interest Payment Date (which amount shall have been
confirmed by the Trustee).
5. CUSIP number of the Global Note representing such Note.
6. Whether such Global Note represents any other Notes issued
or to be issued in book-entry form.
DTC will arrange for each pending deposit message described
above to be transmitted to Standard & Poor's Corporation, which
will use the information in the message to include certain
terms of the related Global Note in the appropriate daily bond
report published by Standard & Poor's Corporation.
D. The Trustee will complete and authenticate the Global Note
representing such Note.
E. DTC will credit such Note to the participant account of the
Trustee maintained by DTC.
F. The Trustee will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC (i) to debit such
Note to the Trustee's participant account and credit such Note
to the participant account of the Offering Agent maintained by
DTC and (ii) to debit the settlement account of the Offering
Agent and credit the settlement account of the Trustee
maintained by DTC, in an amount equal to the price of such Note
less such Offering Agent's discount or underwriting commission,
as applicable. Any entry of such a deliver order shall be
deemed to constitute a representation and warranty by the
Trustee to DTC that (i) the Global Note representing such Note
has been issued and authenticated and (ii) the Trustee is
holding such Global Note pursuant to the Certificate Agreement.
G. In the case of Notes in book-entry form sold through
Exhibit C, Page 20
<PAGE> 55
the Offering Agent, as agent, the Offering Agent will
enter an SDFS deliver order through DTC's Participant
Terminal System instructing DTC (i) to debit such
Note to the Offering Agent's participant account and
credit such Note to the participant account of the
Participants maintained by DTC and (ii) to debit the
settlement accounts of such Participants and credit
the settlement account of the Offering Agent
maintained by DTC in an amount equal to the initial
public offering price of such Note.
H. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures F and G
will be settled in accordance with SDFS operating
procedures in effect on the Settlement Date.
I. Upon receipt, the Trustee will pay the Company, by
wire transfer of immediately available funds to an
account specified by the Company to the Trustee from
time to time, the amount transferred to the Trustee
in accordance with Settlement Procedure F.
J. The Trustee will send a copy of the Global Note by
first class mail to the Company together with a
statement setting forth the principal amount of Notes
Outstanding as of the related Settlement Date after
giving effect to such transaction and all other
offers to purchase Notes of which the Company has
advised the Trustee but which have not yet been
settled.
K. If such Note was sold through the Offering Agent, as
agent, the Offering Agent will confirm the purchase
of such Note to the investor or other purchaser
either by transmitting to the Participant with
respect to such Note a confirmation order through
DTC's Participant Terminal System or by mailing a
written confirmation to such investor or other
purchaser.
Settlement Procedures
Timetable: For offers to purchase Notes accepted by the Company,
Settlement Procedures A through K set forth above shall
be completed as soon as possible following the trade but
not later than the respective times (New York City time)
set forth below:
Exhibit C, Page 21
<PAGE> 56
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the trade date or within one
hour following the trade
B 12:00 noon on the trade date or within one
hour following the trade
C No later than the close of business on the
trade date
D 9:00 a.m. on Settlement Date
E 10:00 a.m. on Settlement Date
F-G No later than 2:00 p.m. on Settlement Date
H 4:00 p.m. on Settlement Date
I-K 5:00 p.m. on Settlement Date
Settlement Procedure H is subject to extension in
accordance with any extension of Fedwire closing
deadlines and in the other events specified in the
SDFS operating procedures in effect on the Settlement
Date.
If settlement of a Note issued in book-entry form is
rescheduled or canceled, the Trustee will deliver to
DTC, through DTC's Participant Terminal System, a
cancellation message to such effect by no later than
5:00 p.m., New York City time, on the Business Day
immediately preceding the scheduled Settlement Date.
Failure to Settle: If the Trustee fails to enter an SDFS deliver order
with respect to a Note issued in book-entry form
pursuant to Settlement Procedure F, the Trustee may
deliver to DTC, through DTC's Participant Terminal
System, as soon as practicable a withdrawal message
instructing DTC to debit such Note to the participant
account of the Trustee maintained at DTC. DTC will
process the withdrawal message, provided that such
participant account contains a principal amount of
the Global Note representing such Note that is at
least equal to the principal amount to be debited.
If withdrawal messages are processed with respect to
all the Notes represented by a Global Note, the
Trustee will mark such Global Note "canceled", make
appropriate entries in its records and send
certification of destruction of such canceled Global
Note to the Company. The CUSIP number assigned to
such Global Note shall, in accordance with CUSIP
Service Bureau procedures, be canceled and not
immediately reassigned. If withdrawal messages are
processed with respect to a portion of
Exhibit C, Page 22
<PAGE> 57
the Notes represented by a Global Note, the Trustee
will exchange such Global Note for two Global Notes,
one of which shall represent the Global Notes for
which withdrawal messages are processed and shall be
canceled immediately after issuance and the other of
which shall represent the other Notes previously
represented by the surrendered Global Note and shall
bear the CUSIP number of the surrendered Global Note.
In the case of any Note in book-entry form sold
through the Offering Agent, as agent, if the purchase
price for any such Note is not timely paid to the
Participants with respect thereto by the beneficial
investor or other purchaser thereof (or a person,
including an indirect participant in DTC, acting on
behalf of such investor or other purchaser), such
Participants and, in turn, the related Offering Agent
may enter SDFS deliver orders through DTC's
Participant Terminal System reversing the orders
entered pursuant to Settlement Procedures F and G,
respectively. Thereafter, the Trustee will deliver
the withdrawal message and take the related actions
described in the preceding paragraph. If such
failure shall have occurred for any reason other than
default by the applicable Offering Agent to perform
its obligations hereunder or under the Distribution
Agreement, the Company will reimburse such Offering
Agent on an equitable basis for its reasonable loss
of the use of funds during the period when the funds
were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Note in book-entry form, DTC
may take any actions in accordance with its SDFS
operating procedures then in effect. In the event of
a failure to settle with respect to a Note that was
to have been represented by a Global Note also
representing other Notes, the Trustee will provide,
in accordance with Settlement Procedure D, for the
authentication and issuance of a Global Note
representing such remaining Notes and will make
appropriate entries in its records.
Exhibit C, Page 23
<PAGE> 58
PART III: PROCEDURES FOR CERTIFICATED NOTES
Denominations: Unless otherwise provided in the applicable Pricing
Supplement, the Certificated Notes will be issued in
denominations of $1,000 and integral multiples
thereof.
Payments of Principal,
Premium, if any,
and Interest: Upon presentment and delivery of the Certificated
Note, the Trustee upon receipt of immediately
available funds from the Company will pay the
principal of, premium, if any, and interest on, each
Certificated Note on the Maturity Date in immediately
available funds. All interest payments on a
Certificated Note, other than interest due on the
Maturity Date, will be made by check mailed to the
address of the person entitled thereto as such
address shall appear in the Security Register;
provided, however, that Holders of $10,000,000 or
more in aggregate principal amount of Certificated
Notes (whether having identical or different terms
and provisions) shall be entitled to receive such
interest payments by wire transfer of immediately
available funds if appropriate wire transfer
instructions have been received in writing by the
Trustee not less than 15 calendar days prior to the
applicable Interest Payment Date.
The Trustee will provide monthly to the Company a
list of the principal, premium, if any, and interest
to be paid on Certificated Notes maturing in the next
succeeding month. The Trustee will be responsible
for withholding taxes on interest paid as required by
applicable law.
Certificated Notes presented to the Trustee on the
Maturity Date for payment will be canceled by the
Trustee. All canceled Certificated Notes held by the
Trustee shall be destroyed, and the Trustee shall
furnish to the Company a certificate with respect to
such destruction.
Settlement
Procedures: Settlement Procedures with regard to each
Certificated Note purchased by an Agent, as
principal, or through an Agent, as agent, shall be as
follows:
A. The Offering Agent will advise the Company by
Exhibit C, Page 24
<PAGE> 59
telephone of the following Settlement
information with regard to each Certificated
Note:
1. Exact name in which the Certificated
Note(s) is to be registered (the
"Registered Owner").
2. Exact address or addresses of the
Registered Owner for delivery, notices and
payments of principal, premium, if any, and
interest.
3. Taxpayer identification number of the
Registered Owner.
4. Principal amount, Authorized Denomination
and Specified Currency.
5. Exchange Rate Agent, if any.
6. (a) Fixed Rate Notes:
(i) Interest Rate.
(ii) Interest Payment Dates.
(iii) Whether such Note is being
issued with Original Issue
Discount and, if so, the terms
thereof.
(b) Floating Rate Notes:
(i) Interest Category.
(ii) Interest Rate Basis or Bases.
(iii) Initial Interest Rate.
(iv) Spread and/or Spread
Multiplier, if any.
(v) Initial Interest Reset Date
and Interest Reset Dates.
(vi) Interest Payment Dates.
Exhibit C, Page 25
<PAGE> 60
(vii) Index Maturity, if any.
(viii) Maximum and/or Minimum
Interest Rates, if any.
(ix) Day Count Convention.
(x) Calculation Agent.
7. Price to public of such Certificated Note
(or whether such Note is being offered at
varying prices relating to prevailing
market prices at time of resale as
determined by the Offering Agent).
8. Trade Date.
9. Settlement Date (Original Issue Date).
10. Stated Maturity Date.
11. Redemption provisions, if any.
12. Repayment provisions, if any.
13. Default Rate, if any.
14. Net proceeds to the Company.
15. The Offering Agent's discount or
commission.
16. Whether such Note is being sold to the
Offering Agent as principal or to an
investor or other purchaser through the
Offering Agent acting as agent for the
Company.
17. Such other information specified with
respect to such Note (whether by Addendum
or otherwise).
B. After receiving such settlement information from
the Offering Agent, the Company will advise the
Trustee of the above settlement information by
facsimile transmission confirmed by telephone.
The Company will cause the Trustee to issue,
authenticate and deliver the
Exhibit C, Page 26
<PAGE> 61
Certificated Note.
C. The Trustee will complete the Certificated Note
in the form approved by the Company and the
Offering Agent, and will make three copies
thereof (herein called "Stub 1", "Stub 2" and
"Stub 3"):
1. Certificated Note with the Offering
Agent's confirmation, if traded on a
principal basis, or the Offering Agent's
customer confirmation, if traded on an
agency basis.
2. Stub 1 for Trustee.
3. Stub 2 for Offering Agent.
4. Stub 3 for the Company.
D. With respect to each trade, the Trustee will
deliver the Certificated Note and Stub 2 thereof
to the Offering Agent at the following
applicable address: Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Merrill Lynch Money
Markets Clearance, 55 Water Street,
Concourse Level, N.S.C.C. Window, New York, New
York 10041, Attention: Al Mitchell, (212)
558-2405, telecopier: (212) 558-2457; First
Chicago Capital Markets Inc., Attention: John
Roche, (312) 732-7885, telecopier: (312)
732-3008 and NationsBanc Montgomery Securities
LLC, 100 N. Tryon Street, NC 1007-07-01,
Charlotte, North Carolina, 28255, Attention:
Lynn T. McConnell, (704) 386-6616, telecopier:
(704) 388-9939 and The Trustee will keep Stub
1. The Offering Agent will acknowledge receipt
of the Certificated Note through a broker's
receipt and will keep Stub 2. Delivery of the
Certificated Note will be made only against
such acknowledgment of receipt. Upon
determination that the Certificated Note has
been authorized, delivered and completed as
aforementioned, the Offering Agent will wire
the net proceeds of the Certificated Note after
deduction of its applicable commission to the
Company pursuant to standard wire instructions
given by the Company.
E. In the case of a Certificated Note sold through
the Offering Agent, as agent, the Offering Agent
will deliver
Exhibit C, Page 27
<PAGE> 62
such Certificated Note (with the confirmation)
to the purchaser against payment in immediately
available funds.
F. The Trustee will send Stub 3 to the Company.
Settlement
Procedures
Timetable: For offers to purchase Certificated Notes accepted by
the Company, Settlement Procedures A through F set
forth above shall be completed as soon as possible
following the trade but not later than the respective
times (New York City time) set forth below:
SETTLEMENT
PROCEDURE TIME
--------- ----
A 11:00 a.m. on the trade date or
within one hour following the trade
B 12:00 noon on the trade date or
within one hour following the trade
C-D 2:15 p.m. on Settlement Date
E 3:00 p.m. on Settlement Date
F 5:00 p.m. on Settlement Date
Failure to Settle: In the case of Certificated Notes sold through the
Offering Agent, as agent, if an investor or other
purchaser of a Certificated Note from the Company
shall either fail to accept delivery of or make
payment for such Certificated Note on the date fixed
for settlement, the Offering Agent will forthwith
notify the Trustee and the Company by telephone,
confirmed in writing, and return such Certificated
Note to the Trustee.
The Trustee, upon receipt of such Certificated Note
from the Offering Agent, will immediately advise the
Company and the Company will promptly arrange to
credit the account of the Offering Agent in an amount
of immediately available funds equal to the amount
previously paid to the Company by such Offering Agent
in settlement for such Certificated Note. Such
credits will be made on the Settlement Date if
possible, and in any event not later than the
Business Day following the Settlement Date; provided
that the Company has received notice on the same day.
If such failure shall have occurred for any reason
other
Exhibit C, Page 28
<PAGE> 63
than failure by such Offering Agent to perform its
obligations hereunder or under the Distribution
Agreement, the Company will reimburse such Offering
Agent on an equitable basis for its reasonable loss
of the use of funds during the period when the funds
were credited to the account of the Company.
Immediately upon receipt of the Certificated Note in
respect of which the failure occurred, the Trustee
will cancel and destroy such Certificated Note, make
appropriate entries in its records to reflect the
fact that such Certificated Note was never issued,
and accordingly notify in writing the Company.
Exhibit C, Page 29
<PAGE> 1
================================================================================
SUNDSTRAND CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO
AS TRUSTEE
-----------------
INDENTURE
DATED AS OF DECEMBER 1, 1998
-----------------
================================================================================
<PAGE> 2
SUNDSTRAND CORPORATION
CROSS REFERENCE SHEET*/
[This Cross Reference Sheet shows the location in the Indenture of the
provisions inserted pursuant to Sections 310-318(a), inclusive, of the Trust
Indenture Act of 1939, as amended.]
<TABLE>
<CAPTION>
SECTIONS OF
TRUST INDENTURE ACT THE INDENTURE
- ------------------- -------------
<S> <C>
310(a)(1)(2)................................................................ 7.09
(3)................................................................ 7.14
(4)................................................................ Inapplicable
310(b) ................................................................ 7.08 and 7.10
310(c) ................................................................ Inapplicable
311(a) 7.13(a) and (c)(1) and (2)
(b) ................................................................ 7.13(b)
(c) ................................................................ Inapplicable 312(a), 5.01 and 5.02(a)
(b) ................................................................ 5.02(a) and (b)
(c) ................................................................ 5.02(c)
313(a) ................................................................ 5.04
(b)(1) ................................................................ Inapplicable
(2) ................................................................ 5.04
(c)(d) ................................................................ 5.04
314(a) ................................................................ 5.03
(b) ................................................................ Inapplicable
(c)(1)(2)................................................................ 14.05
(3) ................................................................ Inapplicable
(d) ................................................................ Inapplicable
(e) ................................................................ 14.05
(f) ................................................................ Inapplicable
315(a)(c)(d)................................................................ 7.01
(b) ................................................................ 6.07
(e) ................................................................ 6.08
316(a)(1) ................................................................ 6.06
(2) ................................................................ Inapplicable
(last sentence).................................................... 8.04
(b) ................................................................ 6.04
(c) ................................................................ 8.06
317(a) ................................................................ 6.02
- --------
*/ The Cross Reference Sheet is not part of the Indenture.
(b) ................................................................. 4.04
318(a) ................................................................. 14.07
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES.......................................................................................................... 1
RECITALS:
Purpose of Indenture.................................................................................... 1
Form of Security........................................................................................ 1
Form of Trustee's Certificate of Authentication......................................................... 1
Compliance with legal requirements...................................................................... 1
Purpose of and consideration for Indenture.............................................................. 1
<CAPTION>
ARTICLE ONE
DEFINITIONS.......................................................................................................1
Section 1.01. Certain Terms Defined...........................................................................1
Attributable Debt...............................................................................2
Authorized Newspaper............................................................................2
Board of Directors..............................................................................2
Business Day....................................................................................2
Certified Board Resolution......................................................................2
Company ......................................................................................3
Company Direction...............................................................................3
Consolidated Net Tangible Assets................................................................3
Corporate Trust Office..........................................................................3
Defaulted Interest..............................................................................3
Depositary......................................................................................3
ECU.............................................................................................4
Event of Default................................................................................4
Global Security.................................................................................4
Holder ......................................................................................4
Indenture ......................................................................................4
Interest Payment Date...........................................................................5
Officers' Certificate...........................................................................5
Opinion of Counsel..............................................................................5
Original Issue Discount Security................................................................5
Outstanding.....................................................................................5
Principal Property..............................................................................6
Record Date.....................................................................................6
Responsible Officer.............................................................................6
Restricted Subsidiary...........................................................................6
Sale and Lease-Back Transaction.................................................................7
Security or Securities..........................................................................7
Security Register and Security Registrar........................................................7
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
Sinking Fund....................................................................................7
Stated Maturity.................................................................................7
Subsidiary......................................................................................7
Trust Indenture Act of 1939.....................................................................8
Trustee ......................................................................................8
<CAPTION>
ARTICLE TWO
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION, REGISTRATION OF
TRANSFER AND EXCHANGE OF SECURITIES...............................................................................8
Section 2.01. Amount Unlimited; Establishment of Series.....................................................8
Section 2.02. Form of Securities and Trustee's Certificate of Authentication...............................10
Section 2.03. Denomination, Authentication and Dating of Securities........................................10
Section 2.04. Execution of Securities......................................................................13
Section 2.05. Registration of Transfer and Exchange........................................................13
Section 2.06. Temporary Securities.........................................................................16
Section 2.07. Mutilated, Destroyed, Lost or Stolen Securities..............................................16
Section 2.08. Cancellation of Surrendered Securities.......................................................17
Section 2.09. Provisions of Indenture and Securities for the Sole Benefit of the Parties
and the Holders..............................................................................17
Section 2.10. Computation of Interest......................................................................17
<CAPTION>
ARTICLE THREE
REDEMPTION OF SECURITIES -- SINKING FUND.........................................................................18
Section 3.01. Applicability of Article.....................................................................18
Section 3.02. Notice of Redemption; Selection of Securities................................................18
Section 3.03. When Securities Called for Redemption Become Due and Payable.................................19
Section 3.04. Sinking Fund.................................................................................19
Section 3.05. Use of Acquired Securities to Satisfy Sinking Fund Obligations...............................20
Section 3.06. Effect of Failure to Deliver Officers' Certificate or Securities.............................21
Section 3.07. Manner of Redeeming Securities...............................................................21
Section 3.08. Sinking Fund Moneys to Be Held as Security During Continuance
of Event of Default; Exceptions..............................................................21
<CAPTION>
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY..............................................................................22
Section 4.01. Payments of Principal of (and Premium, if any) and Interest on Securities 22
Section 4.02. Maintenance of Offices or Agencies for Registration of Transfer,
Exchange and Payment of Securities and for Service on the Company...........................22
Section 4.03. Appointment to Fill a Vacancy in the Office of Trustee.......................................23
Section 4.04. Duties of Paying Agents, etc.................................................................23
</TABLE>
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<TABLE>
<S> <C>
Section 4.05. Limitation on Secured Debt...................................................................24
Section 4.06. Limitation on Sale and Lease-Back............................................................27
Section 4.07. Statement by Officers as to Default..........................................................28
Section 4.08. Further Instruments and Acts.................................................................28
<CAPTION>
ARTICLE FIVE
HOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE........................................................28
Section 5.01. Company to Furnish Trustee Information as to Names and
Addresses of Holders.........................................................................28
Section 5.02. Preservation of Information; Communications to Holders.......................................29
Section 5.03. Reports by Company...........................................................................30
Section 5.04. Reports by Trustee...........................................................................31
<CAPTION>
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT..........................................................32
Section 6.01. Events of Default............................................................................32
Section 6.02. Collection of Indebtedness by Trustee, etc...................................................35
Section 6.03. Application of Moneys Collected by Trustee...................................................36
Section 6.04. Limitation on Suits by Holders...............................................................37
Section 6.05. Remedies Cumulative; Delay or Omission in Exercise of Rights
Not a Waiver of Default......................................................................38
Section 6.06. Rights of Holders of Majority in Principal Amount of Securities of
Any Series to Direct Trustee and to Waive Default............................................38
Section 6.07. Trustee to Give Notice of Default Known to It, But May Withhold Such Notice
in Certain Circumstances.....................................................................39
Section 6.08. Requirement of an Undertaking to Pay Costs in Certain Suits Under the
Indenture or Against the Trustee.............................................................39
Section 6.09. Waiver of Stay or Extension Laws.............................................................39
<CAPTION>
ARTICLE SEVEN
CONCERNING THE TRUSTEE...........................................................................................40
Section 7.01. Certain Duties and Responsibilities..........................................................40
Section 7.02. Certain Rights of Trustee....................................................................41
Section 7.03. Trustee Not Liable for Recitals in Indenture or in Securities................................42
Section 7.04. Trustee, Paying Agent or Security Registrar May Own Securities...............................42
Section 7.05. Moneys Received by Trustee to Be Held in Trust...............................................42
Section 7.06. Compensation and Reimbursement...............................................................43
Section 7.07. Right of Trustee to Rely on an Officers' Certificate Where No Other Evidence
Specifically Prescribed......................................................................43
Section 7.08. Disqualification of Trustee; Conflicting Interests...........................................44
Section 7.09. Requirements for Eligibility of Trustee......................................................44
</TABLE>
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<TABLE>
<S> <C>
Section 7.10. Resignation and Removal of Trustee...........................................................44
Section 7.11. Acceptance by Successor to Trustee...........................................................45
Section 7.12. Successor to Trustee by Merger, Consolidation or Succession
to Business..................................................................................46
Section 7.13. Preferential Collection of Claims Against Company............................................47
Section 7.14. Appointment of Additional and Separate Trustees..............................................51
<CAPTION>
ARTICLE EIGHT
CONCERNING THE HOLDERS...........................................................................................53
Section 8.01. Evidence of Action by Holders................................................................53
Section 8.02. Proof of Execution of Instruments and of Holding of Securities...............................53
Section 8.03. Who May Be Deemed Owner of Securities........................................................54
Section 8.04. Securities Owned by Company or Controlled or
Controlling Companies Disregarded for Certain Purposes.......................................54
Section 8.05. Instruments Executed by Holders Bind Future Holders..........................................55
Section 8.06. Record Date for Determination of Holders Entitled to Vote....................................55
<CAPTION>
ARTICLE NINE
HOLDERS' MEETINGS AND CONSENTS...................................................................................55
Section 9.01. Purposes for Which Meeting May Be Called.....................................................55
Section 9.02. Manner of Calling Meetings...................................................................56
Section 9.03. Call of Meetings by Company or Holders.......................................................56
Section 9.04. Who May Attend and Vote at Meetings..........................................................56
Section 9.05. Regulations May Be Made by Trustee...........................................................57
Section 9.06. Manner of Voting at Meetings and Record to Be Kept...........................................57
Section 9.07. Written Consent in Lieu of Meetings..........................................................58
Section 9.08. No Delay of Rights by Meeting................................................................58
<CAPTION>
ARTICLE TEN
SUPPLEMENTAL INDENTURES..........................................................................................58
Section 10.01. Purposes for Which Supplemental Indentures May be Entered into Without
Consent of Holders...........................................................................58
Section 10.02. Modification of Indenture with Consent of Holders............................................60
Section 10.03. Effect of Supplemental Indentures............................................................61
Section 10.04. Securities May Bear Notation of Changes by Supplemental
Indentures...................................................................................61
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE ELEVEN
<S> <C>
CONSOLIDATION, MERGER, SALE, CONVEYANCE OR LEASE.................................................................62
Section 11.01. Company May Consolidate, etc., on Certain Terms..............................................62
Section 11.02. Successor Corporation to be Substituted......................................................62
Section 11.03. Opinion of Counsel and Officers' Certificate to Be Given Trustee.............................63
<CAPTION>
ARTICLE TWELVE
DISCHARGE OF INDENTURE AND DEFEASANCE............................................................................63
Section 12.01. Termination of Company's Obligations.........................................................63
Section 12.02. Application of Trust Deposit.................................................................66
Section 12.03. Repayment to Company.........................................................................66
<CAPTION>
ARTICLE THIRTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS, DIRECTORS AND EMPLOYEES................................................................................67
Section 13.01. Incorporators, Stockholders, Officers, Directors and Employees
of Company Exempt from Individual Liability..................................................67
<CAPTION>
ARTICLE FOURTEEN
MISCELLANEOUS PROVISIONS.........................................................................................67
Section 14.01. Successors and Assigns of Company Bound by Indenture.........................................67
Section 14.02. Acts of Board, Committee or Officer of Successor
Corporation Valid............................................................................67
Section 14.03. Required Notices or Demands..................................................................67
Section 14.04. Indenture and Securities to be Construed in Accordance with the Laws of the
State of New York............................................................................68
Section 14.05. Officers' Certificate and Opinion of Counsel to be Furnished upon Application
or Demand by the Company.....................................................................68
Section 14.06. Payments Due on Holidays.....................................................................69
Section 14.07. Provisions Required by Trust Indenture Act of 1939 to Control................................69
Section 14.08. Indenture May be Executed in Counterparts....................................................69
Section 14.09. Separability Clause..........................................................................69
</TABLE>
v
<PAGE> 8
INDENTURE, dated as of the 1st day of December, 1998, between
SUNDSTRAND CORPORATION, a corporation incorporated under the laws of Delaware
(the "Company"), party of the first part, and THE FIRST NATIONAL BANK OF
CHICAGO, a national banking institution (the "Trustee"), party of the second
part.
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of its unsecured debentures, notes and other
evidences of indebtedness (hereinafter referred to as the "Securities"), to be
issued in one or more series in an unlimited amount as provided in this
Indenture.
WHEREAS, the text of the Securities is to be substantially in the form
attached hereto as Schedule A, with such specific terms, additions or omissions
as may be determined pursuant to an Officers' Certificate or a supplemental
indenture as contemplated in Section 2.01 hereof.
WHEREAS, the Trustee's certificate of authentication for the Securities
is to be substantially in the form attached hereto as Schedule B.
WHEREAS, all acts and things necessary to make this Indenture a valid
agreement of the Company have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In consideration of the premises and of the sum of One Dollar duly paid
by the Trustee to the Company at the execution and delivery of these presents,
the receipt whereof is hereby acknowledged, the Company and the Trustee covenant
and agree with each other, for the equal and proportionate benefit of all
Holders from time to time of the Securities, as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Certain Terms Defined. The terms defined in this Section
1.01 (except as herein otherwise expressly provided or unless the context
otherwise requires) for all purposes of this Indenture and of any indenture
supplemental hereto and of any Officers' Certificate establishing the terms of a
particular series of Securities as herein provided shall have the respective
meanings specified in this Section 1.01. All other terms used in this Indenture
which are defined in the Trust Indenture Act of 1939, or which are by reference
therein defined in the Securities Act of 1933 (except as herein otherwise
expressly provided or unless the context otherwise requires), shall have the
meanings assigned to such terms in the Trust Indenture Act of 1939 and in such
Securities Act as in force as of the date of this Indenture.
<PAGE> 9
Attributable Debt:
The term "Attributable Debt" shall have the meaning specified in
Section 4.06.
Authorized Newspaper:
The term "Authorized Newspaper" shall mean a newspaper printed in the
English language and customarily published at least once a day on each Business
Day in each calendar week and of general circulation in the Borough of
Manhattan, The City and State of New York, whether or not such newspaper is
published on Saturdays, Sundays and legal holidays. Whenever, under the
provisions of this Indenture, two or more publications of a notice or other
communication are required or permitted, such publications may be in the same or
different authorized newspapers. If, because of temporary or permanent
suspension of publication or general circulation of any newspaper or for any
other reason, it is impossible or impracticable to publish any notices required
by this Indenture in the manner herein provided, then such publication in lieu
thereof or such other notice as shall be made with the approval of the Trustee
shall constitute a sufficient publication of such notice.
Board of Directors:
The term "Board of Directors," when used with reference to the Company,
shall mean the Board of Directors of the Company or any executive committee of
such Board to which the powers of such Board have lawfully been delegated.
Business Day:
The term "Business Day" means, except as may otherwise be provided in
the form of Securities of any particular series, with respect to any Place of
Payment, any day, other than a Saturday or Sunday, that is not a legal holiday,
or a day on which banking institutions are authorized or required by law or
regulation to close in The City of New York or the City of Chicago or in that
Place of Payment, or with respect to Securities denominated in a Foreign
Currency, the capital city of the country of such Foreign Currency, or with
respect to Securities denominated in ECU, Brussels, Belgium.
Certified Board Resolution:
The term "Certified Board Resolution" shall mean one or more
resolutions certified by the Secretary or any Assistant Secretary of the Company
to have been duly adopted by the Board of Directors of the Company and to be in
full force and effect on the date of such certification, which are delivered to
the Trustee.
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<PAGE> 10
Company:
The term "Company" shall mean SUNDSTRAND CORPORATION and, subject to
the provisions of Article Eleven, shall mean its successors and assigns from
time to time hereafter.
Company Direction:
The term "Company Direction" shall mean a written direction, order or
instruction, signed in the name of the Company by its Chairman of the Board or
its President or any Vice President and by its Treasurer or its Secretary or any
Assistant Treasurer or any Assistant Secretary and delivered to the Trustee.
Consolidated Net Tangible Assets:
The term "Consolidated Net Tangible Assets" means, as of any particular
time, the total amount of assets (less applicable reserves) after deducting
therefrom (a) all current liabilities (excluding any thereof which are by their
terms extendible or renewable at the option of the obligor thereon to a time
more than 12 months after the time as of which the amount thereof is being
computed and excluding current maturities of long-term indebtedness) and (b) all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense, and other like intangible assets, all as shown in the latest quarterly
consolidated balance sheet of the Company contained in the Company's then most
recent annual report to stockholders or quarterly report filed with the
Securities and Exchange Commission, as the case may be, except that assets shall
include an amount equal to the Attributable Debt in respect of any Sale and
Lease-Back Transaction not capitalized on such balance sheet.
Corporate Trust Office:
The term "Corporate Trust Office," or other similar term, shall mean
the principal office of the Trustee in the City of Chicago, at which at any
particular time its corporate trust business shall be principally administered
or, if no such office is maintained, such other office of the Trustee as shall
be designated. The Corporate Trust Office on the date hereof is located at One
North State Street, Ninth Floor, Chicago, Illinois 60602.
Defaulted Interest:
The term "Defaulted Interest" shall have the meaning specified in
Section 2.03.
Depositary:
The term "Depositary" shall mean, with respect to the Securities of any
series issuable or issued in the form of one or more Global Securities, a
clearing agency registered under the Securities Exchange Act of 1934 and any
other applicable statute or regulation designated as Depositary by the Company
pursuant to Section 2.01 until a successor Depositary shall have become such
pursuant
3
<PAGE> 11
to Section 2.05, and thereafter "Depositary" shall mean or include each person
who is then a Depositary hereunder, and if at any time there is more than one
such person, "Depositary" as used with respect to the Securities of any such
series shall mean the Depositary with respect to the Global Securities of that
series.
ECU:
The term "ECU" means the European Currency Unit as defined and revised
from time to time by the Council of the European Communities.
Event of Default:
The term "Event of Default" shall mean any event specified in Section
6.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
Global Security:
The term "Global Security" means a Security bearing the legend
prescribed in Section 2.03 and issued in definitive form without coupons,
evidencing all or a part of an issuance of Securities of any series, and issued
to the Depositary for such series in accordance with Section 2.03.
Holder:
The term "Holder," with respect to a registered Security, shall mean
any person in whose name such Security shall be registered on the Security
Register and, with respect to an unregistered Security, shall mean the bearer
thereof.
Indenture:
The term "Indenture" shall mean this instrument as originally executed
or, if amended or supplemented as herein provided, as so amended or
supplemented, and shall include the terms of particular series of Securities
established as contemplated hereunder; provided, however, that if at any time
more than one Trustee is serving as such under this instrument, "Indenture"
shall mean, with respect to any one or more series of Securities for which any
such Trustee is serving, this Indenture as originally executed or as amended or
supplemented as herein provided, exclusive, however, of any provisions or terms
which relate solely to one or more series of Securities for which such Trustee
is not serving, regardless of when such terms or provisions were adopted, and
exclusive of any provisions or terms adopted with respect to a particular series
of Securities executed and delivered after such Trustee had become a Trustee
hereunder but with respect to which series such Trustee was not serving as
Trustee.
4
<PAGE> 12
Interest Payment Date:
The term "Interest Payment Date" shall mean the date on which an
installment of interest on any series of Securities shall become due and
payable, as therein or herein provided.
Officers' Certificate:
The term "Officers' Certificate" shall mean a certificate signed by any
two of the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, provided that one of the officers signing the Officers' Certificate
shall be the Chairman of the Board, or the President, or any Vice President
(which Vice President, if executing any Officers' Certificate delivered pursuant
to Section 2.01, shall be the chief financial officer of the Company, or, if no
such Vice President exists, a Vice President having similar responsibility as to
financial matters), which complies with Section 14.05 and is delivered to the
Trustee.
Opinion of Counsel:
The term "Opinion of Counsel" shall mean an opinion in writing signed
by legal counsel, who may be an employee of, or counsel to, the Company. Each
such opinion shall include (except as otherwise provided in this Indenture) the
statements provided for in Section 14.05.
Original Issue Discount Security:
The term "Original Issue Discount Security" shall mean any Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the Stated Maturity thereof
pursuant to Section 6.01.
Outstanding:
The term "outstanding," when used with reference to Securities of any
series, subject to the provisions of Section 8.04, shall mean, as of any
particular time, all Securities of such series authenticated by the Trustee and
delivered under this Indenture, except:
(a) Securities of such series theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;
(b) Securities of such series or portions thereof for the
payment or redemption of which moneys in the necessary amount shall
have been deposited in trust with the Trustee or with any paying agent
(other than the Company) or shall have been set aside and segregated in
trust by the Company (if the Company shall act as its own paying
agent); provided that, if such Securities or portions thereof are to be
redeemed, notice of such redemption shall have been given as in Article
Three provided or provision satisfactory to the Trustee shall have been
made for giving such notice;
5
<PAGE> 13
(c) Securities of such series in lieu of or in substitution
for which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.07; and
(d) Securities of any series the indebtedness in respect to
which has been discharged in accordance with Section 12.01(a).
Principal Property:
The term "Principal Property" shall mean any manufacturing plant or
facility which is located within the United States of America and is owned by
the Company or any Restricted Subsidiary, except any such plant or facility
which the Board of Directors by resolution declares is not of material
importance to the total business conducted by the Company and its Restricted
Subsidiaries as an entirety and which, when taken together with all other plants
and facilities as to which such a declaration has been made, are so declared by
the Board of Directors to be not of material importance to the total business
conducted by the Company and its Restricted Subsidiaries as an entirety.
Record Date:
The term "Record Date," as used with respect to any Interest Payment
Date, shall mean the close of business on the 15th day of the month preceding
the month in which an Interest Payment Date occurs, if such Interest Payment
Date is the 15th day of such month, in each case whether or not a Business Day,
or such other dates with respect to a particular series of Securities, as may be
specified in the instrument establishing such series, so long as such Record
Date is not less than 15 days prior to the applicable Interest Payment Date.
Responsible Officer:
The term "Responsible Officer," when used with respect to the Trustee,
shall mean any officer assigned by the Trustee to administer corporate trust
matters or any other Officer or Assistant Officer of the Trustee to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
Restricted Subsidiary:
The term "Restricted Subsidiary" shall mean any Subsidiary (i)
substantially all the property of which is located within the United States of
America, (ii) which owns a Principal Property, and (iii) in which the Company's
investment, direct or indirect and whether in the form of equity, debt or
advances, as shown on the consolidating balance sheet used in the preparation of
the latest quarterly consolidated financial statements of the Company preceding
the date of determination, is in excess of 2% of the total consolidated assets
of the Company as shown on such quarterly consolidated financial statements;
provided, however, that the term "Restricted Subsidiary" shall not include any
Subsidiary which is principally engaged in leasing
6
<PAGE> 14
or in financing installment receivables or which is principally engaged in
financing the Company's operations outside the continental United States of
America.
SALE AND LEASE-BACK TRANSACTION:
The term "Sale and Lease-Back Transaction" shall have the meaning
specified in Section 4.06.
SECURITY OR SECURITIES:
The terms "Security" or "Securities" shall have the meaning stated in
the recital of this Indenture and shall mean any Security or such Securities, as
the case may be, authenticated and delivered pursuant to this Indenture;
PROVIDED, HOWEVER, that if at any time there is more than one Trustee serving
under this Indenture, "Securities" with respect to this Indenture, as to which
such Trustee is serving, shall have the meaning stated in the recital and shall
more particularly mean Securities authenticated and delivered pursuant to this
Indenture, exclusive of Securities of any series as to which such Trustee is not
serving as Trustee.
SECURITY REGISTER AND SECURITY REGISTRAR:
The terms "Security Register" and "Security Registrar," with respect to
any series of Securities, shall have the respective meanings specified in
Section 2.05.
SINKING FUND:
The term "Sinking Fund" shall mean any fund established by the Company
for redemption of the Securities of any series prior to Stated Maturity.
STATED MATURITY:
The term "Stated Maturity," when used with respect to any Security,
shall mean the date on which the last payment of principal of such Security is
due and payable in accordance with the terms thereof.
SUBSIDIARY:
The term "Subsidiary" shall mean any corporation which is consolidated
in the Company's accounts and any corporation of which at least a majority of
the outstanding stock having by the terms thereof ordinary voting power to elect
a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
the Company, or by one or more Subsidiaries, or by the Company and one or more
Subsidiaries.
7
<PAGE> 15
TRUST INDENTURE ACT OF 1939:
The term "Trust Indenture Act of 1939" (except as herein otherwise
expressly provided in Sections 7.14, 10.01 and 10.02) shall mean the Trust
Indenture Act of 1939.
TRUSTEE:
The term "Trustee" shall mean The First National Bank of Chicago until
a successor Trustee shall have become such pursuant to the applicable provisions
hereof, and thereafter "Trustee" shall mean or include all Trustees hereunder
and, subject to the provisions of Article Seven, shall also include its
successors and assigns and, unless the context otherwise requires, shall also
include any co-trustee or co-trustees or separate trustee or trustees appointed
pursuant to Section 7.14.
ARTICLE TWO
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION, REGISTRATION OF
TRANSFER AND EXCHANGE OF SECURITIES
Section 2.01. AMOUNT UNLIMITED; ESTABLISHMENT OF SERIES. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited. The Securities may be issued in one or more series.
All Securities of any one series shall be substantially identical except as to
denomination and except as the Company in an Officers' Certificate delivered
pursuant to this Section 2.01 or in any supplemental indenture may otherwise
provide. The Securities may bear interest at such lawful rate or rates, from
such date or dates, shall mature at such time or times, may be redeemable at
such price or prices and upon such terms, including, without limitation, out of
proceeds from the sale of other Securities, or other indebtedness of the
Company, and may contain and/or be subject to such other terms and provisions as
shall be determined by the Company in accordance with the authority granted in
one or more resolutions of the Board of Directors reasonably acceptable to the
Trustee and set forth in an Officers' Certificate or a supplemental indenture,
which instrument shall establish with respect to each series of Securities:
(1) the designation of the Securities of such series, which
shall distinguish the Securities of one series from all other
Securities;
(2) the limit upon the aggregate principal amount at Stated
Maturity of the Securities of such series which may be authenticated
and delivered under this Indenture (not including Securities
authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of such series pursuant
to Sections 2.05, 2.06, 2.07, 3.02 or 10.04);
8
<PAGE> 16
(3) the rate at which the Securities of such series shall bear
interest, if any, or the formula by which interest shall accrue, the
dates from which interest shall accrue, and the Interest Payment Dates
on which such interest shall be payable;
(4) the Stated Maturity of the Securities of such series;
(5) the period or periods within which, 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;
(6) the obligation, if any, of the Company to redeem or
purchase Securities of such series pursuant to a sinking, purchase or
analogous fund and the period or periods within which, the price or
prices at which, and the terms and conditions upon which the Securities
of such series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(7) if other than the principal amount at Stated Maturity, the
portion of the principal amount at Stated Maturity of the Securities of
such series which shall be payable upon declaration of acceleration of
the maturity thereof pursuant to Section 6.01;
(8) if other than denominations of $1,000 and any multiple
thereof, the denominations in which Securities of such series shall be
issuable;
(9) any changes in, omissions from or additions to the form of
Security to be used to evidence ownership of Securities of such series;
(10) any terms with respect to conversion of the Securities of
such series, warrants attached thereto or terms pursuant to which
warrants may exist;
(11) the place or places where the principal of (and premium,
if any) and interest on the Securities of such series shall be payable;
(12) any additional office or agencies maintained pursuant to
Section 4.02;
(13) whether the Securities of such series shall be issued as
registered Securities or as unregistered Securities, with or without
coupons; PROVIDED THAT no Securities will be issued as unregistered
Securities if such issuance would violate applicable law;
(14) whether Article Twelve hereof, including, without
limitation, Section 12.01(a) and (b) thereof, is applicable to the
Securities;
(15) whether any Securities are to be Original Issue Discount
Securities;
9
<PAGE> 17
(16) if other than United States dollars, the currency or
currencies, including composite currencies, in which payments of
interest or principal are payable with respect to the Securities of the
series;
(17) if the amount of payments of principal of or interest on
the Securities of any series may be determined with reference to the
differences in the price of or rate of exchange between any indexes,
currencies or commodities, the manner in which such amounts shall be
determined;
(18) whether any Securities of the series shall be issued as,
or exchanged for, in whole or in part, one or more Global Securities
and, in such case, (i) the terms upon which interests in such Global
Security or Securities shall be exchangeable by the Company or the
holder thereof for definitive Securities and (ii) the identity of the
Depositary for such Global Security or Securities; and
(19) any other terms of the Securities of such series (which
term shall not be inconsistent with the provisions of this Indenture).
Section 2.02. FORM OF SECURITIES AND TRUSTEE'S CERTIFICATE OF
AUTHENTICATION. The Securities and the Trustee's certificate of authentication
to be borne by such Securities shall be substantially in the respective forms
thereof set forth in Schedules A (or a form established by or pursuant to a
Certified Board Resolution) and B to this Indenture with such specific terms,
additions or omissions as may be determined pursuant to an Officers' Certificate
or a supplemental indenture as contemplated in Section 2.01 hereof, in each case
with such letters, numbers or other marks of identification or designation and
such legends or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Indenture (the provisions of which shall be appropriate to reflect the
terms of each series of Securities, including the currency or denomination,
which may be United States dollars, foreign currency or ECU) or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Securities may be listed, or to conform to usage.
Section 2.03. DENOMINATION, AUTHENTICATION AND DATING OF SECURITIES.
The Securities of each series may be issued as registered Securities or, if
provided by the terms of the instrument establishing such series of Securities,
as unregistered Securities, with or without coupons. The Securities of each
series shall be issuable in denominations of $1,000 and any integral multiple of
$1,000, unless otherwise provided by the terms of the instrument establishing
such series of Securities. Each Security shall be dated as of the date of its
authentication.
If the Company shall establish pursuant to Section 2.01 that the
Securities of a series may be issued in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall, in accordance
with this Section 2.03, authenticate and deliver one or more Global Securities
that (i) shall represent and shall be denominated in an amount equal to the
aggregate principal amount of the outstanding Securities to be represented by
such Global Security or
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Securities, (ii) shall be registered in the name of the Depositary for such
Global Security or Securities or the nominee of such Depositary, (iii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions and (iv) shall bear a legend substantially to the following effect:
"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."
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Direction for
authentication and delivery of such Securities, and the Trustee shall thereupon
authenticate and deliver such Securities in accordance with such Company
Direction. Prior to the issuance of Securities of any series, the Trustee shall
be entitled to receive and, subject to Section 7.01, shall be fully protected in
relying upon:
(1) a Certified Board Resolution pursuant to which the
issuance of the Securities of such series is authorized;
(2) an executed supplemental indenture, if any;
(3) an Officer's Certificate, if any, delivered in accordance
with Section 2.01 and an Officers' Certificate as to the absence of any
Event of Default or any event which with notice or lapse of time or
both could become an Event of Default; and
(4) an Opinion of Counsel of the Company which in substance
shall state that:
(i) the form and the terms of the Securities of
such series have been established in conformity with the
provisions of this Indenture;
(ii) the Securities of such series have been duly
authorized and, when executed and authenticated in accordance
with the provisions of this Indenture and subject to any other
reasonable and customary conditions specified in such Opinion
of Counsel, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of this
Indenture;
(iii) the registration statement, if any, relating to
the Securities of such series and any amendments thereto has
become effective under the Securities Act of 1933 and, to the
best knowledge of such counsel, no stop order suspending the
effectiveness of such registration statement, as amended, has
been issued and no proceedings for that purpose have been
instituted or threatened;
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(iv) no consent, approval, authorization or order of
any court or governmental agency or body in the United States
is required for the issuance of the Securities of such series,
except such as have been obtained and such as may be required
under the blue sky laws of any jurisdiction in the United
States in connection with the purchase and distribution of the
Securities of such series;
(v) neither the issue nor sale of the Securities of
such series will conflict with, result in a breach of or
constitute a default under the terms of any indenture or other
agreement or instrument known to such counsel and to which the
Company or any of its Subsidiaries is a party or is bound, or
any order or regulation known to such counsel to be applicable
to the Company or any of its Subsidiaries of any court,
regulatory body, administrative agency or governmental body
having jurisdiction over the Company or any of its
Subsidiaries;
(vi) the authentication and delivery of the
Securities of such series by the Trustee in accordance with
the Company Direction so to do, and the Company's execution
and delivery of the Securities of such series, will not
violate the terms of this Indenture; and
(vii) such other opinions as shall be reasonably
requested by the Trustee.
PROVIDED, HOWEVER, that in the case of Securities of a series that are not to be
originally issued at one time, the Trustee shall authenticate and deliver or
make available for delivery such Securities from time to time in accordance with
such other procedures (including, without limitation, the receipt by the Trustee
of oral or electronic instructions from the Company or its duly authorized
agents, promptly confirmed in writing) acceptable to the Trustee as may be
specified by or pursuant to a Company Order delivered to the Trustee prior to
the time of the first authentication of Securities of such series.
The Trustee shall have the right to decline to authenticate and deliver
any Securities of such series (A) if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or (B) if the Trustee in
good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or responsible officers shall
determine that such action would expose the Trustee to personal liability to
Holders of outstanding Securities of any series.
So long as there is no existing default in the payment of interest on
registered Securities of any series, all such Securities authenticated by the
Trustee after the close of business on the Record Date for the payment of
interest on any Interest Payment Date relating thereto and prior to such
Interest Payment Date shall be dated the date of authentication but shall bear
interest from such Interest Payment Date; PROVIDED, HOWEVER, that if and to the
extent that the Company shall default in the interest due on such Interest
Payment Date, then any such Securities shall bear interest from the next
preceding Interest Payment Date relating to such Security with respect to which
interest has been paid or duly provided for on such Securities, from the date
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from which interest shall accrue as such date is set forth in the instrument
establishing the terms of such Securities.
The person in whose name any Security is registered at the close of
business on any Record Date with respect to any Interest Payment Date shall be
entitled to receive the interest payable on such Interest Payment Date
notwithstanding the cancellation of such Security upon any registration of
transfer or exchange thereof subsequent to such Record Date and prior to such
Interest Payment Date, except if and to the extent the Company shall default in
the payment of the interest due on such Interest Payment Date, in which case
such defaulted interest (herein called "Defaulted Interest") shall be paid to
the persons in whose names outstanding Securities of such series are registered
at the close of business on a subsequent record date selected by the Trustee,
which shall not be less than five Business Days preceding the date of payment of
such Defaulted Interest, established for such purpose by notice given by mail or
on behalf of the Company to Holders of such Securities not less than 15 days
preceding such subsequent record date. Such notice shall be given to the persons
in whose names such outstanding Securities of such series are registered at the
close of business on the third Business Day preceding the date of the mailing of
such notice.
Section 2.04. EXECUTION OF SECURITIES. The Securities and coupons
appertaining thereto, if any, shall be signed on behalf of the Company by its
Chairman or its President or any Vice President and by its Secretary or
Assistant Secretary under its corporate seal. Such signatures may be the manual
or facsimile signatures of the present or any future such authorized officers
and may be imprinted or otherwise reproduced on the Securities and such coupons.
The seal of the Company may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Securities and such
coupons.
Only such Securities as shall bear thereon a Trustee's certificate of
authentication substantially in the form provided for in Schedule B and signed
manually by the Trustee shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. The Trustee's certificate of
authentication on any Security executed by the Company shall be conclusive
evidence that the Security so authenticated has been duly authenticated and
delivered hereunder.
In case any officer of the Company who shall have signed any of the
Securities or such coupons shall cease to be such officer before the Securities
or such coupons so signed shall have been authenticated by the Trustee and
delivered or disposed of by the Company, such Securities and such coupons
nevertheless may be authenticated and delivered or disposed of as though the
person who signed such Securities and such coupons had not ceased to be such
officer of the Company; and any Security or such coupons may be signed on behalf
of the Company by such persons as, at the actual date of the execution of such
Security or such coupons, shall be the proper officers of the Company, although
at the date of such Security or such coupons or of the execution of this
Indenture any such person was not such officer.
Section 2.05. REGISTRATION OF TRANSFER AND EXCHANGE. The Company shall
keep, at an office or agency maintained by the Company in accordance with the
provisions of Section 4.02,
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a register for each series of registered Securities (such register being herein
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall register Securities of such
series and shall register the transfer of such Securities as in this Article Two
provided. At all reasonable times the Security Register shall be open for
inspection by the Trustee. Upon due presentment for registration of transfer of
any such Security at such office or agency, or such other offices or agencies as
the Company may designate, the Company shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of authorized denominations, of the same series and of
like aggregate principal amount at Stated Maturity.
Unless and until otherwise determined by the Company by resolution of
its Board of Directors, the Security Register for the purpose of registration,
exchange or registration of transfer of registered Securities shall be kept at
the Corporate Trust Office and, for this purpose, the Trustee shall be
designated the "Security Registrar."
At the option of the Holder, Securities of any series may be exchanged
for Securities of the same series of like aggregate principal amount at Stated
Maturity and of other authorized denominations. Securities to be so exchanged
shall be surrendered at the offices or agencies to be maintained by the Company
as provided in Section 4.02, and the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor the Security or Securities which
the Holder making the exchange shall be entitled to receive.
All Securities presented or surrendered for registration of transfer,
exchange, redemption or payment shall (if so required by the Company or the
Security Registrar) be duly endorsed or be accompanied by a written instrument
or instruments of transfer, in form satisfactory to the Company and the Trustee,
duly executed by the Holder or his attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer or Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto.
The Company shall not be required (a) to issue, register the transfer
of or exchange any Securities of any series for a period of 15 days next
preceding any selection of Securities of such series to be redeemed or (b) to
register the transfer of or exchange any Securities of such series selected,
called or being called for redemption.
Notwithstanding any other provision of this Section 2.05 to the
contrary, unless and until it is exchanged in whole or in part for Securities in
definitive registered form without coupons, a Global Security representing all
or a portion of the Securities of a series may not be transferred except as a
whole by the Depositary for such series to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor Depositary
for such series or a nominee of such successor Depositary.
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If at any time the Depositary for the Securities of a series
represented by one or more Global Securities notifies the Company that it is
unwilling or unable to continue as Depositary for the Securities of such series
or if at any time the Depositary for such Securities shall no longer be eligible
under Section 2.01, the Company shall appoint a successor Depositary with
respect to the Securities. If (i) the Depositary for Securities of a series
represented by one or more Global Securities is at any time unwilling or unable
to continue as Depositary or the Depositary for the Securities of such series
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, as amended, and a successor Depositary is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
ineligibility or (ii) the Company executes and delivers to the Trustee an order
to the effect that the Securities of any series issued in the form of one or
more Global Securities shall no longer be represented by such Global Security or
Securities, then the Company's election pursuant to Section 2.01 that the
Securities of such series be represented by one or more Global Securities shall
no longer be effective with respect to the Securities of such series, and the
Company will execute, and the Trustee, upon receipt of an order of the Company
for the authentication and delivery of definitive Securities of such series,
will authenticate and deliver Securities of such series in definitive registered
form without coupons, in any authorized denominations, in an aggregate principal
amount equal to the principal amount of the Global Security or Securities
representing such Securities in exchange for such Global Security or Securities.
If specified by the Company pursuant to Section 2.01 with respect to a
series of Securities represented by a Global Security, the Depositary for such
Global Security may surrender such Global Security in exchange in whole or in
part for Securities of the same series in definitive registered form without
coupons on such terms as are acceptable to the Company and such Depositary.
Thereupon, the Company shall execute, and the Trustee upon receipt of an order
for the authentication and delivery of definitive Securities of such series
shall authenticate and deliver, without service charge,
(i) to the person specified by such Depositary a new Security
or Securities of the same series, of any authorized denominations as
requested by such person, in an aggregate principal amount equal to and
in exchange for such person's beneficial interest in the Global
Security; and
(ii) to such Depositary a new Global Security in a
denomination equal to the difference, if any, between the principal
amount of the surrendered Global Security and the aggregate principal
amount of Securities authenticated and delivered pursuant to clause (i)
above.
Upon the exchange of a Global Security for Securities in definitive
registered form without coupons, in authorized denominations, such Global
Security shall be canceled by the Trustee. Securities in definitive registered
form without coupons issued in exchange for a Global Security pursuant to this
Section 2.05 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall
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deliver such Securities to or as directed by the persons in whose names such
Securities are so registered.
Section 2.06. TEMPORARY SECURITIES. Pending the preparation of
definitive Securities, the Company may execute and deliver and the Trustee, upon
Company Direction and the satisfaction of the conditions set forth in Section
2.03 hereof, shall authenticate and deliver temporary Securities (printed,
lithographed or typewritten) of any authorized denomination and substantially in
the form of the definitive Securities, but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Company. Temporary Securities may be issued without a recital
of the specific redemption prices, if any, applicable to such Securities and may
contain such reference to any provisions of this Indenture as may be
appropriate. Every temporary Security shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities. The Company
shall execute and furnish definitive Securities as soon as practicable, and
thereupon any or all temporary Securities may be surrendered in exchange
therefor at the Corporate Trust Office, and the Trustee shall authenticate and
deliver in exchange for such temporary Securities a like aggregate principal
amount at Stated Maturity of definitive Securities of the same series. Until so
exchanged, the temporary Securities shall be entitled to the same benefits under
this Indenture as definitive Securities authenticated and delivered hereunder.
Section 2.07. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES. In case
any temporary or definitive Security and, in the case of a definitive Security,
coupons appertaining thereto, if any, shall become mutilated or be destroyed,
lost or stolen, the Company in its discretion may execute, and upon Company
Direction the Trustee shall authenticate and deliver, a new Security or such
coupons of the same series bearing a number not contemporaneously outstanding,
in exchange and substitution for the mutilated Security or such coupons, or in
lieu of and in substitution for the Security or such coupons so destroyed, lost
or stolen. In every case, the applicant for a substituted Security or such
coupons shall furnish to the Company, and to the Security Registrar and any
paying agent, such security or indemnity as may be required by them to save each
of them harmless from all risk, however remote, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company, and
to the Trustee and any paying agent, evidence to their satisfaction of the
destruction, loss or theft of such Security or such coupons and of the ownership
thereof. The Trustee may authenticate any such substituted Security and deliver
the same upon Company Direction. Upon the issuance of any substituted Security
or such coupons, 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 connected therewith. In case any Security which
has matured or is about to mature or which has been called for redemption shall
become mutilated or be destroyed, lost or stolen, the Company may, instead of
issuing a substituted Security, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Security) if the
applicant for such payment shall furnish the Company and any paying agent with
such security or indemnity as either may require to save it harmless from all
risk, however remote, and, in case of
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destruction, loss or theft, evidence to the satisfaction of the Company of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substituted Security of any series or coupon issued pursuant to
the provisions of this Section 2.07 by virtue of the fact that any Security or
coupon is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
or coupon shall be found at any time, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Securities
of such series or coupons duly issued and delivered hereunder. All Securities
and coupons shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities and coupons and shall preclude
(to the extent lawful) any and all other rights or remedies, notwithstanding any
law or statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
Section 2.08. CANCELLATION OF SURRENDERED SECURITIES. All Securities
surrendered for payment, redemption (whether through the operation of a Sinking
Fund or otherwise), registration of transfer or exchange, and all coupons
surrendered for payment, shall, if surrendered to any person other than the
Trustee, be delivered to the Trustee for cancellation by it or, if surrendered
to the Trustee, shall be cancelled by it, and all Securities delivered to the
Trustee in discharge or satisfaction in whole or in part of any Sinking Fund
payment (referred to in Section 3.04) shall be cancelled by the Trustee, and no
Securities shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Indenture. The Trustee will destroy cancelled
Securities and coupons and deliver a certificate of destruction to the Company
unless requested otherwise. If the Company shall acquire any of the Securities
or coupons, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness or rights represented by such Securities or
coupons unless and until the same are delivered or surrendered to the Trustee
for cancellation.
Section 2.09. PROVISIONS OF INDENTURE AND SECURITIES FOR THE SOLE
BENEFIT OF THE PARTIES AND THE HOLDERS. Nothing in this Indenture or in the
Securities, expressed or implied, shall give or be construed to give to any
person, firm or corporation, other than the parties hereto and the Holders of
the Securities, any legal or equitable right, remedy or claim under or in
respect of this Indenture, or under any covenant, condition or provision herein
contained, all its covenants, conditions and provisions being for the sole
benefit of the parties hereto and the Holders.
Section 2.10. COMPUTATION OF INTEREST. Except as otherwise specified as
contemplated by Section 2.01 for Securities of any series, interest on the
Securities of each series shall be computed on the basis of a 360-day year of
twelve 30-day months.
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ARTICLE THREE
REDEMPTION OF SECURITIES -- SINKING FUND
Section 3.01. APPLICABILITY OF ARTICLE. The Company may become
obligated, or reserve the right, to redeem and pay, prior to Stated Maturity,
all or any part of the Securities of any series, either by optional redemption,
Sinking Fund or otherwise, by provision therefor in the instrument establishing
such series of Securities pursuant to Section 2.01 or in the Securities of such
series. Redemption of any series shall be made in accordance with the terms of
such Securities and to the extent that this Article does not conflict with such
terms, in accordance with this Article.
Section 3.02. NOTICE OF REDEMPTION; SELECTION OF SECURITIES. In case
the Company shall exercise the right or be obligated to redeem Securities as
provided for in the first sentence of Section 3.01, it shall fix a date for
redemption (unless, by the terms of the instrument establishing such series of
Securities or the terms of such Securities, such date is fixed), and it or, at
its request, the Trustee, in the name of and at the expense of the Company,
shall give notice of such redemption to the Holders of the Securities to be
redeemed as a whole or in part, with respect to registered Securities, by
mailing a notice of such redemption not less than 20 nor more than 60 days prior
to the date fixed for redemption to their last addresses as they shall appear
upon the Security Register and, with respect to unregistered Securities, by
publishing in an authorized newspaper notice of such redemption on two separate
days, each of which is not less than 20 nor more than 60 days prior to the date
fixed for redemption. Any notice which is mailed or published, as the case may
be, in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the Holder actually receives such notice. In any
case, failure duly to give notice by mail, or any defect in the notice, to the
Holder of any registered 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 of such series.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impractical to mail notice of any event to Holders of
registered Securities when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
Each such notice of redemption shall specify the date fixed for
redemption and the redemption price at which Securities are to be redeemed, and
shall state that payment of the redemption price of the Securities or portions
thereof to be redeemed, together with interest accrued to the date fixed for
redemption, will be made at the offices or agencies to be maintained by the
Company in accordance with the provisions of Section 4.02 upon presentation and
surrender of such Securities and that, on and after such date, interest thereon
or on the portions thereof to be redeemed will cease to accrue. If less than all
the Securities of any series are to be redeemed, the notice to the Holders of
Securities to be redeemed shall specify the
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Securities to be redeemed. In case any Security is to be redeemed in part only,
such notice shall state the portion of the principal amount thereof to be
redeemed and shall state that, on and after the redemption date, upon surrender
of such Security, a new Security or Securities of the same series in authorized
denominations and in a principal amount at Stated Maturity equal to the
unredeemed portion thereof will be issued.
If less than all the Securities of any series are to be redeemed, the
Company shall give the Trustee written notice, at least 15 days prior to the
date on which notice is to be given to the Holders of such Securities (or such
shorter period acceptable to the Trustee), as to the aggregate principal amount
at Stated Maturity of Securities of such series to be redeemed, which shall be
an integral multiple of $1,000, and thereupon the Trustee shall select, in such
manner as it shall deem appropriate and fair, the Securities of such series to
be redeemed in part and shall thereafter promptly notify the Company in writing
of the numbers of the Securities so to be redeemed and, in the case of
Securities to be redeemed in part only, the principal amount at Stated Maturity
so to be redeemed.
Section 3.03. WHEN SECURITIES CALLED FOR REDEMPTION BECOME DUE AND
PAYABLE. If the Company has fixed a date for redemption pursuant to Section
3.02, the Securities or portions of Securities specified in the notice provided
in Section 3.02 shall become due and payable on the date and at the place stated
in such notice at the applicable redemption price, together with interest
accrued to the date fixed for redemption, and on and after such date fixed for
redemption (unless the Company shall default in the payment of such Securities
at the redemption price, together with interest accrued to the date fixed for
redemption) interest on the Securities or portions of Securities so called for
redemption shall cease to accrue. On presentation and surrender of such
Securities on or after the date fixed for redemption at the place of payment
specified in such notice, such Securities shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued to
the dated fixed for redemption; PROVIDED, HOWEVER, that installments of interest
becoming due on the date fixed for redemption on Securities which are in
registered form shall be payable to the Holders of such Securities or of one or
more previous such Securities evidencing all or a portion of the same debt as
that evidenced by such particular Securities, registered as such on the relevant
Record Dates according to their terms and the provisions of Section 2.03.
Upon presentation of any Security which is redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security, at the expense of the Company, a new Security or
Securities of the same series in authorized denominations and in a principal
amount at Stated Maturity equal to the unredeemed portion of the Security so
presented.
Section 3.04. SINKING FUND. In the event that the instrument
establishing the terms of a particular series shall provide for a Sinking Fund,
the Company covenants that as and for a Sinking Fund for the redemption of
Securities of such series, so long as any of the Securities of such series are
outstanding:
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(a) It will pay to the Trustee or to a paying agent (or, if
the Company is acting as its own paying agent, segregate and hold in
trust as provided in Section 4.04), on or before each date set forth as
a Sinking Fund payment date (each such date is herein called a "Sinking
Fund payment date") in the instrument establishing such series, a sum
in cash sufficient to retire on each such date, at the Sinking Fund
redemption price provided for in such instrument and upon the
conditions, if any, applicable thereto as specified in such instrument,
the principal amount of such Securities as specified in such
instrument, together with interest accrued to the Sinking Fund payment
date. Each sum payable as provided in this paragraph (a) is herein
called a "mandatory Sinking Fund payment."
(b) If the instrument establishing any series of Securities so
provides, and upon the terms provided herein, the Company may elect to
pay to the Trustee or to a paying agent (or, if the Company is acting
as its own paying agent, segregate and hold in trust as provided in
Section 4.04), on or before any Sinking Fund payment date with respect
to a particular series of Securities, an additional sum in cash
sufficient to retire on such Sinking Fund payment date, at the Sinking
Fund redemption price, up to any additional principal amount of
Securities, together with interest accrued to the Sinking Fund payment
date set forth in such instrument. Any sum payable as provided in this
paragraph (b) is herein called an "optional Sinking Fund payment." Any
such election by the Company shall be evidenced by an Officers'
Certificate, delivered to the Trustee not later than 60 days (or such
shorter period acceptable to the Trustee) preceding such Sinking Fund
payment date, which certificate shall set forth the amount of the
optional Sinking Fund payment which the Company then elects to pay. The
Company's election, so evidenced, shall be irrevocable and the Company
shall, upon delivery of such certificate to the Trustee, become bound
to pay or segregate and hold in trust as aforesaid on or before such
Sinking Fund payment date the amount specified in such certificate.
Unless otherwise provided in the instrument establishing such series,
any such right to make an optional Sinking Fund payment shall be
noncumulative and shall in no event relieve the Company of its
obligation set forth in paragraph (a) of this Section 3.04.
All moneys paid or segregated and held in trust pursuant to this
Section 3.04 shall be applied on the Sinking Fund payment date in respect of
which such payment or segregation was made to the redemption of Securities as
provided in this Article Three.
Section 3.05. USE OF ACQUIRED SECURITIES TO SATISFY SINKING FUND
OBLIGATIONS. In lieu of making all or any Sinking Fund payment in cash as may be
required by Section 3.04(a), the Company may, not later than 60 days (or such
shorter period acceptable to the Trustee) preceding any applicable Sinking Fund
payment date relating to a particular series of Securities, deliver to the
Trustee for cancellation Securities of such series theretofore acquired by the
Company (otherwise than through the use of Sinking Fund moneys pursuant to
Section 3.07) and not theretofore made the basis for the reduction of any
Sinking Fund payment with respect to such series, accompanied by an Officers'
Certificate stating the Company's election to use such Securities to reduce the
amount of such Sinking Fund payment with respect to such series
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(specifying the amount of the reduction of each such payment) and certifying
that such Securities have not theretofore been acquired pursuant to Section 3.07
or made the basis for a reduction of any Sinking Fund payment with respect to
such series. Securities so delivered shall be credited against the Sinking Fund
payment due on such Sinking Fund payment date at the Sinking Fund redemption
price thereof.
Section 3.06. EFFECT OF FAILURE TO DELIVER OFFICERS' CERTIFICATE OR
SECURITIES. In case of a failure of the Company, at or before the time provided
above, to deliver any Officers' Certificate as may be required by Section 3.05,
together with any Securities of the particular series required by Section 3.05,
the Company shall not be permitted to make any such reduction of the amount of
the Sinking Fund payment with respect to such series payable on such Sinking
Fund payment date.
Section 3.07. MANNER OF REDEEMING SECURITIES. The Securities of any
series to be redeemed from time to time through the operation of any Sinking
Fund relating to such series, as in Section 3.04 provided, shall be selected by
the Trustee for redemption in the manner provided in Section 3.02, and notice
thereof shall be given by the Trustee to the Company, and the Company hereby
irrevocably authorizes the Trustee, in the name of and at the expense of the
Company, to give notice on behalf of the Company of the redemption of such
Securities, all in the manner and with the effect in this Article Three
specified, except that, in addition to the matters required to be included in
such notice by Section 3.02, such notice shall also state that the Securities
therein designated for redemption are to be redeemed through operation of such
Sinking Fund. Such Securities shall be so redeemed and paid in accordance with
such notice in the manner and with the effect provided in Sections 3.02 and
3.03.
Notwithstanding the foregoing, if at any time the amount of cash to be
paid into any Sinking Fund with respect to a particular series of Securities on
any next succeeding Sinking Fund payment date for such series, together with any
unused balance of any preceding Sinking Fund payment or payments with respect to
such series which shall not, in any case, include funds held by the Trustee for
Securities of such series which previously have been called for redemption,
shall not exceed in the aggregate $100,000, the Trustee, unless requested by the
Company, shall not select Securities for or give notice of the redemption of
Securities through the operation of the Sinking Fund with respect to such series
on the next succeeding Sinking Fund payment date. Such unused balance of moneys
deposited in the Sinking Fund with respect to a particular series of Securities
shall be added to the next Sinking Fund payment for such series to be made in
cash or, at the request of the Company, shall be applied at any time or from
time to time to the purchase of Securities of such series, by public or private
purchase, in the open market or otherwise.
Section 3.08. SINKING FUND MONEYS TO BE HELD AS SECURITY DURING
CONTINUANCE OF EVENT OF DEFAULT; EXCEPTIONS. Unless all Securities of any series
then outstanding are to be redeemed, neither the Trustee nor any paying agent
shall redeem any Securities of such series with Sinking Fund moneys if such
person shall at the time have knowledge of the continuance of any Event of
Default with respect to such series, except that where the mailing or
publication of notice of
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redemption of any such Securities shall theretofore have been made, the Trustee
or any paying agent, if sufficient funds shall have been deposited with it for
such purpose, shall redeem such Securities. However, the Company itself shall
not redeem any such Securities with Sinking Fund moneys during the continuance
of any Event of Default with respect to such series. The Trustee shall not mail
or publish any notice of redemption if it shall at the time have knowledge of
the continuance of any Event of Default with respect to such series. Except as
aforesaid, any moneys in the Sinking Fund with respect to such series at such
time and any moneys thereafter paid into the Sinking Fund shall during such
continuance be held as security for the payment of all Securities of that
series; PROVIDED, HOWEVER, that in case such Event of Default with respect to
such series shall have been waived as permitted by this Indenture or otherwise
cured, such moneys shall thereafter be held and applied in accordance with the
provisions of this Article Three.
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
Section 4.01. PAYMENTS OF PRINCIPAL OF (AND PREMIUM, IF ANY) AND
INTEREST ON SECURITIES. The Company will duly and punctually pay or cause to be
paid the principal of (and premium, if any) and interest, if any, on Securities
of each series at the place, at the time or times and in the manner provided in
the instrument establishing such series and in the Securities of such series.
The interest on the Securities, if any, shall be payable (subject to the
provisions of Section 2.03) only to or upon the written order of the Holders
thereof or, in the case of unregistered Securities with coupons, the Holders of
coupons relating thereto. Any installment of interest on registered Securities
of any series may, at the Company's option be paid by mailing checks for such
interest payable to or upon the written order of the person entitled thereto
pursuant to Section 2.03 to the address of such person as it appears on the
Security Register.
In the case of Global Securities, each installment of interest on the
Securities of any series shall be made by wire transfer of immediately available
funds if appropriate wire transfer instructions in writing have been received by
the Trustee not less than 15 days prior to the Interest Payment Date.
Section 4.02. MAINTENANCE OF OFFICES OR AGENCIES FOR REGISTRATION OF
TRANSFER, EXCHANGE AND PAYMENT OF SECURITIES AND FOR SERVICE ON THE COMPANY. As
long as any of the Securities of any series remain outstanding, the Company will
maintain one or more offices or agencies in the City of Chicago, and at such
other locations as the Company may from time to time designate for any series of
Securities, where such Securities may be presented for registration of transfer
and exchange. The Corporate Trust Office shall be such office in the City of
Chicago. The Trustee shall be the agent of the Company in the City of Chicago
for all of the foregoing purposes, unless the Company shall designate and
maintain some other office and agency for
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such purposes and give the Trustee written notice of the location thereof. The
Company will give to the Trustee notice of the location of each such office or
agency and of any change of location thereof.
Section 4.03. APPOINTMENT TO FILL A VACANCY IN THE OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee for any one or more series of Securities, will appoint, in the manner
provided in Section 7.10, a Trustee so that there shall at all times be a
Trustee with respect to each series of Securities hereunder.
Section 4.04. DUTIES OF PAYING AGENTS, ETC. (a) The Company shall cause
each paying agent, if any, other than the Trustee, for any series of Securities,
to execute and deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to the provisions of this Section 4.04, that:
(1) it will hold all sums held by it as such agent for the
payment of the principal of (and premium, if any) or interest on the
Securities of such series (whether such sums have been paid to it by
the Company or by any other obligor on the Securities of such series)
in trust for the benefit of the Holders of the Securities of such
series;
(2) it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Securities of such series) to
make any payment of the principal of (or premium, if any) or interest
on the Securities of such series when the same shall be due and
payable;
(3) it will at any time during the continuance of an Event of
Default with respect to such series of Securities, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held
by it as such agent; and
(4) it will give the Trustee prompt written notice of any
change of address of any Holder of the Securities.
Whenever the Company shall have one or more paying agents for any
series of Securities, it will, on or before each due date of the principal of
(and premium, if any) or interest on Securities of such series, deposit with
such paying agent or agents a sum sufficient to pay such principal (and premium,
if any) or interest on such Securities so becoming due.
(b) If the Company shall act as its own paying agent for any series of
Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest, including dates fixed for redemption (including
Sinking Fund payment dates), on the Securities of such series, set aside,
segregate and hold in trust for the benefit of the Holders of the Securities of
such series a sum sufficient to pay such principal (and premium, if any) or
interest on such Securities so becoming due. The Company will promptly notify
the Trustee of any failure by the Company to take such action or the failure by
any other obligor on the Securities of such
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series to make any payment of the principal of (or premium, if any) or interest
on the Securities of such series when the same shall be due and payable.
(c) Anything in this Section 4.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it or any paying agent hereunder, as
required by this Section 4.04, 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.
(d) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
the provisions of Section 12.03.
Section 4.05. LIMITATION ON SECURED DEBT. (a) The Company will not, nor
will it permit any Restricted Subsidiary to, incur, issue, assume or guarantee
any indebtedness for money borrowed or any other indebtedness evidenced by
notes, bonds, debentures or other similar evidence of indebtedness for money
borrowed (hereinafter in this Article Four called "Debt") other than 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 services,
secured by a mortgage, security interest, pledge, lien or other encumbrance
(mortgages, security interests, pledges, liens and other encumbrances being
hereinafter in this Article Four called "mortgage" or "mortgages") upon any
Principal Property of the Company or any Restricted Subsidiary or upon any
shares of stock or Debt of any Restricted Subsidiary (whether such Principal
Property, shares of stock or Debt are now owned or hereafter acquired), except
with respect to each series of Securities any Debt so secured on the date of
issuance of such series, without in any such case effectively providing
concurrently with the issuance, assumption or guaranty of any such Debt that the
Securities (together with, if the Company shall so determine, any other
indebtedness of or guaranteed by the Company or such Restricted Subsidiary
ranking equally with the Securities and then existing or thereafter created)
shall be secured equally and ratably with (or, at the option of the Company,
prior to) such secured Debt, so long as such Debt shall be so secured; PROVIDED,
HOWEVER, that the foregoing restrictions shall not apply to, and there shall be
excluded from secured Debt in any computation under this Section, Debt secured
by
(i) mortgages on property, shares of stock or Debt
(hereinafter in this Article Four called "property") of any
corporation existing at the time such corporation becomes a
Restricted Subsidiary;
(ii) mortgages on property existing at the time of
acquisition of the affected property by the Company or a
Restricted Subsidiary, or mortgages to secure the payment of
all or any part of the purchase price of such property upon
the acquisition of such property by the Company or a
Restricted Subsidiary or to
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secure any Debt incurred by the Company or a Restricted
Subsidiary prior to, at the time of, or within 180 days after
the later of the acquisition, the completion of construction
(including any improvements on an existing property) or the
commencement of commercial operation of such property, which
Debt is incurred for the purpose of financing all or any part
of the purchase price thereof or construction or improvements
thereon; PROVIDED, HOWEVER, that in the case of any such
acquisition, construction or improvement the mortgage shall
not apply to any property theretofore owned by the Company or
a Restricted Subsidiary, other than, in the case of any such
construction or improvement, any real property on which the
property so constructed or the improvement is located which,
in the opinion of the Board of Directors, was, prior to such
construction or improvement, substantially unimproved for the
use intended by the Company or such Restricted Subsidiary;
(iii) mortgages on property of a Restricted
Subsidiary securing Debt owing to the Company or to another
Restricted Subsidiary;
(iv) mortgages on property of a corporation
existing at the time such corporation is merged into or
consolidated with the Company or a Restricted Subsidiary or at
the time of a sale, lease or other disposition of the
properties of a corporation or firm as an entirety or
substantially as an entirety to the Company or a Restricted
Subsidiary; PROVIDED, HOWEVER, that any such mortgages do not
attach to or affect property theretofore owned by the Company
or such Restricted Subsidiary;
(v) mortgages on property owned or leased by the
Company or a Restricted Subsidiary in favor of the United
States of America or any State thereof, or any department,
agency or instrumentality or political subdivision of the
United States of America or any State thereof, or in favor of
any other country or any political subdivision thereof, or in
favor of holders of securities issued by any such entity,
pursuant to any contract or statute (including, without
limitation, mortgages to secure Debt of the pollution control
or industrial revenue bond type), or to secure any
indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of construction of the
property subject to such mortgages;
(vi) mortgages existing at the date of this
Indenture;
(vii) landlords' liens on fixtures located on
premises leased by the Company or a Restricted Subsidiary in
the ordinary course of business;
(viii) mortgages on property of the Company or a
Restricted Subsidiary to secure partial, progress, advance or
other payments or any Debt incurred for the purpose of
financing the cost of construction, development, or
substantial
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repair, alteration or improvement of the property subject to
such mortgages if the commitment for the financing is obtained
not later than one year after the later of the completion of
or the placing into operation (exclusive of test and start-up
periods) of such constructed, developed, repaired, altered or
improved property;
(ix) mortgages arising in connection with contracts
and subcontracts with or made at the request of the United
States of America, or any state thereof, or any department,
agency or instrumentality of the United States or any state
thereof;
(x) mechanics', materialmen's, carriers' or other
like liens arising in the ordinary course of business
(including construction of facilities) in respect of
obligations which are not due or which are being contested in
good faith;
(xi) any mortgage arising by reason of deposits
with, or the giving of any form of security to, any
governmental agency or any body created or approved by law or
governmental regulations, which is required by law or
governmental regulation as a condition to the transaction of
any business, or the exercise of any privilege, franchise or
license;
(xii) mortgages for taxes, assessments or
governmental charges or levies not yet delinquent or mortgages
for taxes, assessments or governmental charges or levies
already delinquent but the validity of which is being
contested in good faith;
(xiii) mortgages (including judgment liens) arising
in connection with legal proceedings so long as such
proceedings are being contested in good faith and, in the case
of judgment liens, execution thereon is stayed; or
(xiv) any extension, renewal or replacement (or
successive extensions, renewals or replacements) in whole or
in part of any mortgage referred to in the foregoing clauses
(i) to (xiii), inclusive, PROVIDED, HOWEVER, that the
principal amount of Debt secured or securable thereby shall
not exceed the principal amount of Debt so secured or
securable at the time of such extension, renewal or
replacement mortgage, and that such extension, renewal or
replacement mortgage shall be limited to all or a part of the
property which secured the mortgage so extended, renewed or
replaced (plus improvements on such property).
(b) Notwithstanding the foregoing provisions of this Section
4.05, the Company and any one or more Restricted Subsidiaries may
issue, assume or guarantee Debt secured by mortgage which would
otherwise be subject to the foregoing restrictions in an aggregate
amount which, together with all other Debt of the Company and its
Restricted Subsidiaries which (if originally issued, assumed or
guaranteed at such time) would otherwise be subject to the foregoing
restrictions (not including Debt permitted to
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be secured under clauses (i) through (xiv) above), does not at the time
exceed 10% of Consolidated Net Tangible Assets, as shown on the latest
quarterly consolidated financial statements of the Company preceding
the date of determination.
Section 4.06. LIMITATION ON SALE AND LEASE-BACK. The Company will not,
nor will it permit any Restricted Subsidiary to, enter into any arrangement with
any bank, insurance company or other lender or investor (not including the
Company or any Restricted Subsidiary) or to which any such lender or investor is
a party, providing for the leasing by the Company or any Restricted Subsidiary
for a period, including renewals, in excess of three years, of any Principal
Property of the Company or any Restricted Subsidiary (whether such Principal
Property is now owned or hereafter acquired) (except for temporary leases for a
term of not more than three years and except for leases between the Company and
a Restricted Subsidiary or between Restricted Subsidiaries), which Principal
Property has been or is to be sold or transferred more than one year after the
acquisition thereof or after the completion of construction and commencement of
full operation thereof, by the Company or such Restricted Subsidiary to such
lender or investor or to any person to whom funds have been or are to be
advanced by such lender or investor on the security of such Principal Property
(herein referred to as a "Sale and Lease-Back Transaction"), unless either (a)
the Company or such Restricted Subsidiary would be entitled, pursuant to the
provisions of Section 4.05, to issue, assume or guarantee Debt secured by a
mortgage upon such Principal Property at least equal in amount to the
Attributable Debt in respect of such arrangement without equally and ratably
securing the Securities, PROVIDED, HOWEVER, that from and after the date on
which such arrangement becomes effective the Attributable Debt in respect of
such arrangement shall be deemed for all purposes under Sections 4.05 and 4.06
to be Debt subject to the provisions of Section 4.05 or (b) the Company within
270 days after the sale or transfer shall have been made by the Company or by
any such Restricted Subsidiary, applies an amount equal to the greater of (i)
the net proceeds of the sale of the Principal Property sold and leased back
pursuant to such arrangement and (ii) the fair market value of the Principal
Property so sold and leased back at the time of entering into such arrangement
(as determined by any two of the following: the chairman of the Board of
Directors, its president, any vice president, its treasurer and its controller)
to (x) the purchase of property, facilities or equipment (other than the
property, facilities or equipment involved in such sale) having a value at least
equal to the net proceeds of such sale or (y) the retirement of Debt of the
Company (and any retirement of Securities of any series pursuant to this
provision shall not be deemed to constitute a refunding operation or anticipated
refunding operation for the purposes of any provision restricting any refunding
operations with moneys borrowed having an interest cost to the Company in excess
of a certain amount with respect to the Securities of such series); provided,
that the amount to be applied to the retirement of Debt of the Company shall be
reduced by (i) the principal amount of any Securities of any series (or, if the
Securities of any series are Original Issue Discount Securities, such portion of
the principal amount as may be due and payable with respect to such series
pursuant to a declaration in accordance with Section 6.01) delivered within 270
days after such sale to the Trustee for retirement and cancellation, and (ii)
the principal amount of Debt, other than the Securities of any series,
voluntarily retired by the Company within 270 days after such sale.
Notwithstanding the
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foregoing, no retirement referred to in this clause (b) may be effected by
payment at maturity or pursuant to any mandatory sinking fund payment or any
mandatory prepayment provision.
The term "Attributable Debt" shall mean the present value (discounted
at the actual percentage rate inherent in such arrangement as determined in good
faith by the Company, compounded semiannually) of the obligation of a lessee for
rental payments during the remaining term of any lease (including any period for
which such lease has been extended). Such rental payments shall not include
amounts payable by the lessee for maintenance and repairs, insurance, taxes,
assessments and similar charges and for contingent rents (such as those based on
sales). In case of any lease which is terminable by the lessee upon the payment
of a penalty, such rental payments shall also include such penalty, but no rent
shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated. Any determination of any actual
percentage rate inherent in any such arrangement made in good faith by the
Company shall be binding and conclusive, and the Trustee shall have no duty with
respect to any determination made under this Section 4.06.
Section 4.07. STATEMENT BY OFFICERS AS TO DEFAULT. The Company will
deliver to the Trustee, on or before a date not more than four months after the
end of each of its fiscal years ending after the date hereof during which any
Securities are outstanding, an Officers' Certificate stating that neither of the
signers thereof has any knowledge, after due investigation, of the existence of
any Event of Default, or any event which could with the passage of time or
notice mature into an Event of Default, by the Company under this Indenture or
stating that they have knowledge of the existence of such an event of which the
signers have knowledge and the nature thereof.
Section 4.08. FURTHER INSTRUMENTS AND ACTS. The Company will, upon
request of the Trustee, execute and deliver such further instruments and do such
further acts as may reasonably be necessary or proper to carry out more
effectually the purposes of this Indenture.
ARTICLE FIVE
HOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 5.01. COMPANY TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND
ADDRESSES OF HOLDERS. The Company covenants and agrees that it will furnish or
cause to be furnished to the Trustee with respect to each series of Securities:
(a) semiannually, not more than 15 days after each Record Date
for the payment of interest, and not less than 15 days before each
interest payment, if any, with respect to such series of Securities
(or, in the case of any series of Securities not having semiannual
Record Dates, semiannually on the dates determined pursuant to Section
2.01 for such series), a list, in such form as the Trustee may
reasonably require of the names and addresses of the Holders of such
series as of such Record Date; and
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(b) at such other time 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 date such list is furnished;
except that, so long as the Trustee is the Security Registrar with respect to
such series of Securities, no such list need be furnished under this Section
5.01.
Section 5.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of Holders (1)
contained in the most recent list furnished to it as provided in Section 5.01
and (2) received by it in the capacity of paying agent or Security Registrar (if
so acting) hereunder.
The Trustee may destroy any list furnished to it with respect to
Securities of any series as provided in Section 5.01 upon receipt of a new list
with respect to such series so furnished.
(b) In case three or more Holders of registered Securities of any
series (hereinafter referred to as "applicants") apply in writing to the
Trustee, and furnish to the Trustee reasonable proof that each applicant has
owned a Security of such series for a period of at least six months preceding
the date of such application and such application states that the applicants
desire to communicate with other Holders of Securities of such series with
respect to their rights under this Indenture or under the Securities of such
series, and is accompanied by a copy of the form of proxy or other communication
which such applicants propose to transmit, then the Trustee shall, within five
business days after the receipt of such application, at its election, either
(1) afford such applicants access to the information preserved
at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 5.02, or
(2) inform such applicants as to the approximate number of
Holders of Securities of such series whose names and addresses appear
in the information preserved at the time by the Trustee, in accordance
with the provisions of subsection (a) of this Section 5.02, and as to
the approximate cost of mailing to such Holders the form of proxy or
other communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each such Holder whose name and address appears in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 5.02, a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender the Trustee shall mail to such applicants and file
with the Securities and Exchange Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interests of such
Holders or would be in violation
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of applicable law. Such written statement shall specify the basis of such
opinion. If such Commission, after opportunity for a hearing upon the objections
specified in the written statement so filed, shall enter an order refusing to
sustain any of such objections or if, after the entry of an order sustaining one
or more of such objections, such Commission shall find, after notice and
opportunity for hearing, that all the objections so sustained have been met and
shall enter an order so declaring, the Trustee shall mail copies of such
material to all such Holders with reasonable promptness after the entry of such
order and the renewal of such tender; otherwise the Trustee shall be relieved of
any obligation or duty to such applicants respecting their application.
(c) Each and every Holder, by receiving and holding any Security,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any Security Registrar nor any paying agent 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 the provisions of subsection (b) of this
Section 5.02, regardless of the source from which such information was derived,
and that Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under said subsection (b).
Section 5.03. REPORTS BY COMPANY. (a) The Company covenants and agrees
to file with the Trustee, within 15 days after the Company is required to file
the same with the Securities and Exchange 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 said Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file with
such Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; 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 such Commission, in accordance with rules and regulations prescribed
from time to time by such Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Securities and Exchange Commission, in accordance with the rules and regulations
prescribed from time to time by such Commission, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in its Indenture and the Securities as may
be required from time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit to the Holders of
Securities within 30 days after the filing thereof with the Trustee, in the
manner and to the extent provided in subsection (c) of Section 5.04, such
summaries of any information, documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this Section 5.03 as may be
required by rules and regulations prescribed from time to time by the Securities
and Exchange Commission.
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(d) The Company covenants to furnish to the Trustee, not less often
than annually, a brief certificate from the principal executive officer,
principal financial officer, principal treasurer or principal accounting officer
of the Company as to his or her knowledge of the Company's compliance with all
conditions and covenants under this Indenture. For purposes of this paragraph,
such compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture.
Section 5.04. REPORTS BY TRUSTEE. (a) On or before May 15, 1999, and on
or before May 15th in every year thereafter, so long as any Securities of any
series, are outstanding hereunder, the Trustee shall transmit to the Holders of
Securities of each such series as hereinafter in this Section 5.04 provided, and
to the Company a brief report dated as of the preceding March 15th, with respect
to any of the following events which may have occurred within the previous 12
months (but if no such event has occurred within such period no report need be
transmitted):
(1) its eligibility under Section 7.09 and its qualifications
under Section 7.08, or in lieu thereof, if to the best of its knowledge
it has continued to be eligible and qualified under such Sections, a
written statement to such effect;
(2) the creation of or any material change to a relationship
specified in paragraphs (1) through (10) of Section 310(b) of the Trust
Indenture Act;
(3) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities of such series,
on any property or funds held or collected by it as Trustee, except
that the Trustee shall not be required (but may elect) to report such
advances if such advances so remaining unpaid aggregate not more than
one-half of one percent of the principal amount at Stated Maturity of
Securities of such series outstanding on the date of such report;
(4) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the
Securities of such series) to the Trustee in its individual capacity,
on the date of such report, with a brief description of any property
held as collateral security therefor, except an indebtedness based upon
a creditor relationship arising in any manner described in paragraph
(2), (3), (4) or (6) of subsection (b) of Section 7.13;
(5) the property and funds, if any, physically in the
possession of the Trustee (as such) on the date of such report;
(6) any additional issue of Securities of such series which
the Trustee has not previously reported; and
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(7) any action taken by the Trustee in the performance of its
duties under this Indenture which it has not previously reported and
which in its opinion materially affects any of the Securities of such
series, except action in respect of a default, notice of which has been
or is to be withheld by it in accordance with the provisions of Section
6.07.
(b) The Trustee shall transmit to Holders of Securities of each series,
as hereinafter provided, and to the Company a brief report with respect to the
character and amount of any advances (and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to the provisions of
subsection (a) of this Section 5.04 (or if no such report has yet been so
transmitted, since the date of execution of this Indenture), for the
reimbursement of which it claims or may claim a lien or charge prior to that of
the Securities of such series on property or funds held or collected by it as
Trustee, and which it has not previously reported pursuant to this subsection,
except that the Trustee shall not be required (but may elect) to report such
advances if such advances remaining unpaid at any time aggregate ten percent or
less of the principal amount at Stated Maturity of Securities of such series
outstanding at such time, such report to be transmitted within 90 days after
such time.
(c) Reports to Holders pursuant to this Section 5.04 shall be
transmitted by mail:
(1) to all Holders of Registered Securities of each series
entitled thereto, as the names and addresses of such Holders appear
upon the Security Register with respect to such series;
(2) such Holders as have, within two years preceding such
transmission, filed their names and addresses with the Trustee for that
purpose; and
(3) except in the case of reports pursuant to subsection (b)
of this Section 5.04, to each Holder whose name and address is
preserved at the time by the Trustee, as provided in Section 5.02.
(d) A copy of each such report shall, at the time of such transmission
to such Holders, be filed by the Trustee with each stock exchange upon which the
Securities of such series are listed and also with the Securities and Exchange
Commission. The Company agrees to notify the Trustee when and as the Securities
of any series become listed on any stock exchange.
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT
Section 6.01. EVENTS OF DEFAULT. In case one or more of the following
Events of Default (unless it is either inapplicable to a particular series or it
is specifically deleted from or modified
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in the instrument establishing such series and the form of Security for such
series) shall have occurred and be continuing with respect to any series of
Securities, that is to say:
(a) default in the payment of any installment of interest upon
any Security of such series as and when the same shall become due and
payable and continuance of such default for a period of 30 days; or
(b) default in the payment of principal of (or premium, if
any, on) the Securities of such series as and when the same shall
become due and payable either at Stated Maturity, upon redemption
(whether through the operation of a Sinking Fund or otherwise), by
declaration or otherwise, or default in the making of any mandatory
Sinking Fund payment or optional Sinking Fund payment; or
(c) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the
Company in the Securities of such series, or in this Indenture
contained and relating to such series, for a period of 60 days after
the date on which written notice specifying such failure and requiring
the Company to remedy the same shall have been given by registered or
certified mail to the Company by the Trustee, or to the Company and the
Trustee by the Holder of at least twenty-five percent in aggregate
principal amount at Stated Maturity of the Securities of such series at
the time outstanding; or
(d) the Company shall make an assignment for the benefit of
creditors, or shall file a petition in bankruptcy, or the Company shall
be adjudicated insolvent or bankrupt, or shall petition or shall apply
to any court having jurisdiction in the premises for the appointment of
a receiver, trustee, liquidator or sequestrator of, or for, the Company
or any substantial portion of the property of the Company; or the
Company shall commence any proceeding relating to the Company or any
substantial portion of the property of the Company under any
insolvency, reorganization, arrangement, or readjustment of debt,
dissolution, winding-up, adjustment, composition or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect
(hereinafter in this subsection (d) called "Proceeding"); or if there
shall be commenced against the Company any Proceeding and an order
approving the petition shall be entered, or such Proceeding shall
remain undischarged for a period of 60 days; or a receiver, trustee,
liquidator or sequestrator of, or for, the Company or any substantial
portion of the property of the Company shall be appointed and shall not
be discharged within a period of 60 days; or the Company by any act
shall indicate consent to or approval of or acquiescence in any
Proceeding or the appointment of a receiver, trustee, liquidator or
sequestrator of, or for, the Company or any substantial portion of the
property of the Company; PROVIDED THAT a resolution or order for
winding-up the Company with a view to its consolidation, amalgamation
or merger with another company or the transfer of its assets as a
whole, or substantially as a whole, to such other company as provided
in Section 11.01 shall not make the rights and remedies herein
enforceable under this subsection (d) of Section 6.01 if such
lastmentioned company shall, as a part of such consolidation,
amalgamation, merger or
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transfer, and within 60 days from the passing of the resolution or the
date of the order, comply with the conditions to that end stated in
Section 11.01; or
(e) default under other indebtedness of the Company for money
borrowed by the Company having unpaid principal in excess of the
greater of (a) $10,000,000 or (b) 2 percent of the Company's
Consolidated Net Tangible Assets or under any indenture or other
instrument under which any such indebtedness having unpaid principal in
excess of the greater of (a) $10,000,000 or (b) 2 percent of the
Company's Consolidated Net Tangible Assets has been issued or by which
it is governed, whether now existing or hereafter created, which
results in such other indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and
payable, without such acceleration being rescinded or annulled within
60 days after the date on which written notice specifying such default
and requiring the Company to remedy the same shall have 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 twenty-five percent
in aggregate principal amount at Stated Maturity of the Securities of
such series at the time outstanding;
then and in each and every such case, so long as such Event of Default with
respect to such series shall not have been remedied or waived, unless the
principal of all Securities of such series shall have already become due and
payable, either the Trustee or the Holders of not less than twenty-five percent
in aggregate principal amount at Stated Maturity of the Securities of such
series then outstanding hereunder, by notice in writing to the Company (and to
the Trustee if given by such Holders), may declare the principal (or, in the
case of Original Issue Discount Securities, such principal amount as may be
determined in accordance with the terms thereof) of all the Securities of such
series to be due and payable immediately, and upon any such declaration the same
shall become and shall be immediately due and payable, anything in this
Indenture or in the Securities of such series contained to the contrary
notwithstanding. This provision, however, is subject to the condition that if at
any time after the principal of the Securities of such series (or, in the case
of Original Issue Discount Securities, such principal amount as may be
determined in accordance with the terms thereof) shall have been so declared due
and payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest, if any, upon all the Securities of such series and the
principal of (and premium, if any, on) any and all Securities of such series
which shall have become due otherwise than by such acceleration (with interest
upon such principal (and premium, if any), and to the extent that payment of
such interest is enforceable under applicable law, upon overdue installments of
interest at the rate borne by the Securities of such series (or, in the case of
Original Issue Discount Securities, at the yield to Stated Maturity) to the date
of such payment or deposit), and such amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee except as a result of its negligence or bad faith, and any and all
defaults under this Indenture, other than the nonpayment of the principal of
Securities of such series which shall have become due by such acceleration,
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shall have been remedied -- then and in every such case the Holders of a
majority in aggregate principal amount at Stated Maturity of the Securities of
such series then outstanding, by written notice to the Company and to the
Trustee, may waive all defaults and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
In case the Trustee or any Holders shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee or such Holders, then and in
every such case the Company, the Trustee and such Holders shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Company and the Trustee shall continue as though no
such proceedings had been taken.
Section 6.02. COLLECTION OF INDEBTEDNESS BY TRUSTEE, ETC. The Company
covenants that (1) in case default shall be made in the payment of any
installment of interest on any Securities of any series, as and when the same
shall become due and payable, and such default shall have continued for a period
of 60 days, or (2) in case default shall be made in the payment of the principal
of (or premium, if any, on) any Securities of any series when the same shall
have become due and payable, whether at the Stated Maturity of the Securities of
such series or upon redemption (whether through the operation of a Sinking Fund
or otherwise) or upon declaration or otherwise -- then, upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of the Holders of
the Securities of such series, the whole amount that then shall have become due
and payable on all such Securities for principal (and premium, if any) or
interest, or both, as the case may be, with interest upon the overdue principal
(and premium, if any) and (to the extent that payment of such interest is
enforceable under applicable law) upon overdue installments of interest at the
rate borne by the Securities of such series (or, in the case of Original Issue
Discount Securities, at the yield to Stated Maturity); and, in addition thereto,
such further amount as shall be sufficient to cover reasonable compensation to
the Trustee, its agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee except as a result
of its negligence or bad faith.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon the
Securities of such series and collect in the manner provided by law out of the
property of the Company or other obligor upon the Securities of such series
wherever situated the moneys adjudged or decreed to be payable.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization or other similar judicial proceedings relative to the
Company, its creditors, or its property, the Trustee (irrespective of whether
the principal of the Securities of any series shall
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then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 6.02) shall, if permitted by law, be entitled and
empowered to file and prove a claim or claims for the whole amount of principal
(and premium, if any) and interest owing and unpaid in respect of the Securities
of such series to which the Trustee or the Holders of the Securities of such
series shall be entitled, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee and of such
Holders hereunder or on the Securities of such series allowed in such judicial
proceedings, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amount payable to the Trustee for compensation and expenses, including
counsel fees; and any trustee in bankruptcy or receiver is hereby authorized by
each of such Holders to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to such
Holders, to pay the Trustee any amount due to it for compensation and expenses,
including counsel fees, incurred by it to the date of such payment. Nothing
herein contained shall be deemed to authorize or empower the Trustee, except in
accordance with action taken under Article Nine, to consent to or accept or
adopt, on behalf of any Holder, any plan of reorganization or readjustment of
the Company affecting the Securities of any series or the rights of any Holder
thereof, or to authorize or empower the Trustee to vote in respect of the claim
of any such Holder in any such proceedings.
All rights of action and of asserting claims under this Indenture, or
under any Securities of any series, may be enforced by the Trustee without the
possession of any such Securities, or the production thereof at trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Trustee shall be brought in its own name and as trustee of an express trust,
and any recovery of judgment (except for any amounts payable to the Trustee
pursuant to Section 7.06) shall be for the ratable benefit of the Holders in
respect of which the action was taken.
In case of an Event of Default hereunder, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Section 6.03. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys
collected by the Trustee, pursuant to Section 6.02 on account of a default
relating to a particular series of Securities, shall be applied in the order
following, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal (or premium, if any) or
interest, upon presentation of the several Securities of such series and coupons
appertaining thereto, if any, and the notation thereon of the payment, if only
partially paid, and upon surrender thereof if fully paid:
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FIRST: To the payment of costs and expenses of collection, and
reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all sums due the Trustee pursuant to Section 7.06
hereof;
SECOND: In case the principal of the Securities of such series
shall not have become due, to the payment of interest on the Securities
of such series, in the order of the maturity of the installments of
such interest, with interest (to the extent that such interest may be
lawfully paid under applicable law and has been collected by the
Trustee) upon the overdue installments of interest at the rate borne by
the Securities of such series (or, in the case of Original Issue
Discount Securities, at the yield to Stated Maturity), such payments to
be made ratably to the persons entitled thereto without discrimination
or preference;
THIRD: In case the principal of the Securities of such series
shall have become due, by declaration or otherwise, to the payment of
the whole amount then owing and unpaid upon the Securities of such
series for principal (and premium, if any) and interest, with interest
on the overdue principal (and premium, if any) and (to the extent that
such interest may be lawfully paid under applicable law and has been
collected by the Trustee) upon overdue installments of interest at the
rate borne by the Securities of such series (or, in the case of
Original Issue Discount Securities, at the yield to Stated Maturity);
and in case such moneys shall be insufficient to pay in full the whole
amount so due and unpaid upon the Securities of such series, then to
the payment of such principal (and premium, if any) and interest,
without preference or priority of principal (and premium, if any) over
interest, or of interest over principal (and premium, if any), or of
any installment of interest over any other installment of interest, or
of any Securities of such series over any other Securities of such
series, ratably to the aggregate of such principal (and premium, if
any) and accrued and unpaid interest; and
FOURTH: The remainder, if any, shall be paid to the Company,
its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same, or as a court of competent jurisdiction may direct.
Section 6.04. LIMITATION ON SUITS BY HOLDERS. No Holder of any Security
of any series shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceedings at law or in equity upon
or under or with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless such Holder previously
shall have given to the Trustee written notice of an Event of Default with
respect to Securities of that series and unless the Holders of not less than
twenty-five percent in aggregate principal amount at Stated Maturity of the then
outstanding Securities of such series shall have made written request upon the
Trustee to institute such action or proceedings in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the cost, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such action or
proceedings and no direction inconsistent with such written
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request shall have been given to the Trustee pursuant to Section 6.06; it being
understood and intended, and being expressly covenanted by the taker and Holder
of any Security of any series with every other such taker and Holder and the
Trustee, that no one or more Holders of such Securities shall have any right in
any manner whatever by virtue or by availing of any provision of this Indenture
to affect, disturb or prejudice the rights of the Holders of any other such
Securities or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Holders of such Securities. For the protection and enforcement of the provisions
of this Section 6.04, each and every Holder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Notwithstanding the foregoing paragraph or any other provision in this
Indenture, however, any right of any Holder to receive payment of the principal
of (and premium, if any) and interest on any Security on or after the respective
due dates expressed in such Security (including any date fixed for redemption
pursuant hereto, including any Sinking Fund payment date) or to institute suit
for the enforcement of any such payment on or after such respective dates shall
not be impaired or affected without the consent of such Holder.
Section 6.05. REMEDIES CUMULATIVE; DELAY OR OMISSION IN EXERCISE OF
RIGHTS NOT A WAIVER OF DEFAULT. All powers and remedies given by this Article
Six to the Trustee or to the Holders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the Holders, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any Holder to exercise any right or power accruing upon any default
occurring and continuing as aforesaid, shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
given by this Article Six or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Holders.
Section 6.06. RIGHTS OF HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF
SECURITIES OF ANY SERIES TO DIRECT TRUSTEE AND TO WAIVE DEFAULT. The Holders of
a majority in aggregate principal amount at Stated Maturity of the Securities of
any series at the time outstanding 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 Securities of such series; PROVIDED, HOWEVER, that such direction shall not
be otherwise than in accordance with law and the provisions of this Indenture,
and that subject to the provisions of Section 7.01 hereof, the Trustee shall
have the right to decline to follow any such direction if the Trustee being
advised by counsel shall determine that the action so directed may not lawfully
be taken, or if the Trustee shall by a responsible officer or officers determine
that the action so directed would involve it in personal liability or would be
unjustly prejudicial to Holders of Securities of such series not taking part in
such direction; and PROVIDED FURTHER, that nothing in this Indenture contained
shall impair the right of the Trustee in its discretion to take any action
deemed proper by the Trustee and which is not inconsistent with such direction
by such Holders.
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Prior to the declaration of the maturity of the Securities of any series as
provided in Section 6.01, the Holders of a majority in aggregate principal
amount at Stated Maturity of the Securities of such series at the time
outstanding may on behalf of the Holders of all of the Securities of such series
waive any past default hereunder and its consequences, except a default in the
payment of the principal of (and premium, if any) or interest on any of the
Securities of such series. In case of any such waiver, the Company, the Trustee
and the Holders of the Securities of such series shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
Section 6.07. TRUSTEE TO GIVE NOTICE OF DEFAULT KNOWN TO IT, BUT MAY
WITHHOLD SUCH NOTICE IN CERTAIN CIRCUMSTANCES. The Trustee shall, within 90 days
after the occurrence of a default, give to the Holders of all then outstanding
Securities, in the manner and to the extent provided in subsection (c) of
Section 5.04, notice of all defaults known to the Trustee with respect to such
Securities, unless such defaults shall have been cured or waived before the
giving of such notice (the term "default" or defaults" for the purposes of this
Section 6.07 being hereby defined to be any event or events, as the case may be,
specified in clauses (a), (b), (c), (d) and (e) of Section 6.01, not including
periods of grace, if any, provided for therein and irrespective of the giving of
the written notice specified in clauses (c) and (e) of Section 6.01); PROVIDED
THAT, except in the case of default in the payment of the principal of (or
premium, if any, on) or interest on any of the Securities of any series or in
the making of any Sinking Fund payment, 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 and/or responsible officers of the
Trustee in good faith determines that the withholding of such notice is in the
interest of the Holders thereof.
Section 6.08. REQUIREMENT OF AN UNDERTAKING TO PAY COSTS IN CERTAIN
SUITS UNDER THE INDENTURE OR AGAINST THE TRUSTEE. All parties to this Indenture
agree, and each Holder by his acceptance of any Security 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, suffered 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 6.08 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 ten percent in principal
amount at Stated Maturity 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 premium, if any) or interest on any Security, on or after the
respective due dates expressed in such Security (including any date fixed for
redemption, including any Sinking Fund payment date).
Section 6.09. WAIVER OF STAY OR EXTENSION LAWS. The Company covenants
and agrees (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in
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any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or 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 SEVEN
CONCERNING THE TRUSTEE
Section 7.01. CERTAIN DUTIES AND RESPONSIBILITIES. The Trustee, prior
to the occurrence of an Event of Default with respect to a particular series of
Securities and after the curing or waiving of all Events of Default which may
have occurred with respect to such series, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default with respect to a particular series of Securities has occurred
(which has not been cured or waived), the Trustee shall exercise such of the
rights and powers vested in it by this Indenture relating to such series, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
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 wilful misconduct, except that:
(a) prior to the occurrence of an Event of Default with
respect to a particular series of Securities and after the curing or
waiving of all Events of Default which may have occurred with respect
to such series:
(1) the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any 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) the Trustee shall not be liable for an 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;
(c) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith relating to
Securities of any series in accordance with the direction of the
Holders of not less than a majority in principal amount at Stated
Maturity of the Securities of such series at the time outstanding
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, with respect to the Securities of such
series under this Indenture; and
(d) whether or not therein so provided, every provision of
this Indenture relating to the conduct or affecting the liability of,
or affording protection to the Trustee, shall be subject to the
provisions of this Section.
None of the provisions of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any personal financial liability
in the performance of any duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate security or indemnity against such risk or
liability is not reasonably assured to it.
Section 7.02. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided
in Section 7.01:
(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, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Company Direction
(unless other evidence in respect thereof is herein specifically
prescribed), and any resolution of the Board of Directors of the
Company shall be evidenced to the Trustee by a Certified Board
Resolution;
(c) 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 accordance with such
advice or opinion of counsel;
(d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders, pursuant to the provisions of
this Indenture, unless such Holders shall have
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offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby;
(e) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture;
(f) prior to the occurrence of an Event of Default with
respect to the Securities of any series and after the curing or waiving
of all such Events of Default which may have occurred, 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, approval or other
paper or document, unless requested in writing to do so by the Holders
of a majority in aggregate principal amount at Stated Maturity of
Securities of any series then outstanding; PROVIDED, HOWEVER, that if
the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is not, in the opinion of the Trustee, reasonably
assured to the Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable indemnity against
such costs, expenses or liabilities as a condition to so proceeding;
the reasonable expense of every such investigation shall be paid by the
Company or, if paid by the Trustee, shall be repaid by the Company upon
demand; and
(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.
Section 7.03. TRUSTEE NOT LIABLE FOR RECITALS IN INDENTURE OR IN
SECURITIES. The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Securities of any series. The Trustee represents that
it is duly authorized to execute and deliver this Indenture and perform its
obligations hereunder. The Trustee shall not be accountable for the use or
application by the Company of any of the Securities of any series or of the
proceeds thereof.
Section 7.04. TRUSTEE, PAYING AGENT OR SECURITY REGISTRAR MAY OWN
SECURITIES. The Trustee or any paying agent or Security Registrar with respect
to any series of Securities, in its individual or any other capacity, may become
the owner or pledgee of Securities of such series with the same rights it would
have if it were not Trustee, paying agent or Security Registrar with respect to
such Securities.
Section 7.05. MONEYS RECEIVED BY TRUSTEE TO BE HELD IN TRUST. Subject
to the provisions of Article Twelve hereof, all moneys received by the Trustee
shall, until used or applied as
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herein provided, be held in trust for the purposes for which they were received,
but 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.
Section 7.06. COMPENSATION AND REIMBURSEMENT. The Company covenants and
agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such reasonable compensation for all services rendered by it
hereunder as is mutually agreed upon by the Company and the Trustee (which shall
not be limited by any provisions of law in regard to the compensation of a
trustee of an express trust), and, except as otherwise expressly provided, the
Company will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents,
attorneys and counsel and of all persons not regularly in its employ) except any
such expense, disbursement or advance as may arise from its negligence or bad
faith. If any property other than cash shall at any time be subject to a lien in
favor of the Holders, the Trustee, if and to the extent authorized by a
receivership or bankruptcy court of competent jurisdiction or by the
supplemental instrument subjecting such property to such lien, shall be entitled
to make advances for the purpose of preserving such property or of discharging
tax liens or other prior liens or encumbrances thereon. The Company also
covenants to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense (including the reasonable 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) incurred without
negligence or bad faith on the part of the Trustee, arising out of or in
connection with the acceptance or administration of this trust. The obligations
of the Company under this Section 7.06 to compensate and indemnify the Trustee
and to pay or reimburse the Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of the Indenture and the resignation or removal of
the Trustee. Such additional indebtedness shall be secured by a lien, prior to
that of the Securities of any series with respect to which the indebtedness
arose, upon all property and funds held or collected by the Trustee, as such,
relating to such series except funds held in Trust for the payment of principal
of (and premium, if any) or interest on Securities of such series.
Section 7.07. RIGHT OF TRUSTEE TO RELY ON AN OFFICERS' CERTIFICATE
WHERE NO OTHER EVIDENCE SPECIFICALLY PRESCRIBED. Except as otherwise provided in
Section 7.01, whenever in the administration of the provisions of this Indenture
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, such
matter (unless other evidence in respect thereof is herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such Certificate, in the absence of
negligence or bad faith on the part of the Trustee, shall be full warrant to the
Trustee for any action taken, suffered or omitted by it under the provisions of
this Indenture upon the faith thereof.
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Section 7.08. DISQUALIFICATION OF TRUSTEE; CONFLICTING INTERESTS. If
the Trustee has or shall acquire any conflicting interest, as defined in the
Trust Indenture Act, then, within 90 days after ascertaining that it has such
conflicting interest, and if the default (as defined in the Trust Indenture Act)
to which such conflicting interest relates has not been cured or waived or
otherwise eliminated before the end of such 90-day period, the Trustee shall
either eliminate such conflicting interest or resign in the manner and with the
effect specified in the Trust Indenture Act and this Indenture.
Section 7.09. REQUIREMENTS FOR ELIGIBILITY OF TRUSTEE. The Trustee
hereunder shall at all times be a corporation or banking association organized
and doing business under the laws of the United States of America or of any
State or of the District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by Federal, State or District
of Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 7.09,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 7.10.
Section 7.10. RESIGNATION AND REMOVAL OF TRUSTEE. (a) The Trustee, or
any trustee or trustees hereafter appointed, may at any time resign as Trustee
with respect to any series of Securities by giving written notice of resignation
to the Company and by giving notice thereof to the Holders of the Securities of
such series in the manner and to the extent provided in subsection (c) of
Section 5.04. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee with respect to the Securities of such series shall have
been so appointed and have accepted appointment within 30 days after the mailing
of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any Holder
who has been a bona fide Holder of a Security or Securities of the affected
series for at least six months may, subject to the provisions of Section 6.08,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee with respect to the Securities of
such series. Such court may thereupon, after such notice, if any, as it may deem
proper and advisable, appoint a successor trustee with respect to the Securities
of such series.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
subsection (a) of Section 7.08 after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Security
or Securities of the affected series for at least six months, or
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(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 7.09 and shall fail to resign after written
request therefor by the Company or by any such Holder, or
(3) 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, the Company may remove the Trustee with respect to all
Securities of any affected series and appoint a successor trustee thereof by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor trustee, or subject to the provisions of Section 6.08,
any Holder who has been a bona fide Holder of a Security or Securities of such
series for at least six months 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 thereof. Such court
may thereupon, after such notice, if any, as it may deem proper and advisable,
remove the Trustee and appoint a successor trustee with respect to the
Securities of such series.
(c) The Holders of a majority in aggregate principal amount at Stated
Maturity of the Securities of any series at the time outstanding may at any time
remove the Trustee with respect to the Securities of such series and appoint a
successor trustee therefor by the delivery to the Trustee so removed, to the
successor trustee and to the Company of the evidence provided for in Section
8.01 of the action in that regard taken by such Holders.
(d) Any resignation or removal of the Trustee and any appointment of a
successor trustee for the Securities of any series pursuant to any of the
provisions of this Section 7.10 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 7.11.
Section 7.11. ACCEPTANCE BY SUCCESSOR TO TRUSTEE. (a) No successor
trustee with respect to any series of Securities shall accept appointment as
provided in this Section 7.11 unless at the time of such acceptance such
successor trustee shall be qualified under the provisions of Section 7.08 and
eligible under the provisions of Section 7.09.
(b) In case of the appointment hereunder of a successor trustee with
respect to all Securities, every such successor trustee so appointed shall
execute, acknowledge and deliver to the Company and to its predecessor Trustee
as provided in Section 7.10 an instrument accepting such appointment, and
thereupon the resignation or removal of the predecessor 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 predecessor Trustee with respect to all such Securities; but, on the request
of the Company or the successor trustee, such predecessor Trustee, with like
effect as if originally named as Trustee herein, shall, upon
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payment of its charges, execute and deliver an instrument transferring to such
successor trustee all the rights, powers and trusts of the predecessor Trustee
and shall duly assign, transfer and deliver to such successor trustee all
property and money held by such predecessor Trustee hereunder subject,
nevertheless, to its lien, if any, provided for in Section 7.06.
(c) In case of the appointment hereunder of a successor trustee with
respect to the Securities of one or more (but not all) series, the Company, the
predecessor Trustee and each successor trustee with respect to the Securities of
the affected series shall execute and deliver an indenture supplemental hereto
wherein each successor trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor trustee all the rights, powers,
trusts and duties of the predecessor Trustee with respect to the Securities of
that or those series to which the appointment of such successor trustee relates,
(2) if the predecessor Trustee is not retiring with respect to all Securities,
shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the predecessor
Trustee with respect to the Securities of that or those series as to which the
predecessor Trustee is not resigning shall continue to be vested in the
predecessor Trustee and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such trustees
co-trustees of the same trust and that each such trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such trustee; and upon the execution and delivery of
such supplemental indenture, the resignation or removal of the predecessor
Trustee shall become effective to the extent provided therein and each such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the predecessor Trustee
with respect to the Securities of that or those series to which the appointment
of such successor trustee relates; but, on request of the Company or any
successor trustee, such predecessor Trustee shall duly assign, transfer and
deliver to such successor trustee all property and money held by such
predecessor Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor trustee relates.
(d) Upon acceptance of appointment by a successor trustee with respect
to any series of Securities as provided in this Section 7.11, the Company shall
give notice of the succession of such trustee and the address of its Corporate
Trust Office to all Holders of Securities of any such series in the manner and
to the extent provided in subsection (c) of Section 5.04. If the Company fails
to provide such notice within 10 days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be provided
at the expense of the Company.
Section 7.12. SUCCESSOR TO TRUSTEE BY MERGER, 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 the corporate trust business
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of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be qualified under the provisions of Section 7.08 and eligible
under the provisions of Section 7.09 without the execution or filing of any
paper or any further act on the part on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of the particular series
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee
and deliver such Securities so authenticated; and in case at that time any of
the Securities of such series shall not have been authenticated, any successor
Trustee with respect to the Securities of such series may authenticate such
Securities either in the name of any predecessor hereunder with the consent of
such predecessor if the predecessor still exists, which consent shall not
unreasonably be withheld, or in the name of the successor trustee; and in all
such cases such certificates shall have the full force which it is anywhere in
such Securities or in this Indenture provided that the certificate of
authentication of the Trustee shall have; PROVIDED, HOWEVER, that the right to
adopt the certificate of authentication of any predecessor Trustee or to
authenticate Securities of the particular series in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 7.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
(a) Subject to the provisions of subsection (b) of this Section 7.13,
if the Trustee in its individual capacity shall be or shall become a creditor,
directly or indirectly, secured or unsecured, of the Company or of any other
obligor on any Securities within three months prior to a default, as defined in
subsection (c) of this Section 7.13, or subsequent to such a default, then,
unless and until such default shall be cured, the Trustee shall set apart and
hold in a special account for the benefit of the Trustee individually, the
Holders of the Securities and the holders of other indenture securities (as
defined in subsection (c) of this Section 7.13):
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest, effected after the beginning of such three months' period
and valid as against the Company and its other creditors, except any
such reduction resulting from the receipt or disposition of any
property described in paragraph (2) of this subsection, or from the
exercise of any right of set-off which the Trustee could have exercised
if a petition in bankruptcy had been filed by or against the Company
upon the date of such default; and
(2) all property received by the Trustee in respect of any
claim as such creditor, either as security therefor, or in satisfaction
or composition thereof, or otherwise, after the beginning of such three
months' period, or an amount equal to the proceeds of any such
property, if disposed of, subject, however, to the rights, if any, of
the Company and its other creditors in such property or such proceeds.
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Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account
of any such claim by any person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim
by the Trustee to a third person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to Title 11 of the United States Code or
applicable state law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such three months' period;
(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after the
beginning of such three months' period and such property was received
as security therefor simultaneously with the creation thereof, and if
the Trustee shall sustain the burden of proving, that at the time such
property was so received, the Trustee had no reasonable cause to
believe that a default as defined in subsection (c) of this Section
7.13 would occur within three months; or
(D) to receive payment of any claim referred to in paragraph
(B) or (C), against the release of any property held as security for
such claim as provided in such paragraph (B) or (C), as the case may
be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three months' period for property held as security
at the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any such paragraphs is created in renewal
of, or in substitution for or for the purpose of repaying or refunding any
pre-existing claim of the Trustee as such creditor, such claim shall have the
same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
between the Trustee, the Holders and the holders of other indenture securities
in such manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to Title 11 of the
United States Code or applicable state law, the same percentage of their
respective claims, figured before crediting to the claim of the Trustee anything
on account of the receipt by it from the Company of the funds and property in
such special account and before crediting to the respective claims of the
Trustee, the Holders and the holders of other indenture securities dividends on
claims filed against the Company in bankruptcy or receivership or in proceedings
for reorganization pursuant to Title 11 of the
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United States Code or applicable state law, but after crediting thereon receipts
on account of the indebtedness represented by their respective claims from all
sources other than from such dividends and from the funds and property so held
in such special account. As used in this paragraph, with respect to any claim,
the term "dividends" shall include any distribution with respect to such claim,
in bankruptcy or receivership or in proceedings for reorganization pursuant to
Title 11 of the United States Code or applicable state law, whether such
distribution is made in cash, securities or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim. The court in which such bankruptcy, receivership, or proceeding for
reorganization is pending shall have jurisdiction (i) to apportion between the
Trustee, the Holders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held in
such special account and the proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made to
the Trustee, the Holders and the holders of other indenture securities with
respect to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee who has resigned or been removed after the beginning of
such three months' period shall be subject to the provisions of this subsection
(a) as though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such three months' period, it
shall be subject to the provisions of this subsection (a) if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim which would
have given rise to the obligation to account, if such Trustee had
continued as Trustee, occurred after the beginning of such three
months' period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of
this Section 7.13 a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under
any indenture or any security or securities having a maturity of one
year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction, or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advance and of the
circumstances
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surrounding the making thereof is given to the Holders at the time and
in the manner provided in Section 5.04;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of
this Section 7.13;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
United States Federal Reserve Act, as amended, which is directly or
indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper as defined in
subsection (c) of this Section 7.13.
(c) As used in this Section 7.13:
(1) The term "default" shall mean any failure to make payment
in full of the principal or interest upon any Security of any series or
upon the other indenture securities when and as such principal or
interest becomes due and payable.
(2) The term "other indenture securities" shall mean
securities upon which the Company is an obligor (as defined in the
Trust Indenture Act of 1939) outstanding under any other indenture (A)
under which the Trustee is also trustee, (B) which contains provisions
substantially similar to the provisions of subsection (a) of this
Section 7.13, and (C) under which a default exists at the time of the
apportionment of the funds and property held in said special account.
(3) The term "cash transaction" shall mean any transaction in
which full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or in checks
or other orders drawn upon banks or bankers and payable upon demand.
(4) The term "self-liquidating paper" shall mean any draft,
bill of exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Company for the purpose of financing the
purchase, processing, manufacture, shipment, storage or sale of goods,
wares or merchandise and which is secured by documents evidencing title
to, possession of, or lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously
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with the creation of the creditor relationship with the Company arising
from the making, drawing, negotiating or incurring of the draft, bill
of exchange, acceptance or obligation.
(5) The term "Company" shall mean any obligor upon any
Security.
Section 7.14. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. Whenever
the Trustee shall deem it necessary or prudent in order to conform to any law of
any jurisdiction, or the Trustee shall be advised by counsel, satisfactory to
it, that it is necessary or prudent in the interest of the Holders of Securities
of any series or in the event that the Trustee shall have been requested to do
so by the Holders of a majority in principal amount at Stated Maturity of the
Securities of any series at the time outstanding, the Trustee and the Company
shall execute and deliver an indenture supplemental hereto and all other
instruments and agreements necessary or proper to constitute another bank or
trust company, or one or more persons appointed by the Company, either to act as
additional trustee or trustees hereunder, jointly with the Trustee, or to act as
separate trustee or trustees hereunder, in any such case with such powers with
respect to the affected series of Securities as may be provided in such
indenture supplemental hereto, and to vest in such bank, trust company or person
as such additional trustee or separate trustee, as the case may be, any
property, title, right, power, duty or obligation of the Trustee with respect to
the affected series of Securities deemed necessary or advisable by the Trustee,
subject to the provisions of this Section 7.14 below set forth. In the event the
Company shall not have joined in the execution of such indenture supplemental
hereto within ten days after the receipt of a written request from the Trustee
so to do, or in case an Event of Default with respect to the particular series
of Securities shall occur and be continuing, the Trustee may act under the
foregoing provisions of this Section 7.14 without the concurrence of the
Company; and the Company hereby appoints the Trustee its agent and
attorney-in-fact to act for it under the foregoing provisions of this Section
7.14 in either of such contingencies. The Trustee may execute, deliver and
perform any deed, conveyance, assignment or other instrument in writing as may
be required by any additional trustee or separate trustee for more fully and
certainly vesting in and confirming to it any property, title, right or powers
with respect to the affected series of Securities conveyed or conferred to or
upon such additional trustee or separate trustee, and the Company shall, upon
the Trustee's request, join therein and execute, acknowledge and deliver the
same; and the Company hereby makes, constitutes and appoints the Trustee its
agent and attorney-in-fact for it and in its name, place and stead to execute,
acknowledge and deliver any such deed, conveyance, assignment or other
instrument with respect to the affected series of Securities in the event that
the Company shall not itself execute and deliver the same within ten days after
receipt by it of such request so to do. Any supplemental indenture executed
pursuant to the provisions of this Section 7.14 shall conform to the provisions
of the Trust Indenture Act of 1939 as in effect as of the date of such
supplemental indenture.
Every additional trustee and separate trustee hereunder shall, to the
extent permitted by law, be appointed and act, and the Trustee shall act with
resect to a particular series of Securities, subject to the following provisions
and conditions:
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(1) the Securities of such series shall be authenticated by
the Trustee and all powers, duties, obligations and rights conferred
upon the Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Trustee;
(2) all other rights, powers, duties and obligations with
respect to the Securities of such series conferred or imposed upon the
Trustee and such additional trustee or separate trustee or any of them
shall be conferred or imposed upon and exercised or performed by the
Trustee and such additional trustee or trustees and separate trustee or
trustees jointly, except to the extent that, under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations with
respect to the Securities of such series shall be exercised and
performed by such additional trustee or trustees or separate trustee or
trustees;
(3) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee with respect to a particular series of Securities
shall be exercised hereunder by such additional trustee or separate
trustee except with the consent of the Trustee; and
(4) No trustee with respect to a particular series of
Securities hereunder shall be personally liable by reason of any act or
omission of any other trustee with respect to such series of Securities
hereunder.
If at any time the Trustee shall deem it no longer necessary or prudent in order
to conform to any such law or shall be advised by counsel that it is no longer
so necessary or prudent in the interest of the Holders of Securities of any
series or in the event that the Trustee shall have been requested to do so in
writing by the Holders of a majority in principal amount at Stated Maturity of
the Securities of such series at the time outstanding, the Trustee and the
Company shall execute and deliver an indenture supplemental hereto and all other
instruments and agreements necessary or proper to remove any additional trustee
or separate trustee with respect to such series. In the event that the Company
shall not have joined in the execution of such indenture supplemental hereto,
instruments and agreements, the Trustee may act on behalf of the Company to the
same extent provided above.
Any additional trustee or separate trustee with respect to any series
of Securities may at any time by an instrument in writing constitute the
Trustee, its agents or attorney-in-fact with full power and authority, to the
extent which may be authorized by law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise with
respect to such series, for and in its behalf and in its name. In case any such
additional trustee or separate trustee shall die, become incapable of acting,
resign or be removed, all the assets, property, rights, powers, trusts, duties
and obligations of such additional trustee or separate trustee with respect to
such series, as the case may be, so far as permitted by law, shall vest in and
be exercised by the Trustee, without the appointment of a new successor to such
additional trustee
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or separate trustee unless and until a successor with respect to such series is
appointed in the manner hereinbefore provided.
Any request, approval or consent in writing by the Trustee to any
additional trustee or separate trustee of any series of Securities shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action with respect to the particular series of Securities
as may be so requested, approved or consented to.
Each additional trustee or separate trustee appointed pursuant to this
Section 7.14 shall be subject to, and shall have the benefit of, Articles Six,
Seven (other than Section 7.09) and Eight hereof and the following Sections of
this Indenture shall be specifically applicable to each additional trustee and
separate trustee: 5.04(a) (except to the extent that reference therein is made
to its eligibility under Section 7.09), (b), (c) and (d), 6.02, 6.07, 7.01, 7.06
and 7.13; PROVIDED, HOWEVER, that no resignation of an additional or separate
trustee pursuant to Section 7.10 hereof shall be conditioned in any sense
whatever upon the appointment of a successor to such trustee.
ARTICLE EIGHT
CONCERNING THE HOLDERS
Section 8.01. EVIDENCE OF ACTION BY HOLDERS. Whenever in this Indenture
it is provided that the Holders of a specified percentage in aggregate principal
amount at Stated Maturity of the Securities of any series may take any action
(including the making of any demand or request, the giving of any direction,
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the Holders of such specified percentage have
joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Holders in person or by agent or
proxy appointed in writing, or (b) by the record of such Holders voting in favor
thereof at any meeting of such Holders duly called and held in accordance with
the provisions of Article Nine, or (c) by a combination of such instrument or
instruments and any such record of such a meeting of such Holders.
Section 8.02. PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
SECURITIES. Subject to the provisions of Sections 7.01, 7.02 and 9.05, proof of
the execution of any instrument by a Holder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
shall be satisfactory to the Trustee.
The ownership of a registered Security shall be proved by the Security
Register relating to the series or by a certificate of the Security Registrar.
The ownership of an unregistered Security or any coupon attached to
such Security at its issuance shall be proved by the production of such Security
or coupon or, with respect to unregistered Securities only, by a certificate
executed by any trust company, bank, broker or
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other depositary, wherever situated, if such certificate shall be acceptable to
the Trustee, showing that at the date therein mentioned such person had on
deposit with such depositary, or exhibited to it, the Securities therein
described; or such facts may be proved by the certificate or affidavit of the
person holding such Security, if such certificate or affidavit is acceptable to
the Trustee. The Trustee and the Company may assume that such ownership of any
unregistered Security continues until (1) another certificate or affidavit
bearing a later date issued in respect of the same Security is produced, (2)
such Security is produced by some other person or (3) such Security is no longer
outstanding. The amount of unregistered Securities held by any person may also
be proved in any other manner which the Trustee deems sufficient.
The Trustee may require such additional proof of any matter referred to
in this Section 8.02 as it shall deem necessary.
The record of any meeting of Holders shall be proved in the manner
provided in Section 9.06.
Section 8.03. WHO MAY BE DEEMED OWNER OF SECURITIES. Prior to due
presentment for registration of transfer of a registered Security of any series,
the Company, the Trustee, any paying agent and any Security Registrar may deem
and treat the person in whose name such Security shall be registered or, in the
case of unregistered Securities, the bearer thereof or the owner thereof
determined, pursuant to Section 8.02, as the absolute owner of such Security
(whether or not such Security shall be overdue and notwithstanding any notation
of ownership or other writing thereon made by anyone) for the purpose of
receiving payment of or on account of the principal of (and premium, if any) and
interest on such Security and for all other purposes, and neither the Company
nor the Trustee nor any paying agent nor any Security Registrar shall be
affected by any notice to the contrary; and all such payments so made to any
such Holder for the time being, or upon his order, shall be valid and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
Section 8.04. SECURITIES OWNED BY COMPANY OR CONTROLLED OR CONTROLLING
COMPANIES DISREGARDED FOR CERTAIN PURPOSES. In determining whether the Holders
of the requisite aggregate principal amount at Stated Maturity of Securities of
any series have concurred in any direction, consent or waiver under this
Indenture, Securities of such series which are owned by the Company or any other
obligor on the Securities of such series or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Securities of such series shall be
disregarded and deemed not to be outstanding for the purposes of any such
determination, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver, only
Securities of such series which the Trustee knows are so owned shall be so
disregarded. Securities of such series so owned which have been pledged in good
faith may be regarded as outstanding for the purposes of this Section 8.04 if
the pledgee shall establish to the satisfaction of the Trustee the pledgee's
right to vote such Securities and that the pledgee is not the Company or any
other obligor on the Securities of such series or a person directly or
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indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In the case of a dispute as
to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection for the Trustee.
Section 8.05. INSTRUMENTS EXECUTED BY HOLDERS BIND FUTURE HOLDERS. At
any time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.01, of the taking of any action by the Holders of the percentage in
aggregate principal amount at Stated Maturity of the Securities of any series
specified in this indenture in connection with such action, any Holder of a
Security of such series which is shown by the evidence to be included in the
Securities of the particular series the Holders of which have consented to such
action may, by filing written notice with the Trustee at its Corporate Trust
Office and upon proof of holding as provided in Section 8.02, revoke such action
so far as concerns such Security. Except as aforesaid, any such action taken by
the Holder of any Security shall be conclusive and binding upon such Holder and
upon all future Holders and owners of such Security, and of any Security issued
upon registration of transfer thereof or in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon such
Security or such other Security. Any action taken by the Holders of the
percentage in aggregate principal amount at Stated Maturity of the Securities of
any series specified in this Indenture in connection with such action shall be
conclusively binding upon the Company, the Trustee and the Holders of all such
Securities.
Section 8.06. RECORD DATE FOR DETERMINATION OF HOLDERS ENTITLED TO
VOTE. The Company may, in the circumstances permitted by the Trust Indenture
Act, set a Record Date for the purpose of determining the Holders 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. If not set by the Company prior to the first
solicitation of a Holder made by any Person 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 required to be provided pursuant to Section 4.01) prior to such
first solicitation or vote, as the case may be. With regard to any record date,
only the Holders on such date (or their duly appointed proxies) shall be
entitled to give or take, or vote on, the relevant action.
ARTICLE NINE
HOLDERS' MEETINGS AND CONSENTS
Section 9.01. PURPOSES FOR WHICH MEETING MAY BE CALLED. A meeting of
Holders of Securities of any series may be called at any time and from time to
time pursuant to the provisions of this Article Nine for any of the following
purposes:
(1) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiving of any
default hereunder and its
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consequences, or to take any other action authorized to be taken by
Holders of Securities of such series pursuant to any of the provisions
of Article Six;
(2) to remove the Trustee and appoint a successor trustee with
respect to Securities of such series pursuant to the provisions of
Article Seven;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.02; or
(4) to take any other action to be taken by or on behalf of
the Holders of any specified aggregate principal amount at Stated
Maturity of Securities of such series under any other provision of this
Indenture or under applicable law.
Section 9.02. MANNER OF CALLING MEETINGS. The Trustee may at any time
call a meeting of Holders of Securities of any series to take any action
specified in Section 9.01, to be held at such time and at such place in the
Borough of Manhattan, The City and State of New York, or at such other location
as the Trustee shall determine. With respect to registered Securities of any
series, notice of every such meeting, setting forth the time and the place of
such meeting, and in general terms the action proposed to be taken at such
meeting, shall be mailed to such Holders at their addresses as they shall appear
on the Security Register with respect to such Securities. With respect to
unregistered Securities of any series, notice of every such meeting shall be
published in an authorized newspaper on two separate days. Such notice shall be
provided not less than 20 nor more than 120 days prior to the date fixed for the
meeting.
Section 9.03. CALL OF MEETINGS BY COMPANY OR HOLDERS. In case at any
time the Company, pursuant to a Certified Board Resolution, or the Holders of at
least ten percent in aggregate principal amount at Stated Maturity of Securities
of any series then outstanding shall have requested the Trustee to call a
meeting of Holders of Securities of such series to take any action authorized in
Section 9.01 by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have provided the
notice of such meeting within 20 days after receipt of such request, then the
Company or the Holders of such Securities in the amount above specified may
determine the time and the place in the Borough of Manhattan, The City and State
of New York, for such meeting and may call such meeting by providing notice
thereof as provided in Section 9.02.
Section 9.04. WHO MAY ATTEND AND VOTE AT MEETINGS. To be entitled to
vote at any meeting of Holders of a particular series of Securities, a person
shall (a) be a Holder of one or more Securities of such series or (b) be a
person appointed by an instrument in writing as proxy by a Holder of one or more
Securities of such series. The only persons who shall be entitled to be present
or to speak at any meeting of Holders of a particular series of Securities shall
be the persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
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Section 9.05. REGULATIONS MAY BE MADE BY TRUSTEE. Notwithstanding any
other provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Holders of Securities of
a particular series, in regard to proof of the holding of Securities of such
series and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem necessary. Except as
otherwise permitted or required by any such regulations, the holding of
Securities of such series shall be proved in the manner specified in Section
8.02 and the appointment of any proxy shall be proved in the manner specified in
Section 8.02.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders as provided in Section 9.03, in which case the Company or
such Holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting may be elected by vote of the Holders of a majority in principal
amount at Stated Maturity of Securities of the particular series represented at
the meeting and entitled to vote.
Subject to the provisions of Section 8.04, at the meeting each Holder
of Securities of the particular series or proxy entitled to vote shall have one
vote for each $1,000 principal amount at Stated Maturity of Securities of such
series held or represented by him; PROVIDED, HOWEVER, that no vote shall be cast
or counted at any meeting in respect of any Security of such series challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Securities of such series held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other Holders
of Securities of the particular series. At any meeting of Holders duly called
pursuant to the provisions of Section 9.02 or Section 9.03, the presence of
persons holding or persons representing Securities of the particular series in
an aggregate principal amount at Stated Maturity sufficient to take action on
the business for the transaction of which such meeting was called shall
constitute a quorum, but, if less than a quorum be present, the meeting may be
adjourned from time to time by the Holders of a majority in principal amount at
Stated Maturity of the Securities of such series represented at the meeting and
entitled to vote, and the meeting may be held as so adjourned without further
notice.
Section 9.06. MANNER OF VOTING AT MEETINGS AND RECORD TO BE KEPT. The
vote upon any resolution submitted to any meeting of Holders of Securities of
any series shall be by written ballots on which shall be subscribed the
signatures of the Holders or proxies entitled to vote. The chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting, of Holders of Securities of any series shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or
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more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was given as provided in Section 9.02.
The record shall be signed and verified by the affidavits of the chairman and
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 9.07. WRITTEN CONSENT IN LIEU OF MEETINGS. The written
authorization or consent of the requisite percentage herein provided of Holders
of Securities of any series entitled to vote at any meeting of Holders of
Securities of a particular series, evidenced as provided in Article Eight and
filed with the Trustee, shall be effective in lieu of a meeting of such Holders
with respect to any matter provided for in this Article Nine.
Section 9.08. NO DELAY OF RIGHTS BY MEETING. Nothing in this Article
Nine contained shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Holders of Securities of any series, or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Holders of Securities of such series under any of the
provisions of this Indenture or of the Securities of such series.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
Section 10.01. PURPOSES FOR WHICH SUPPLEMENTAL INDENTURES MAY BE
ENTERED INTO WITHOUT CONSENT OF HOLDERS. Without the consent of Holders, the
Company, when authorized by a resolution of its Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act of 1939 as in force at the date of the execution thereof)
for one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article Eleven;
(b) to appoint one or more additional or separate trustees to
act under this Indenture in the manner and to the extent contemplated
by Section 7.14;
(c) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions for the protection of
the Holders of Securities of any or all series as its Board of
Directors and the Trustee shall consider to be for the protection of
the Holders of Securities of such series, and to make the occurrence,
or the
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occurrence and continuance, of a default of any such additional
covenants, restrictions, conditions or provisions a default or an Event
of Default permitting the enforcement of all or any of the several
remedies provided in this Indenture as herein set forth with respect to
Securities to such series, PROVIDED, HOWEVER, that in respect of any
such additional covenant, restriction, condition or provision with
respect to Securities of such series, such supplemental indenture may
provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default
or may limit the remedies available to the Trustee upon such default or
may limit the right of the Holders of a majority in aggregate principal
amount at Stated Maturity of the Securities of such series to waive
such default;
(d) to add, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that
any such addition, change or elimination (i) shall neither (A) apply to
any Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision
nor (B) modify the rights of the Holder of any such Security with
respect to such provision or (ii) shall become effective only when
there is no such Security Outstanding;
(e) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture; to convey, transfer, assign, mortgage
or pledge any property to or with the Trustee; or to make such other
provisions in regard to matters or questions arising under this
Indenture as shall not adversely affect the interests of Holders of
Securities of any series;
(f) to modify, amend or supplement this Indenture to comply
with the provisions of Section 11.01;
(g) to provide for the issuance of unregistered Securities, or
the exchangeability of registered Securities of any series with
unregistered Securities of a series issued hereunder, or vice versa,
and to make all appropriate changes for such purpose;
(h) to provide for the issuance under this Indenture of
Securities of a series having any form or terms contemplated by
Sections 2.01 and 2.02; and
(i) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 7.14.
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The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Trustee shall not be obligated to entered into any supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
10.01 may be executed by the Company and the Trustee without the consent of the
Holders of any Securities of any series at the time outstanding, notwithstanding
any of the provisions of Section 10.02.
Section 10.02. MODIFICATION OF INDENTURE WITH CONSENT OF HOLDERS. With
the consent (evidenced as provided in Section 8.01) of the Holders of not less
than a majority in aggregate principal amount at Stated Maturity of the
Securities of each series affected at the time outstanding, the Company, when
authorized by a resolution of its Board of Directors, and the Trustee may from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of 1939
as in force at the date of execution thereof) with respect to Securities of the
particular series for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture relating to such series of Securities or of modifying in
any manner the rights of the Holders of Securities of the particular series;
PROVIDED, HOWEVER, that no such supplemental indenture shall (i) extend the
Stated Maturity of any Security, reduce the principal amount thereof, reduce the
rate or extend the time of payment of any interest thereon, reduce any premium
payable upon the redemption thereof, reduce the amount of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of Stated Maturity thereof pursuant to Section 6.01, modify
provisions relating to amount or regularity of mandatory Sinking Fund payments
or make the principal amount thereof payable in any money other than United
States legal tender for the payment of public or private debts, without the
consent of the Holder of each Security so affected, or (ii) reduce the aforesaid
percentage of Securities of any series, the consent of the Holders of which is
required for any such supplemental indenture, without the consent of the Holders
of all Securities of each affected series.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with resect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any series not so affected.
Upon the request of the Company, accompanied by a Certified Board
Resolution authorizing the execution of any such supplemental indenture relating
to Securities of a particular series, and upon the filing with the Trustee of
evidence of the consent of Holders of Securities of the particular series as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own
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rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such supplemental indenture.
It shall not be necessary for the Holders of Securities of a particular
series to approve under this Section 10.02 the particular form of any proposed
supplemental indenture with respect to such series of Securities, but it shall
be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 10.02, the
Company shall mail a notice thereof by first-class mail to the Holders of
registered Securities of each series affected thereby at their addresses as they
shall appear on the Security Register for such Securities, or, in the case of
unregistered Securities, shall give notice in the manner and to the extent
provided in subsection (c) of Section 5.04, setting forth in general terms the
substance of such supplemental indenture. Any failure of the Company to provide
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
Section 10.03. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution
and delivery of any supplemental indenture with respect to any series of
Securities pursuant to the provisions of this Article Ten, this Indenture shall
be and be deemed to be modified and amended with respect to the affected series
of Securities in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the Holders of Securities of the series affected shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
The Trustee, subject to the provisions of Sections 7.01 and 7.02, may
regard an Opinion of Counsel as conclusive evidence that any such supplemental
indenture with respect to any series of Securities complies with the provisions
of this Article Ten.
Section 10.04. SECURITIES MAY BEAR NOTATION OF CHANGES BY SUPPLEMENTAL
INDENTURES. Securities authenticated and delivered after the execution, pursuant
to the provisions of this Article Ten, of any supplemental indenture with
respect to any series of Securities may bear a notation in the form acceptable
to the Trustee as to any matter provided for in such supplemental indenture. New
Securities of the affected series so modified as to conform, in the opinion of
the Trustee and the Board of Directors of the Company, to any modification of
this Indenture contained in any such supplemental indenture with respect to such
series of Securities may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Securities of the particular series
then outstanding.
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ARTICLE ELEVEN
CONSOLIDATION, MERGER, SALE, CONVEYANCE OR LEASE
Section 11.01. COMPANY MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. Nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of the Company with or into any other corporation or
corporations (whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any sale, conveyance or lease of
all or substantially all the property of the Company to any other corporation
(whether or not affiliated with the Company) authorized to acquire and operate
the same; PROVIDED, HOWEVER, and the Company hereby covenants and agrees, that
upon any such consolidation, merger, sale, conveyance or lease, other than a
merger in which the Company is the continuing corporation, (i) the due and
punctual payment of the principal of and interest on all the Securities,
according to their tenor, and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be performed by the
Company, shall be expressly assumed, by supplemental indenture satisfactory in
form to the Trustee, executed an delivered to the Trustee by the corporation (if
other than the Company) formed by such consolidation, or into which the Company
shall have been merged, or by the corporation which shall have acquired or
leased such property and (ii) the Company or successor entity, as the case may
be, shall not, immediately after such merger or consolidation, or such sale,
conveyance or lease, be in default in the performance of any such covenant or
condition.
Section 11.02. SUCCESSOR CORPORATION TO BE SUBSTITUTED. In case of any
such consolidation, merger, sale, conveyance or lease referred to in Section
11.01 and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the due and punctual payment of the principal of and interest on all
of the Securities and the due and punctual performance of all of the covenants
and conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as a party. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of Sundstrand Corporation any or all of the Securities issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor corporation instead of the
Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Securities which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for the purpose. All the Securities so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date of the execution
hereof. In the event of any such sale or conveyance, but not any such lease, the
Company or any successor corporation which shall theretofore previously have
become
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such in the manner described in this Article Eleven shall be discharged from all
obligations and covenants under this Indenture and the Securities and may be
dissolved and liquidated.
In case of any such consolidation, merger, sale, conveyance or lease
referred to in Section 11.01, such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued as may be
appropriate.
Section 11.03. OPINION OF COUNSEL AND OFFICERS' CERTIFICATE TO BE GIVEN
TRUSTEE. The Trustee, subject to Section 7.01 and 7.02, shall be provided with,
and shall be fully protected in relying upon, an Opinion of Counsel and an
Officers' Certificate stating that any such consolidation, merger, sale,
conveyance or lease and any such assumption complies with the provisions of this
Article Eleven.
ARTICLE TWELVE
DISCHARGE OF INDENTURE AND DEFEASANCE
Section 12.01. TERMINATION OF COMPANY'S OBLIGATIONS.
(a) If the Securities of any series so provide, the Company shall be
deemed to have paid and discharged the entire indebtedness on all the Securities
of a series, and except as otherwise provided in subsection (d) of this Section
12.01, the provisions of this Indenture as it relates to such Securities shall
no longer be in effect, and the Trustee, at the expense of the Company, shall,
upon Company Direction, execute proper instruments acknowledging the same if the
conditions set forth in paragraphs (1) or (2) or (3) below are satisfied:
(1)(A) all Securities of such series theretofore authenticated
and delivered (other than (i) Securities which have been destroyed,
lost or stolen and which have been replaced or paid as provided in
Section 2.07 and (ii) Securities for whose payment money (defined for
purposes of this Article Twelve as such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts) has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 12.03) have been delivered to the Trustee for cancellation;
(B) the Company has paid or caused to be paid all other sums
payable under this Indenture in respect of the Securities of such
series; and
(C) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction of the
entire indebtedness on all Securities of any such series and the
discharge of this Indenture as it relates to such Securities have been
complied with; or
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(2)(A) all Securities of such series not theretofore delivered
to the Trustee for cancellation (i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year, or (iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company;
(B) the condition described in Section 12.01(b)(1) has been
satisfied;
(C) the conditions described in paragraphs 1(B) and 1(C) of
this Section 12.01(a) have been satisfied; and
(D) the Company has received an Opinion of Counsel to the
effect that the satisfaction and discharge contemplated by this Section
12.01(a)(2) will not violate the then applicable rules of, or any
related undertaking of the Company to any nationally-recognized
securities exchange on which Securities of that series are listed; or
(3)(A) the conditions referred to or described in paragraphs
2(B), 2(C) and 2(D) of this Section 12.01(a) have been satisfied; and
(B) no Event of Default or event which with notice or lapse of
time would become an Event of Default shall have occurred and be
continuing on the date of the deposit referred to in Section
12.01(b)(1) on the 91st day after the date of such deposit; PROVIDED,
HOWEVER, that should that condition fail to be satisfied on or before
such 91st day, the Trustee shall promptly, upon satisfactory receipt of
evidence of such failure, return such deposit to the Company.
(b) If the Securities of any series so provide, except as otherwise
provided in subsection (d) of this Section 12.01, the Company may, at its
option, cease to be under any and all obligations with respect to the Securities
of any series or cease to be under any obligation to comply with any term,
provision or condition set forth in Sections 4.05 and 4.06, and Section 6.01(c)
with respect to Sections 4.05 and 4.06 shall not be deemed to be an Event of
Default under the Indenture and the Debt Securities of such series, at any time
after the applicable conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities of such series (i) money in an amount, or
(ii) U.S. Government Obligations which through the payment of interest
and principal in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment,
money in an amount, or (iii) a combination of (i) and (ii), sufficient,
after payment based on then applicable law, of all Federal, state and
local taxes in respect thereof, payable by the Trustee, in the opinion
(with respect to (ii) and (iii)) of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge
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each instalment of principal (including mandatory Sinking Fund
payments) of, and premium, if any, with respect to and interest on, the
Outstanding Securities of such series on the dates such instalments of
interest or principal are due;
(2) if the Securities of such series are then listed on any
national securities exchange, the Company shall have delivered to the
Trustee an Opinion of Counsel to the effect that the Company's exercise
of its option under this paragraph would not cause such Securities to
be delisted;
(3) the interest in the Holders in such deposit shall have
been duly perfected under applicable provisions of the Uniform
Commercial Code;
(4) no Event of Default or event (including such deposit)
which with notice or lapse of time would become an Event of Default
with respect to the Securities of such series shall have occurred and
be continuing on the date of such deposit;
(5) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that Holders of the Securities of such series
will not recognize income, gain or loss for Federal income tax purposes
as a result of the Company's exercise of its option under this Section
12.01(b) and will be subject to Federal income tax on the same amount
and in the same manner and at the same times as would have been the
case if such option had not been exercised; and
(6) the Company has delivered to the Trustee an Opinion of
Counsel and Officer's Certificate, each stating that all of the
conditions in this Section 12.01(b) have been complied with.
(c) For purposes of this Article Twelve, "U.S. Government Obligations"
means securities that are (i) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case under clauses (i) or (ii) are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligation or a specific payment of interest
to any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
(d) The Company's obligations in Sections 2.05, 2.07, 4.02, 4.03, 4.04,
5.01, 5.02(a), 7.06, 7.10, 7.11 and 14.01 with respect to the Securities of such
series, shall survive
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until all of the Securities of such series are no longer outstanding. Thereafter
the Company's obligations in Sections 7.06 and 14.01 shall survive.
(e) After a deposit described in subsection (a) or (b) of this Section
12.01, such moneys or payments of principal of and any interest on such U.S.
Government Obligations, as the case may be, shall be payable to the Holders of
the Securities of such series, as principal of and any interest on such
Securities, in the manner and on the dates specified in the Securities of such
series. The Trustee then shall, upon request, acknowledge in writing the
discharge of the Company's obligations under the Securities of such series and
this Indenture with respect to the Securities of such series, except for those
surviving obligations specified above. Prior to making any deposit pursuant to
this Article Twelve, the Company shall mail a notice by first-class mail to each
Holder of Registered Securities of such series and, if the Securities of such
series were initially issued as unregistered Securities, shall cause to be
published at least once in an authorized newspaper a notice, in each case, that
states that the Company intends to take such action.
(f) Notwithstanding any of the foregoing, the Trustee's rights, duties,
obligations and immunities under this Indenture with respect to Securities of
any series shall survive until all of the Securities of such series are no
longer outstanding.
Section 12.02. APPLICATION OF TRUST DEPOSIT. The Trustee shall hold in
trust any money or U.S. Government Obligations deposited with it pursuant to
Section 12.01. The Trustee shall apply the deposited money or payments of
principal of and any interest on U.S. Government Obligations through the paying
agent and in accordance with this Indenture to the payment of principal and
interest, if any, on the Securities of the series, or to the payment of any
mandatory Sinking Fund payments, for which the money or U.S. Government
Obligations have been deposited.
Section 12.03. REPAYMENT TO COMPANY. The Trustee and the paying agent
shall promptly pay to the Company upon written request any excess money or U.S.
Government Obligations held by them at any time. Subject to applicable law, any
money or U.S. Government Obligations deposited with the Trustee or any paying
agent, or then held by the Company, in trust for the payment of the principal of
(and premium, if any) or any interest on any Security, or for the payment of any
mandatory Sinking Fund payments, and remaining unclaimed for two years after
such principal, premium or interest, or such mandatory Sinking Fund payments,
have become due and payable shall be paid to the Company on written 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 or U.S. Government
Obligations, and all liability of the Company as trustee thereof, shall
thereupon cease.
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ARTICLE THIRTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS, DIRECTORS AND EMPLOYEES
Section 13.01. INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS AND
EMPLOYEES OF COMPANY EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon
any obligation, covenant or agreement of this Indenture, or of any Security or
for any claim based thereon or otherwise in respect thereof, shall be had
against any incorporator, stockholder, officer, director or employee, as such,
past, present or future, of the Company or of any successor corporation, either
directly or through the Company, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that this Indenture and the obligations issued
hereunder are solely corporate obligations, and that no such personal liability
whatever shall attach to, or is or shall be incurred by, the incorporators,
stockholders, officers, directors or employees, as such, of the Company or of
any successor corporation, or any of them, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Securities
or implied therefrom; and that any and all such personal liability, either at
common law or in equity or by constitution or statute of, and any and all such
rights and claims against every such incorporator, stockholder, officer,
director or employee, as such, because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations, covenants or
agreements contained in this Indenture or in any of the Securities or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution and delivery of this Indenture and the issue of
Securities hereunder.
ARTICLE FOURTEEN
MISCELLANEOUS PROVISIONS
Section 14.01. SUCCESSORS AND ASSIGNS OF COMPANY BOUND BY INDENTURE.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or in behalf of the Company shall bind its successors and assigns,
whether so expressed or not.
Section 14.02. ACTS OF BOARD, COMMITTEE OR OFFICER OF SUCCESSOR
CORPORATION VALID. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
that time be the successor of the Company.
Section 14.03. REQUIRED NOTICES OR DEMANDS. Except as provided in
Section 6.01(c) and (d), any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
any Holders of Securities of any series to or on the
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<PAGE> 75
Company may be given or served by being deposited first-class postage prepaid in
a post office letter box in the United States addressed (until another address
is filed by the Company with the Trustee) as follows or delivered by hand or
courier to: Sundstrand Corporation, 4949 Harrison Avenue, P.O. Box 7003,
Rockford, Illinois 61125-7003, to the attention of the Secretary. Any notice,
direction, request or demand by the Company or by any Holder to or upon the
Trustee may be given or made, for all purposes, by being deposited first-class
postage prepaid in a post office letter box in the United States addressed to
the Corporate Trust Office. Any notice required or permitted to be mailed to a
Holder of Securities of any series by the Company or the Trustee pursuant to the
provisions of this Indenture shall be deemed to be properly mailed by being
deposited first-class postage prepaid in a post office letter box in the United
States addressed to such Holder at the address of such Holder as shown on the
Security Register for the particular series of Securities. Any notice required
or permitted to be given to a Holder of unregistered Securities of any series
shall be deemed to be properly given if such notice is published in an
authorized newspaper on two separate days. Notices, directions, requests and
demands shall be deemed delivered on the third day after being properly mailed,
on the day delivered if delivered by hand or by courier and on the day after the
second publication if given by publication in an authorized newspaper on two
separate days.
Section 14.04. INDENTURE AND SECURITIES TO BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. This Indenture and each Security shall
be deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be governed by and construed in accordance with the laws of
such State. The descriptive headings of the Articles and Sections of this
Indenture are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
Section 14.05. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL TO BE
FURNISHED UPON APPLICATION OR DEMAND BY THE COMPANY. Upon any application or
demand by the Company to the Trustee to take any action under any of the
provisions of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent 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 have been complied with, except that in the case of any such
application or demand as to which the furnishing of any such document is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion, as the
case may be, need be furnished.
Except as otherwise provided in this Indenture, each certificate or
opinion provided for in this Indenture (other than certificates provided
pursuant to Section 5.03(d)) and delivered to the Trustee with respect to
compliance with a condition or covenant provided for in this Indenture shall
include: (1) a statement that the person making such certificate or opinion has
read such covenant or condition; (2) 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; (3) a statement that, in the
opinion of such person, he or she has made such examination or investigation as
is necessary to enable him or her to express an informed opinion as to
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whether or not such covenant or condition has been complied with; and (4) a
statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.
Section 14.06. PAYMENTS DUE ON HOLIDAYS. In any case where the date of
maturity of interest on or principal of any Security or the date fixed for
redemption of any Security shall not be a business day, then payment of interest
or principal (and premium, if any) 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 date of maturity or the date fixed for redemption, and no interest
shall accrue for the period after such date.
Section 14.07. PROVISIONS REQUIRED BY TRUST INDENTURE ACT OF 1939 TO
CONTROL. If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 through 317 of the Trust Indenture
Act, by the operation of Section 318(c) thereof, such imposed duties shall
control, except as, and to the extent, expressly excluded from this Indenture,
as permitted by the Trust Indenture Act. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, such modification or exclusion shall be controlling.
Section 14.08. INDENTURE MAY BE EXECUTED IN COUNTERPARTS. This
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
Section 14.09. SEPARABILITY CLAUSE. In case any provision in this
Indenture or in the Securities 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.
The party of the second part hereby accepts the trusts in this
Indenture declared and provided upon the terms and conditions hereinabove set
forth.
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IN WITNESS WHEREOF, SUNDSTRAND CORPORATION, the party of the first
part, and THE FIRST NATIONAL BANK OF CHICAGO, the party of the second part, have
caused this Indenture to be duly executed, and their respective corporate seals
to be affixed and attested, all as of the day and year first above written.
SUNDSTRAND CORPORATION
[CORPORATE SEAL] By
------------------------------------------
Name: Paul Donovan
Title: Executive Vice President and
Chief Financial Officer
Attest:
- -----------------------------
Assistant Secretary
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
[CORPORATE SEAL] By
------------------------------------------
Name:
Title:
Attest:
- -----------------------------
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STATE OF ILLINOIS )
) SS:
COUNTY OF WINNEBAGO )
I, _______________, do hereby certify that on the ____ day of December,
1998, ____________ and _________________ personally appeared before me and being
first duly sworn by me severally acknowledged that they signed the foregoing
document in the respective capacities therein set forth and declared that the
statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
----------------------------------------
NOTARY PUBLIC
My Commission Expires:
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
On this ____ day of December, 1998, before me personally came
_____________ to me known, who, being by me duly sworn, did depose and say that
he or she is an _______________________ of THE FIRST NATIONAL BANK OF CHICAGO,
one of the parties described in and which executed the above instrument; that he
or she knows the corporate seal of said corporation; that the seal affixed to
the instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said Corporation, and that he or she signed his or her
name thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand the day and the year in
this Certificate first above written.
----------------------------------------
NOTARY PUBLIC
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SCHEDULE A(1)
[FORM OF FACE OF SECURITY]
SUNDSTRAND CORPORATION
No........... $..........
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT ANY
LEGEND REQUIRED FOR FEDERAL INCOME TAX PURPOSES.]
[DESIGNATION OF SECURITIES OF EACH SERIES AS
SPECIFIED IN THE INSTRUMENT ESTABLISHING SUCH SERIES]
SUNDSTRAND CORPORATION, a corporation incorporated under the laws of the State
of Delaware (hereinafter called the "Company"), for value received, hereby
promises to pay [IF THE SECURITY IS UNREGISTERED, INSERT-BEARER] [IF THE
SECURITY IS REGISTERED, INSERT , OR REGISTERED ASSIGNS] the principal sum of
DOLLARS on at the office or agency of the Company in the Borough of
Manhattan,The City and State of New York and such other location or locations as
may be provided for pursuant to the Indenture referred to on the reverse hereof,
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts [IF
THE SECURITY IS REGISTERED AND BEARS INTEREST PRIOR TO ITS STATED MATURITY,
INSERT and to pay interest on said principal sum at the rate of % per
annum, at said offices or agencies, in like coin or currency, from the or ,
as the case may be, next preceding the date of this [SECURITY] TO WHICH INTEREST
HAS BEEN PAID OR DULY PROVIDED FOR ON THE [SECURITIES], OR, IF THE DATE OF THIS
[SECURITY] IS A OR TO WHICH INTEREST HAS BEEN PAID OR DULY PROVIDED FOR ON
THE [SECURITIES], from or, if the date of this [SECURITY] is after any or
, and prior to the next succeeding or , from such or ; provided,
however, that if an to the extent the Company shall default in payment of the
interest due on such or then from the next preceding or to which
interest has been paid or duly provided for on the [SECURITIES], or if no
interest has been paid or duly provided for on the [SECURITIES], from .
Interest will be payable on , and semi-annually on each and
thereafter, until payment of said principal sum has been made or duly provided
for. The interest so payable on any or will, subject to certain
exceptions provided in the Indenture referred to on the reverse hereof, be paid
to the person in whose name this [SECURITY] is registered at the close of
business on the Record Date ( of , as the case may be) next preceding
such or and may, at the option of the Company, be paid by check mailed
to the person entitled thereto at his address last appearing on the Security
Register.]
The provisions of this [SECURITY] are continued on the reverse hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
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<PAGE> 80
This [SECURITY] shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed manually
by the Trustee under the Indenture referred to on the reverse hereof.
In Witness Whereof, SUNDSTRAND CORPORATION has caused this [SECURITY]
to be signed by its duly authorized officers, manually or in facsimile, and a
facsimile of its corporate seal to be imprinted hereon.
Dated:
--------------------
SUNDSTRAND CORPORATION
(Corporate Seal) By
--------------------------
By
--------------------------
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<PAGE> 81
SCHEDULE A(2)
[FORM OF REVERSE OF SECURITY]
SUNDSTRAND CORPORATION
[DESIGNATION OF SECURITIES OF EACH SERIES AS SPECIFIED IN THE
INSTRUMENT ESTABLISHING SUCH SERIES]
This Security is one of a duly authorized issue of "[INSERT FULL
DESIGNATION OF SERIES]" of the Company, designated as its "[SECURITIES]",
limited to the aggregate principal amount [IF THE SECURITY IS AN ORIGINAL ISSUE
DISCOUNT SECURITY, INSERT - at Stated Maturity] of Dollars ($ ), all
issued under and pursuant to an indenture, dated as of December 1, 1998 (herein
referred to as the "Indenture"), duly executed and delivered by the Company and
Bankers Trust Company (hereinafter called the "Trustee"), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the Holders of the [SECURITIES].
[IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT -
In case an Event of Default, as defined in the Indenture, relating to the
[SECURITIES] shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture provides that in certain events such declaration as it affects the
[SECURITIES] and its consequences, may be waived by the Holders of a majority in
aggregate principal amount of the [SECURITIES] then outstanding. Any such waiver
by the Holder of this [SECURITY] (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such Holder and upon all future Holders and
owners of this [SECURITY] and of any [SECURITY] issued [IF THE SECURITY IS
REGISTERED, INSERT - upon the registration of transfer hereof or] in exchange or
substitution herefor, irrespective of whether or not any notation of such waiver
is made upon this [SECURITY] or such other [SECURITIES].]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT - In
case an Event of Default, as defined in the Indenture, relating to the
[SECURITIES] shall have occurred and be continuing, an amount of principal of
the [SECURITIES] may be declared due and payable in the manner and with the
effect provided in the Indenture. Such amount shall be equal to [INSERT FORMULA
FOR DETERMINING THE AMOUNT, WHICH AMOUNT SHALL BE DETERMINED BY THE COMPANY AND
CERTIFIED TO THE TRUSTEE IN AN OFFICER'S CERTIFICATE]. Upon payment (1) of the
amount of principal so declared due and payable and (2) of interest on any
overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of, and interest, if any,
on the [SECURITIES] shall terminate.]
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<PAGE> 82
[INCLUDE THE FOLLOWING PARAGRAPH IF SERIES IS SUBJECT
TO A SINKING FUND]
The [SECURITIES] are entitled to the benefit of a Sinking Fund as
provided for pursuant to the Indenture and are subject to redemption through
operation of the Sinking Fund on at [100%] OF THEIR PRINCIPAL AMOUNT
(HEREIN CALLED THE "SINKING FUND REDEMPTION PRICE") TOGETHER WITH ACCRUED
INTEREST TO THE DATE FIXED FOR REDEMPTION. EXCEPT AS HEREINAFTER PROVIDED, ON OR
PRIOR TO EACH DATE, THE COMPANY WILL DEPOSIT WITH THE TRUSTEE OR A PAYING AGENT
(OR SEGREGATE AND HOLD IN TRUST) AN AMOUNT SUFFICIENT TO REDEEM $ PRINCIPAL
AMOUNT OF [SECURITIES] on such date. At its option, the Company may pay into the
Sinking Fund, on or prior to each such date, an additional sum up to % of the
amount required to be deposited on such date for the Sinking Fund (before taking
into account any applicable credits as hereinafter mentioned). The Trustee will
apply any such amounts deposited by the Company to redemption of [SECURITIES] as
provided in the Indenture. In lieu of making cash payments into the Sinking Fund
the Company may, to the extent and upon the terms provided in the Indenture,
deliver to the Trustee for cancellation, certain [SECURITIES] theretofore
acquired by the Company and receive credit therefor, at the Sinking Fund
redemption price, or receive credit, at such price, for [SECURITIES] theretofore
called for redemption otherwise than through the Sinking Fund and which shall
have ceased to be outstanding.
[INCLUDE THE FOLLOWING FOUR PARAGRAPHS IF THE SERIES IS
SUBJECT TO REDEMPTION BEFORE STATED MATURITY]
The [SECURITIES] may be redeemed, at the option of the Company, as a
whole or from time to time in part (selected in such manner as the Trustee may
deem appropriate and fair) at any time on or after , upon the notice
referred to below, at the following redemption prices (expressed in percentages
of the principal amount) together with interest accrued to the date fixed for
redemption (except that any interest installments becoming due on the date fixed
for redemption will be payable to the holders of such [SECURITIES], or of one or
more previous [SECURITIES] evidencing all or a portion of the same debt as that
evidenced by such particular [SECURITIES], of record at the close of business on
the relevant Record Date referred to on the face hereof or in the Indenture).
If redeemed during the 12-month period beginning
Year Percentage Year Percentage
[DATES, YEARS AND PERCENTAGES TO BE SPECIFIED
IN INSTRUMENT ESTABLISHING SUCH SERIES]
Notice of redemption shall be given to the Holders of [SECURITIES] to
be redeemed, as a whole or in part, whether through operation of the Sinking
Fund or otherwise, [IF THE SECURITY IS UNREGISTERED, INSERT - by twice
publishing a notice in an authorized newspaper] [IF THE SECURITY IS REGISTERED,
INSERT - by mailing a notice of such redemption to their last addresses as they
shall
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<PAGE> 83
appear upon the Security Register] not less than 20 nor more than 60 days prior
to the date fixed for redemption, all as provided in the Indenture. If this
[SECURITY] (or a portion hereof) is duly called for redemption and funds for
payment duly provided, this [SECURITY] (or such portion) shall cease to bear
interest from and after the date fixed for redemption. The Company shall not be
required (a) to issue, register the transfer of or exchange any Securities of
any series for a period of 15 days next preceding any selection of Securities of
such series to be redeemed or (b) to register the transfer of or exchange any
Securities of such series selected, called or being called for redemption.
In the event of redemption of this [SECURITY] in part only, a new
[SECURITY] or [SECURITIES] in authorized denominations and in principal amount
equal to the unredeemed portion hereof shall be issued upon the cancellation
hereof.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than 66 2/3% in aggregate
principal amount at Stated Maturity of the [SECURITIES] at the time outstanding,
evidenced as in the Indenture provided, to execute supplemental indentures
which, if they pertain specifically to the [SECURITIES], may add any provisions
to or change in any manner or eliminate any of the provisions of the Indenture
relating to the [SECURITIES] or of any supplemental indenture relating to the
[SECURITIES] or modifying in any manner the rights of the Holders of the
[SECURITIES]; provided, however, that no such supplemental indenture shall (i)
extend the Stated Maturity of any [SECURITY], reduce the principal amount
thereof, reduce the rate or extend the time of payment of any interest thereon,
reduce any premium payable upon the redemption thereof, [IF THE SECURITY IS AN
ORIGINAL ISSUE DISCOUNT SECURITY, INSERT - reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Stated Maturity thereof,] [IF THE SECURITY
HAS MANDATORY SINKING FUND PROVISIONS - modify provisions relating to amount or
regularity of mandatory Sinking Fund payments,] or make the principal amount
thereof payable in any money other than United States legal tender for the
payment of public or private debts without the consent of the Holder of each
[SECURITY] so affected, or (ii) reduce the aforesaid percentage of [SECURITIES],
the consent of the Holders of which is required for any such supplemental
indenture relating to the [SECURITIES], without the consent of the Holders of
all [SECURITIES] then outstanding. It is also provided in the Indenture that,
prior to the declaration of maturity of the [SECURITIES] upon the occurrence of
an Event of Default relating to the [SECURITIES] as defined in the Indenture,
the Holders of a majority in aggregate principal amount at Stated Maturity of
the [SECURITIES] at the time outstanding may on behalf of the Holders of all of
the [SECURITIES] waive any past default under the Indenture relating to the
[SECURITIES] and its consequences, except a default in the payment of the
principal of (or premium, if any) or interest on any of the [SECURITIES]. Any
such consent or waiver by the Holder of this [SECURITY] (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such Holder and
upon all future Holders and owners of this [SECURITY] and of any [SECURITY]
issued [IF THE SECURITY IS REGISTERED, INSERT - upon the registration of
transfer hereof or] in exchange or substitution herefor, irrespective of whether
or not any notation of such consent or waiver is made upon this [SECURITY] or
such other [SECURITIES].
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No reference herein to the Indenture and no reference to any 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
premium, if any) and interest, if any, on this [SECURITY] at the place, at the
respective times, at the rate and in the currency herein prescribed.
[IF THE SERIES SO PROVIDES, INSERT] The Company may terminate all of
its obligations under the [SECURITIES] and, with certain limited exceptions
described in the Indenture, under the Indenture, by irrevocably depositing in
trust with the Trustee money, or U.S. Government Obligations (as defined in the
Indenture), or any combination of the two, sufficient to pay principal of and
interest on the [SECURITIES] to maturity or redemption as the case may be.
The [SECURITIES] are issuable as [IF APPLICABLE - REGISTERED] [IF
APPLICABLE - BEARER] [SECURITIES] [IF APPLICABLE - WITHOUT] [IF APPLICABLE -
WITH] coupons in denominations of [$1,000] and any integral multiple of
[$1,000]. At the office or agency to be maintained by the Company in the Borough
of Manhattan, The City and State of New York, or at such other location or
locations as may be provided for in the Indenture, and in the manner and subject
to the limitations provided in the Indenture, [SECURITIES] may be exchanged by
the Holder hereof without charge except for any tax or other governmental charge
imposed in relation thereto, for a like aggregate principal amount at Stated
Maturity of [SECURITIES] of other authorized denominations.
[INCLUDE THE FOLLOWING TWO PARAGRAPHS IF SERIES IS REGISTERED]
This [SECURITY] is transferable and the registration of the transfer
hereof may be effected by the registered Holder hereof or by his attorney duly
authorized in writing upon due presentment for registration of transfer at the
office or agency of the Company, in the Borough of Manhattan, The City and State
of New York, or at such other location or locations as may be provided for in
the Indenture, but only in the manner and subject to the limitations provided in
the Indenture, without charge except for any tax or other governmental charge
imposed in relation thereto. Upon any such registration of transfer, a new
[SECURITY] or [SECURITIES], of authorized denominations, for a like aggregate
principal amount at Stated Maturity will be issued to the transferee in exchange
therefor.
Prior to due presentment for registration of transfer of this
[SECURITY], the Company, the Trustee, any paying agent and the Security
Registrar may deem and treat the registered Holder hereof as the absolute owner
hereof (whether or not this [SECURITY] shall be overdue and notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of receiving payment as herein provided and all other purposes, and neither the
Company nor the Trustee nor any paying agent nor any Security Registrar shall be
affected by any notice to the contrary.
[INCLUDE THE FOLLOWING PARAGRAPH IF THE SECURITY IS UNREGISTERED]
77
<PAGE> 85
The Company, the Trustee, any paying agent and the Security Registrar
may deem and treat the bearer hereof and the bearer of any coupon appertaining
hereto as the absolute owner hereof and thereof (whether or not this [SECURITY]
or such coupon shall be overdue and notwithstanding any notation of ownership or
other writing hereon or thereon made by anyone) for the purpose of receiving
payments as herein and therein provided and for all other purposes.
No recourse shall be had for the payment of the principal of (or
premium, if any) or the interest on this [SECURITY], or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator,
stockholder, officer, director or employee, as such, past, present or future, of
the Company or of any successor corporation whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly waived and released.
[DEFEASANCE, IF APPLICABLE]
All terms used in this [SECURITY] which are defined in the Indenture
shall have the meanings assigned to them therein.
[FORM OF COUPON, IF ANY, TO BE PROVIDED
FOR IN INSTRUMENT ESTABLISHING SERIES]
78
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SCHEDULE B
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the [SECURITIES] described in the within-mentioned
Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE
By
---------------------------------
AUTHORIZED SIGNATURE
79
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 333-66981) and related Prospectus of
Sundstrand Corporation for the registration of $100,000,000 of debt securities
and to the incorporation by reference therein and in the Registration Statement
(Form S-3, No. 333-00801) for the Registration of $150,000,000 of debt
securities of our report dated January 27, 1998 with respect to the
consolidated financial statements of Sundstrand Corporation included in its
Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
December 4, 1998
