Application for Qualification of a Trust Indenture — Form T-3
Filing Table of Contents
Document/Exhibit Description Pages Size
1: T-3 Allied Signal T-3 19 84K
2: EX-99 Exhibit T3C.2 14 38K
3: EX-99 Exhibit T3E.1 35 178K
4: EX-99 Exhibit T3E.2 11 51K
5: EX-99 Exhibit T3E.3 8 41K
6: EX-99 Exhibit T3E.4 4 18K
7: EX-99 Exhibit T3E.5 4 18K
8: EX-99 Exhibit T3F 2 8K
9: EX-99 Miscellaneous Exhibit 5 24K
Exhibit T3E.1 - Offering Circular, dated as of May 20, 1998:
OFFERING CIRCULAR
[LOGO]
OFFER TO EXCHANGE
NOTES DUE JULY 1, 2005
FOR ANY AND ALL OF ITS OUTSTANDING
9 7/8% DEBENTURES DUE JUNE 1, 2002 Cusip No. 019512 AD4
AND ANY AND ALL OF ITS OUTSTANDING
9.20% DEBENTURES DUE FEBRUARY 15, 2003 Cusip No. 019512 AG7
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON THURSDAY, JUNE 18, 1998, UNLESS EXTENDED (THE 'EXPIRATION DATE').
ALLIEDSIGNAL INC. (the 'Company') hereby offers, upon the terms and subject
to the conditions set forth in this Offering Circular (the 'Offering Circular')
and the accompanying Letter of Transmittal (which together constitute the
'Exchange Offer'), to exchange its Notes Due July 1, 2005 (the 'New Notes'), in
an aggregate principal amount to be determined in the manner set forth herein,
for any and all of its $250,000,000 aggregate principal amount of issued and
outstanding 9 7/8% Debentures Due June 1, 2002 (the 'Old 2002 Debentures') and
for any and all of its $100,000,000 aggregate principal amount of issued and
outstanding 9.20% Debentures Due February 15, 2003 (the 'Old 2003 Debentures'
and together with the Old 2002 Debentures the 'Old Debentures') from the
registered holders thereof. See 'Description of New Notes'. The New Notes will
evidence a new series of debt and will be issued pursuant to, and entitled to
the benefits of, an Indenture, dated as of October 1, 1985 between the Company
and The Chase Manhattan Bank, as trustee, as supplemented by the First
Supplemental Indenture dated as of February 1, 1991 and by the Second
Supplemental Indenture dated as of November 1, 1997 (as so supplemented, the
'Indenture'). Although the Old Debentures are listed on the New York Stock
Exchange (the 'NYSE'), the Company does not intend to apply for listing of the
New Notes on the NYSE or any other exchange.
(cover page continued on next page)
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SEE 'RISK FACTORS' ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN EVALUATING THE EXCHANGE OFFER.
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THE OFFER OF THE SECURITIES CONTEMPLATED IN THE EXCHANGE OFFER IS MADE PURSUANT
TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SECTION 5 OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE 'SECURITIES ACT'), PROVIDED BY
SECTION 3(A)(9) THEREOF AND, ACCORDINGLY, THE OFFER OF SUCH SECURITIES
HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING
CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The date of this Offering Circular is May 20, 1998.
(continued from cover page)
The Company will accept for exchange any and all Old Debentures validly
tendered and not withdrawn prior to the Expiration Date. Old Debentures may be
tendered only in denominations of $1,000 or an integral multiple thereof. See
'The Exchange Offer -- Procedures for Tendering Old Debentures'. The Exchange
Offer is subject to certain customary conditions. See 'The Exchange
Offer -- Conditions to the Exchange Offer'.
The New Notes will bear interest at a rate that will be different than the
interest rate on the Old Debentures, as described herein. For the New Notes, the
per annum interest rate (the 'New Coupon') will be equal to the Reference Yield
of the New Notes (as defined herein) rounded downward to the nearest 1/8th of
one percent. The 'Reference Yield of the New Notes' will equal (i) the yield to
maturity of the 6 1/2% U.S. Treasury Note due May 15, 2005 (the '7 Year
Benchmark Rate') plus (ii) 50 basis points. Each holder exchanging Old
Debentures for New Notes pursuant hereto will receive, in exchange for each
$1,000 in aggregate principal amount of Old Debentures exchanged, New Notes in a
principal amount (rounded to the nearest cent, with $0.005 to be taken as a full
cent) equal to (a) $1,000 times (b) the Old Debenture Exchange Price (as defined
herein) divided by (c) the New Note Exchange Price (as defined herein); provided
that New Notes will only be issued in denominations of $1,000 or integral
multiples thereof. In addition, each holder exchanging Old Debentures for New
Notes pursuant hereto will receive on the Exchange Date (as defined herein) an
amount in cash due to rounding the aggregate principal amount of New Notes
issuable to such holder downward to the nearest $1,000. All calculations,
including calculations of the New Note Exchange Price, the Old 2002 Debenture
Exchange Price and the Old 2003 Debenture Exchange Price, will be made in
accordance with standard market practice and in a manner consistent with the
methodology set forth in Schedule A and consistent with the hypothetical
calculations set forth in Schedules B through D. See 'The Exchange
Offer -- Calculations; Information; Payment'.
The 'New Note Exchange Price' will be a price per $1,000 aggregate
principal amount of New Notes (calculated as described herein and rounded to the
nearest cent, with $0.005 to be taken as a full cent) intended to result in a
yield to maturity on the Exchange Date equal to the Reference Yield of the New
Notes. See 'The Exchange Offer -- Terms of the Exchange Offer' and ' -- Summary
of Terms'.
The 'Old 2002 Debenture Exchange Price' will be a price per $1,000
principal amount of the Old 2002 Debentures (calculated as described herein and
rounded to the nearest cent, with $0.005 to be taken as a full cent) intended to
result in a yield to maturity on the Exchange Date equal to the sum of (a) the
yield to maturity of the 5 3/4% U.S. Treasury Note due April 30, 2003 (the '5
Year Benchmark Rate') and (b) 25 basis points. See 'The Exchange Offer -- Terms
of the Exchange Offer'.
The 'Old 2003 Debenture Exchange Price' will be a price per $1,000
principal amount of the Old 2003 Debentures (calculated as described herein and
rounded to the nearest cent, with $0.005 to be taken as a full cent) intended to
result in a yield to maturity on the Exchange Date equal to the sum of (a) the 5
Year Benchmark Rate and (b) 28 basis points. The Old 2002 Debenture Exchange
Price and the Old 2003 Debenture Exchange Price are referred to collectively
herein as the 'Old Debenture Exchange Prices' and individually as an 'Old
Debenture Exchange Price'. See 'The Exchange Offer -- Terms of the Exchange
Offer'.
Interest accrued on the Old Debentures from the last interest payment to
which interest has been paid or duly provided for (June 1, 1998 in the case of
the Old 2002 Debentures and February 15, 1998 in the case of the Old 2003
Debentures) to, but excluding, the Exchange Date, along with interest on the New
Notes accruing from the Exchange Date at the New Coupon to, but excluding, the
first interest payment date, will be paid on July 1, 1998. The interest payment
dates on the New Notes will be January 1 and July 1 of each year commencing July
1, 1998. The 'Exchange Date' will be the fifth business day following the
Expiration Date (i.e., June 25, 1998, unless the Expiration Date is extended).
(cover page continued on the next page)
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The New Coupon, New Note Exchange Price, Old Debenture Exchange Prices,
Benchmark Treasury Rates and the Reference Yield of the New Notes will be
determined as of 3:00 p.m., New York City time, on June 16, 1998, unless the
Exchange Offer is extended by more than three business days, in which case they
will be determined at such time on the second business day prior to the
Expiration Date (the 'Price Determination Date').
The purpose of the Exchange Offer is to take advantage of currently
available interest rates by exchanging a portion of the Company's long-term debt
portfolio upon terms which the Company believes are more beneficial to it. The
Company intends to accomplish this objective by extending the overall maturity
of a portion of its long-term debt portfolio.
Based on an interpretation by the staff of the Division of Corporation
Finance of the Securities and Exchange Commission (the 'Commission'), the
Company believes that the New Notes issued pursuant to the Exchange Offer may be
offered for resale, resold and otherwise transferred by any holder thereof
without compliance with the registration requirements of the Securities Act.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer and, to
the best of the Company's information and belief, each person participating in
the Exchange Offer is acquiring the New Notes in the ordinary course of business
and has no arrangement or understanding with any person to participate in the
distribution of the New Notes.
The Company has made no arrangements for and has no understanding with any
dealer, salesman or other person regarding the solicitation of tenders
hereunder, and no person has been authorized by the Company to give any
information or to make any representations in connection with the Exchange Offer
other than those contained or incorporated by reference in this Offering
Circular and, if given or made, such other information or representations must
not be relied upon as having been authorized. Neither the delivery of this
Offering Circular nor the exchange of New Notes for Old Debentures shall, under
any circumstances, create any implication that the information contained herein
is correct as of any time subsequent to the date hereof.
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer.
The Exchange Agent (as defined herein) and The Depository Trust Company
('DTC') have confirmed that the Exchange Offer is eligible for the DTC Automated
Tender Offer Program ('ATOP'). Accordingly, DTC participants may electronically
transmit their acceptance of the Exchange Offer by causing DTC to transfer Old
Debentures to the Exchange Agent in accordance with DTC's ATOP procedures for
such a transfer. DTC will then send an Agent's Message (as defined herein) to
the Exchange Agent.
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NONE OF THE COMPANY, THE BOARD OF DIRECTORS OF THE COMPANY, THE EXECUTIVE
OFFICERS OF THE COMPANY, THE FINANCIAL ADVISOR, THE INFORMATION AGENT OR THE
EXCHANGE AGENT MAKES ANY RECOMMENDATION TO HOLDERS OF THE OLD DEBENTURES AS TO
WHETHER TO EXCHANGE OR REFRAIN FROM EXCHANGING THEIR OLD DEBENTURES. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF
OLD DEBENTURES MUST MAKE THEIR OWN DECISION WHETHER TO EXCHANGE OLD DEBENTURES
PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE PRINCIPAL AMOUNT OF OLD
DEBENTURES TO EXCHANGE.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
TENDERS FOR EXCHANGE FROM, HOLDERS OF OLD DEBENTURES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the 'Exchange Act') and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
'Commission'). Reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
DC 20549 and at the following Regional Offices of the Commission: 7 World Trade
Center, New York, New York 10048; and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates. The Commission maintains an Internet
web site at http://www.sec.gov/ that contains such reports, proxy statements and
other information. Such reports, proxy statements and other information of the
Company should also be available for inspection at the offices of the New York
Stock Exchange Inc., 20 Broad Street, New York, New York 10005; the Chicago
Stock Exchange, One Financial Place, 440 South LaSalle Street, Chicago,
Illinois, 60605; and the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94104.
The Company has instructed the Financial Advisor, the Exchange Agent and
the Information Agent not to solicit exchanges in connection with the Exchange
Offer or to make any recommendation with respect to acceptance or rejection of
the Exchange Offer. Solicitations will be made solely by employees of the
Company. The Financial Advisor, the Exchange Agent and the Information Agent
will answer any questions from holders of the Old Debentures with respect to the
Exchange Offer solely by reference to the terms of this Offering Circular and
holders may contact the Financial Advisor, the Exchange Agent and the
Information Agent at the addresses and telephone numbers listed below. Holders
of the Old Debentures who have any questions regarding the mechanics of the
Exchange Offer should contact either the Exchange Agent or the Information
Agent. In addition, all questions with respect to the Exchange Offer may be
directed to the Company (Assistant Treasurer, telephone number (973) 455-5109).
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Financial Advisor Information Agent
GOLDMAN, SACHS & CO. GEORGESON & COMPANY INC.
85 Broad Street Wall Street Plaza
New York, New York 10004 88 Pine Street, 30th Floor
(800) 828-3182 New York, New York 10005
Banks and brokers call collect:
(212) 440-9800
All others call toll-free:
(800) 223-2064
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Exchange Agent
THE CHASE MANHATTAN BANK
By Fax: By Hand or Overnight Courier: By Mail:
(214) 672-5932 The Chase Manhattan Bank The Chase Manhattan Bank
Attention: Frank Ivins c/o Chase Bank of Texas, N.A. c/o Chase Bank of Texas, N.A.
Corporate Trust Services Corporate Trust Services
1201 Main Street P.O. Box 219052
18th Floor Dallas, Texas 75221-9052
Dallas, Texas 75202 Attention: Frank Ivins
Attention: Frank Ivins
Phone: (214) 672-5678
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(3) the Company's Current Reports on Form 8-K filed on January 15,
February 2, February 5, February 18, February 23, March 18, April 22 and
April 28, 1998; and
(4) the Company's Application on Form T-3 filed on May 20, 1998.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date
of this Offering Circular and prior to the termination of the offering of the
New Debentures shall be deemed to be incorporated by reference in this Offering
Circular and to be part hereof from the date of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be modified or superseded for purposes of
this Offering Circular to the extent that a statement contained herein, or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Offering Circular.
A copy of the documents incorporated by reference (other than exhibits
thereto) will be forwarded without charge to each person to whom this Offering
Circular is delivered, upon such person's written or oral request to
AlliedSignal Inc., Office of the Secretary, P.O. Box 4000, Morristown, New
Jersey 07962, telephone number (973) 455-5067.
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OFFERING CIRCULAR SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere, or incorporated by reference, in this Offering
Circular. See 'Risk Factors' on page 13 for a discussion of certain factors that
should be considered in connection with the Exchange Offer and the New Notes
offered hereby.
THE COMPANY
The Company is an advanced technology and manufacturing company serving
customers worldwide with aerospace and automotive products, chemicals, fibers,
plastics and advanced materials. The Company is organized into eleven strategic
business units. The Company's products are used by many major industries,
including textiles, construction, plastics, electronics, automotive, chemicals,
housing, telecommunications, utilities, packaging, agriculture, military and
commercial aviation and aerospace and in the space program.
The principal executive offices of the Company are located at 101 Columbia
Road, Morris Township, New Jersey 07962. The telephone number is (973) 455-2000.
THE EXCHANGE OFFER
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The Exchange Offer........................ Upon the terms and subject to the conditions of the Exchange Offer,
the Company is offering to any holder in exchange for any and all of
its $250,000,000 Old 2002 Debentures and for any and all of its
$100,000,000 Old 2003 Debentures newly issued New Notes in principal
amount to be determined as described below.
For the New Notes, the per annum interest rate (the 'New Coupon')
will be equal to the Reference Yield of the New Notes (as defined
herein) rounded downward to the nearest 1/8th of one percent. The
'Reference Yield of the New Notes' will equal (i) the 7 Year
Benchmark Rate plus (ii) 50 basis points. Each holder exchanging Old
Debentures for New Notes pursuant hereto will receive, in exchange
for each $1,000 in aggregate principal amount of Old Debentures
exchanged, New Notes in a principal amount (rounded to the nearest
cent, with $0.005 to be taken as a full cent) equal to (a) $1,000
times (b) the Old Debenture Exchange Price (as defined herein)
divided by (c) the New Note Exchange Price (as defined herein);
provided that New Notes will only be issued in denominations of
$1,000 or integral multiples thereof. In addition, each holder
exchanging Old Debentures for New Notes pursuant hereto will receive
on the Exchange Date (as defined herein) an amount in cash due to
rounding the aggregate principal amount of New Notes issuable to such
holder downward to the nearest $1,000. See 'The Exchange
Offer -- Calculations; Information; Payment'.
The 'New Note Exchange Price' will be a price per $1,000 aggregate
principal amount of New Notes (calculated as described herein and
rounded to the nearest cent, with $0.005 to be taken as a full cent)
intended to result in a yield to maturity on the Exchange Date equal
to the Reference Yield
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of the New Notes. See 'The Exchange Offer -- Terms of the Exchange
Offer' and ' -- Summary of Terms'.
The 'Old 2002 Debenture Exchange Price' will be a price per $1,000
principal amount of the Old 2002 Debentures (calculated as described
herein and rounded to the nearest cent, with $0.005 to be taken as a
full cent) intended to result in a yield to maturity on the Exchange
Date equal to the sum of (a) the 5 Year Benchmark Rate and (b) 25
basis points. See 'The Exchange Offer -- Terms of the Exchange Offer'
and ' -- Summary of Terms'.
The 'Old 2003 Debenture Exchange Price' will be a price per $1,000
principal amount of the Old 2003 Debentures (calculated as described
herein and rounded to the nearest cent, with $0.005 to be taken as a
full cent) intended to result in a yield to maturity on the Exchange
Date equal to the sum of (a) the 5 Year Benchmark Rate and (b) 28
basis points. See 'The Exchange Offer -- Terms of the Exchange Offer'
and ' -- Summary of Terms'.
The Old 2002 Debenture Exchange Price and the Old 2003 Debenture
Exchange Price are referred to collectively herein as the 'Old
Debenture Exchange Prices' and individually as an 'Old Debenture
Exchange Price'. See 'The Exchange Offer -- Terms of the Exchange
Offer'.
The New Coupon, New Note Exchange Price, Old Debenture Exchange
Prices, Benchmark Treasury Rates and Reference Yield of the New Notes
will be determined as of 3:00 p.m., New York City time, on June 16,
1998, unless the Exchange Offer is extended by more than three
business days, in which case they will be determined at such time on
the second business day prior to the Expiration Date (the 'Price
Determination Date').
Interest accrued on the Old Debentures from the last interest payment
to which interest has been paid or duly provided for (June 1, 1998 in
the case of the Old 2002 Debentures and February 15, 1998 in the case
of the Old 2003 Debentures) to, but excluding, the Exchange Date,
along with interest on the New Notes accruing from the Exchange Date
at the New Coupon to, but excluding, the first interest payment date,
will be paid on July 1, 1998. The interest payment dates on the New
Notes will be January 1 and July 1 of each year commencing July 1,
1998. The 'Exchange Date' will be the fifth business day following
the Expiration Date (i.e., June 25, 1998, unless the Expiration Date
is extended).
The New Notes will constitute, and the Old Debentures constitute,
direct, unsecured and unsubordinated obligations of the Company.
Calculations.............................. The New Note Exchange Price, Old Debenture Exchange Prices, Reference
Yield of the New Notes, Benchmark
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Treasury Rates and the New Coupon, will be determined as described
and illustrated in the section 'The Exchange Offer -- Calculations;
Information; Payment' and in Schedules A through D attached hereto.
Information............................... As soon as practicable after the Price Determination Date, but in any
event before 9:00 a.m., New York City time, on the following business
day, the Company will publicly announce by press release to the Dow
Jones News Service: the Benchmark Treasury Rates, the Reference Yield
of New Notes, the New Note Exchange Price, the Old Debenture Exchange
Price and the New Coupon.
During the term of the Exchange Offer, holders of the Old Debentures
can obtain current information regarding the Benchmark Treasury
Rates, Reference Yield of the New Notes, Old Debenture Exchange
Price, New Note Exchange Price and other information regarding the
terms of the Exchange Offer from the Financial Advisor at (800)
828-3182. In addition, the Company intends to publish information
about the Exchange Offer, including the information described in the
preceding paragraph when available, on the MCM 'CorporateWatch'
Service on Telerate pages 41926-7 and on Bloomberg pages 7626-7.
Old 2002 Debentures Outstanding........... As of the date hereof, $250,000,000 aggregate principal amount of Old
2002 Debentures are outstanding.
Old 2003 Debentures Outstanding........... As of the date hereof, $100,000,000 aggregate principal amount of Old
2003 Debentures are outstanding.
Conditions to the Exchange Offer.......... Consummation of the Exchange Offer is conditioned upon certain
customary conditions described herein. The Company may, in its sole
discretion, waive any condition with respect to the Exchange Offer
and accept for exchange any Old Debentures tendered. See 'The
Exchange Offer -- Conditions to the Exchange Offer'.
Expiration Date; Extensions;
Termination; Amendments................... The Exchange Offer will expire at 5:00 p.m., New York City time, on
June 18, 1998 or at such later time and date to which the Exchange
Offer may be extended by the Company in accordance with the
procedures described herein. The Company reserves the right to extend
or terminate the Exchange Offer. See 'The Exchange
Offer -- Expiration Date; Extensions; Termination; Amendments'.
If the Exchange Offer is extended for a period longer than three
business days from the previously scheduled Expiration Date, then a
new Price Determination Date, which would be two business days prior
to the new Expiration Date, may be established. If the extension is
for three business days or less, no new Price Determination Date will
be established and the New Coupon will remain as determined on the
Price Determination Date prior to the extension of the Exchange
Offer.
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If the consideration offered with respect to the Exchange Offer is
changed or if any other amendment to the terms of the Exchange Offer
is made that, in the opinion of the Company, would be adverse to the
interests of the holders tendering Old Debentures for exchange, the
Exchange Offer will remain open for at least five business days from
the date public notice of such change or amendment is given.
Certain U.S. Federal Income Tax
Consequences.............................. The exchange of Old Debentures for New Notes pursuant to the Exchange
Offer should constitute a reorganization for U.S. Federal income tax
purposes. Holders of Old Debentures that participate in the Exchange
Offer should recognize no loss on the exchange but should recognize
gain, if any, to the extent of the sum of the amount of money
received in lieu of a fractional New Note and the fair market value
of any excess of the principal amount of the New Notes received over
the principal amount of the Old Debentures surrendered. See 'Certain
U.S. Federal Income Tax Consequences'.
Tender of Old Debentures.................. Old Debentures may be tendered for exchange only in denominations of
$1,000 or an integral multiple thereof. To tender certificated Old
2002 Debentures pursuant to the Exchange Offer, holders must deliver
their Old Debentures together with a properly completed and duly
executed appropriate Letter of Transmittal to the Exchange Agent or
the procedures for book-entry transfer must be used. If Old
Debentures are held by a broker, dealer, commercial bank, trust
company or other nominee (individually, a 'Custodian' and
collectively, the 'Custodians'), the beneficial owner thereof must
instruct such Custodian to tender such Old Debentures on its behalf.
The Old 2003 Debentures are held in book-entry form through DTC.
Beneficial owners of Old 2003 Debentures and beneficial owners of
uncertificated Old 2002 Debentures must contact the broker, dealer,
commercial bank, trust company or other nominee, any of which may be
a DTC participant ('Custodian'), through whom such Old 2003
Debentures are held and direct such Custodian to tender such Old 2003
Debentures pursuant to the Exchange Offer. All tenders must be made
on or prior to the Expiration Date. See 'The Exchange
Offer -- Procedures for Tendering Old Debentures'.
New Notes will be delivered only in book-entry form through DTC.
Accordingly, holders who anticipate tendering and whose Old
Debentures are not held through DTC are urged to contact promptly a
Custodian that has the capability to hold securities through DTC, to
arrange for receipt of any New Notes to be delivered pursuant to the
Exchange Offer and to obtain the information necessary to provide the
required DTC participant and account information in the relevant
Letter of Transmittal. See 'The Exchange Offer -- Proper Execution
and Delivery of Letter of Transmittal'.
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Guaranteed Delivery....................... Holders of Old Debentures who wish to tender their Old Debentures and
who cannot deliver their Old Debentures or the Letter of Transmittal
to the Exchange Agent, prior to the Expiration Date, or if the
procedures for book-entry transfer cannot be completed on a timely
basis, must tender their Old Debentures pursuant to the guaranteed
delivery procedures set forth in 'The Exchange Offer -- Guaranteed
Delivery Procedures'.
Acceptance of Old Debentures;
Delivery of New Notes..................... Upon the terms and subject to the conditions of the Exchange Offer,
the Company will exchange (and thereby acquire) any and all Old
Debentures that are properly tendered and not withdrawn prior to the
Expiration Date. New Notes will be delivered only in book-entry form
through DTC. New Notes and any amounts due in respect of rounding the
aggregate principal amount of New Notes issuable downward to the
nearest $1,000, will be delivered on the fifth business day following
the Expiration Date. See 'The Exchange Offer -- Acceptance of Old
Debentures Tendered for Exchange; Delivery of New Notes'.
Withdrawal Rights......................... Tenders of Old Debentures for exchange may be withdrawn at any time
prior to the Expiration Date. Withdrawal of tendered Old Debentures
will be deemed a rejection of the Exchange Offer. See 'The Exchange
Offer -- Withdrawal Rights'.
Exchange Agent............................ The Chase Manhattan Bank
Information Agent......................... Georgeson & Company Inc.
Wall Street Plaza
88 Pine Street, 30th Floor
New York, New York 10005
Banks and brokers call collect: (212) 440-9800
All others call toll-free: (800) 223-2064
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THE NEW NOTES
Issuer.................................... AlliedSignal Inc.
Indenture................................. The New Notes will be issued under the Indenture dated as of October
1, 1985 between the Company and The Chase Manhattan Bank, as
supplemented by the First Supplemental Indenture dated as of February
1, 1991 and the Second Supplemental Indenture dated as of November 1,
1997. For a discussion of certain changes to the Indenture as a
result of the Second Supplemental Indenture, see 'Description of New
Notes -- Other Provisions'.
Principal Amount Offered.................. An amount to be determined in accordance with the procedures
described herein. See 'The Exchange Offer -- Terms of the Exchange
Offer'.
Maturity Date............................. July 1, 2005. The New Notes are not subject to redemption prior to
maturity.
Interest.................................. Interest will be paid each January 1 and July 1, commencing July 1,
1998. Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The July 1, 1998 interest payment
will include interest accruing on the New Notes from the Exchange
Date to, but not including, July 1, 1998.
Interest Rate............................. The New Coupon determined as provided herein.
Rating.................................... As of the date hereof, the Company's unsecured senior debt
securities, including the Old Debentures, are rated A2 by Moody's
Investors Service, Inc. ('Moody's') and A by Standard & Poor's
Ratings Group, a division of The McGraw-Hill Companies ('S&P'). The
Company does not intend to obtain ratings on the New Debentures,
however, the Company believes that if the New Debentures were rated
they would receive ratings equivalent to those assigned from time to
time to the Old Debentures. A credit rating is not a recommendation
to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency.
Ranking................................... The New Notes will be unsecured and unsubordinated obligations of the
Company and will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company.
Form...................................... The New Notes will be represented by one or more global notes
registered in the name of DTC's nominee ('Global Notes'). Beneficial
interests in the Global Notes will be shown on, and transfers thereof
will be effected only through, records maintained by DTC and its
participants. Except as described herein, New Notes in definitive
form will not be issued. The New Notes will trade in DTC's Same-Day
Funds Settlement System until maturity, and secondary market trading
activity for the New Notes will therefore settle in immediately
available funds. All payments of principal and interest will be made
by
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[Enlarge/Download Table]
the Company in immediately available funds. See 'Description of New
Notes -- Same-Day Settlement and Payment'.
Listing................................... Although the Old Debentures are listed on the NYSE, the Company does
not intend to apply for listing of the New Notes on the NYSE or any
other exchange.
Use of Proceeds........................... The New Notes will be issued only in exchange for the Old Debentures.
The Company will not receive any cash proceeds from the issuance of
the New Notes.
12
RISK FACTORS
In deciding whether to participate in the Exchange Offer, each holder
should consider carefully, in addition to the other information contained in the
Offering Circular, the factors listed below.
A debt security with a smaller outstanding aggregate principal amount may
command a lower price than would an otherwise identical debt security with a
larger outstanding aggregate principal amount. Depending upon, among other
things, the aggregate principal amount of Old Debentures outstanding after the
Exchange Offer, the trading market for the Old Debentures may be more limited,
which may, therefore, adversely affect the liquidity and market price of the Old
Debentures. Similarly, depending upon, among other things, the aggregate
principal amount of the New Notes outstanding after the Exchange Offer with
respect to the Old 2002 Debentures and the Old 2003 Debentures, the trading
market for the New Notes may be limited, which may, therefore, adversely affect
the liquidity and market price of the New Notes. In addition to the respective
aggregate principal amounts outstanding, the trading market for the Old
Debentures not tendered pursuant to the Exchange Offer and for the New Notes
will depend upon, among other things, the number of holders of each and the
degree to which securities firms maintain a market in the securities. In
addition, although the Old Debentures are listed for trading on the NYSE, the
Company does not intend to apply for listing of the New Notes on the NYSE or any
other exchange.
THE COMPANY
The Company is an advanced technology and manufacturing company serving
customers worldwide with aerospace and automotive products, chemicals, fibers,
plastics and advanced materials. The Company is organized into eleven strategic
business units. The Company's products are used by many major industries,
including textiles, construction, plastics, electronics, automotive, chemicals,
housing, telecommunications, utilities, packaging, agriculture, military and
commercial aviation and aerospace and in the space program.
The principal executive offices of the Company are located at 101 Columbia
Road, Morris Township, New Jersey 07962. The telephone number is (973) 455-2000.
13
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The purpose of the Exchange Offer is to take advantage of currently
available interest rates by exchanging a portion of the Company's long-term debt
portfolio upon terms which the Company believes are more beneficial to it. The
Company intends to accomplish this objective by extending the overall maturity
of a portion of its long-term debt portfolio.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Offering
Circular and the accompanying Letter of Transmittal, the Company is offering to
exchange a principal amount of the New Notes, determined as described below, for
each $1,000 principal amount of the Old Debentures properly tendered for
Exchange.
The New Notes will bear interest at a rate that will be different than the
interest rate on the Old Debentures, as described herein. For the New Notes, the
per annum interest rate (the 'New Coupon') will be equal to the Reference Yield
of the New Notes (as defined herein) rounded downward to the nearest 1/8th of
one percent. The 'Reference Yield of the New Notes' will equal (i) the 7 Year
Benchmark Rate plus (ii) 50 basis points. Each holder exchanging Old Debentures
for New Notes pursuant hereto will receive, in exchange for each $1,000 in
aggregate principal amount of Old Debentures exchanged, New Notes in a principal
amount (rounded to the nearest cent, with $0.005 to be taken as a full cent)
equal to (a) $1,000 times (b) the Old Debenture Exchange Price divided by (c)
the New Note Exchange Price; provided that New Notes will only be issued in
denominations of $1,000 or integral multiples thereof. In addition, each holder
exchanging Old Debentures for New Notes pursuant hereto will receive on the
Exchange Date an amount in cash due to rounding the aggregate principal amount
of New Notes issuable to such holder downward to the nearest $1,000. See
'Calculations; Information; Payment'.
The New Coupon, the Old Debenture Exchange Prices, the New Note Exchange
Price, the Benchmark Treasury Rates and the Reference Yield of the New Notes
will be determined as of 3:00 p.m., New York City time, on June 16, 1998, unless
the Exchange Offer is extended by more than three business days, in which case
they will be determined at such time on the second business day prior to the
Expiration Date (the 'Price Determination Date').
Interest accrued on the Old Debentures from the last interest payment to
which interest has been paid or duly provided for (June 1, 1998 in the case of
the Old 2002 Debentures and February 15, 1998 in the case of the Old 2003
Debentures) to, but excluding, the Exchange Date, along with interest on the New
Notes accruing from the Exchange Date at the New Coupon to, but excluding, the
first interest payment date, will be paid on July 1, 1998. The interest payment
dates on the New Notes will be January 1 and July 1 of each year commencing July
1, 1998. The 'Exchange Date' will be the fifth business day following the
Expiration Date (i.e., June 25, 1998, unless the Expiration Date is extended).
SUMMARY OF TERMS
The following is a summary of certain defined terms used in describing the
Exchange Offer:
Benchmark Treasury Rate: means the yield to maturity for the Benchmark
Treasury Security as of the Price Determination Date.
Benchmark Treasury Security: means the 5 3/4% U.S. Treasury Notes due April
30, 2003 or the 6 1/2% U.S. Treasury Notes due May 15, 2005, as the case may be.
5 Year Benchmark Rate: means the yield to maturity of the 5 3/4% U.S.
Treasury Notes due April 30, 2003 as of the Price Determination Date.
2002 Fixed Spread: means 0.25% (25 basis points).
2003 Fixed Spread: means 0.28% (28 basis points).
14
2005 Fixed Spread: means 0.50% (50 basis points).
Exchange Date: means the date five business days following the Expiration
Date and on which New Notes will be delivered pursuant to the Exchange Offer. If
the Expiration Date is June 18, 1998, the Exchange Date will be June 25, 1998.
Expiration Date: means 5:00 p.m., New York City time, on June 18, 1998,
unless the Exchange Offer is extended.
New Coupon: means, for the New Notes, the per annum interest rate paid on
such New Notes from the Exchange Date, to the maturity date, July 1, 2005. The
New Coupon will be equal to the Reference Yield of the New Notes as determined
on the Price Determination Date rounded downward to the nearest 1/8th of a
percent.
New Note Exchange Price: means, at the Price Determination Date, the price
per $1,000 principal amount of New Notes (calculated as described herein and
rounded to the nearest cent, with $0.005 to be taken as a full cent) intended to
result in a yield to maturity on the Exchange Date equal to the Reference Yield
of the New Notes.
Old 2002 Coupon: means 9 7/8% per annum.
Old 2003 Coupon: means 9.20% per annum.
Old Coupon: means the Old 2002 Coupon or the Old 2003 Coupon, as the case
may be.
Old 2002 Debenture Exchange Price: means the price per $1,000 principal
amount of the Old 2002 Debentures (calculated as described herein and rounded to
the nearest cent, with $0.005 to be taken as a full cent) intended to result in
a yield to maturity on the Exchange Date equal to the sum of (a) the 5 Year
Benchmark Rate and (b) 25 basis points.
Old 2003 Debenture Exchange Price: means the price per $1,000 principal
amount of the Old 2003 Debentures (calculated as described herein and rounded to
the nearest cent, with $0.005 to be taken as a full cent) intended to result in
a yield to maturity on the Exchange Date equal to the sum of (a) the 5 Year
Benchmark Rate and (b) 28 basis points.
Old Debenture Exchange Price: means the Old 2002 Debenture Exchange Price
or the Old 2003 Debenture Exchange Price, as the case may be.
Price Determination Date: means 3:00 p.m., New York City time, on June 16,
1998, unless the Exchange Offer is extended by more than three business days, in
which case such term means at such time on the second business day prior to the
Expiration Date.
Reference Yield of the New Notes: means, at the Price Determination Date,
the sum of (i) the 7 Year Benchmark Rate and (ii) the 2005 Fixed Spread.
7 Year Benchmark Rate: means the yield to maturity of the 6 1/2% U.S.
Treasury Notes due May 15, 2005 as of the Price Determination Date.
ILLUSTRATIVE EXAMPLE AND FORMULAS
Schedule A attached hereto sets forth formulas for determining the Old 2002
Debenture Exchange Price, the Old 2003 Debenture Exchange Price, the New Note
Exchange Price and the exchange ratios of Old Debentures and New Notes.
Hypothetical illustrations of the calculation of the Old 2002 Debenture Exchange
Price, the Old 2003 Debenture Exchange Price and the New Note Exchange Price are
set forth in Schedules B, C and D, respectively, attached hereto and are to be
used solely for the purpose of obtaining an understanding of the calculation of
the Old Debenture Exchange Prices and New Note Exchange Price based on
hypothetical Benchmark Treasury Rates obtained at 3:00 p.m., New York City time,
on May 18, 1998. The information in Schedules B, C and D is provided for
illustrative purposes only. In the event of any discrepancy between the
information in Schedules B, C and D and results obtained by the Company through
the application of calculations described herein and outlined in such results
will supersede the information in Schedules B, C and D.
15
CALCULATIONS; INFORMATION; PAYMENT
The New Coupon on the New Notes will be equal to the Reference Yield of the
New Notes rounded downward to the nearest 1/8th of one percent. The Reference
Yield of the New Notes will equal (i) the 7 Year Benchmark Rate plus (ii) 50
basis points.
The Benchmark Treasury Rate means the yield to maturity as calculated by
the Financial Advisor in accordance with standard market practice based on the
bid side price for the Benchmark Treasury Security, as of the Price
Determination Date, as such bid side price is displayed on the Cantor Fitzgerald
Securities Composite 3:00 P.M. Quotation Service for U.S. Government Securities
(the 'Cantor Fitzgerald Quotation Service'). If any relevant price is not
available on a timely basis on the Cantor Fitzgerald Quotation Service or is
manifestly erroneous, the relevant price information may be obtained from such
other quotation service as the Company and the Financial Advisor shall select in
their reasonable discretion, the identity of which shall be disclosed by the
Company and the Financial Advisor to exchanging holders. Although the Benchmark
Treasury Yield will be determined based solely on the sources described above,
information regarding the price of the Benchmark Treasury Security also may be
found in The Wall Street Journal.
Each holder exchanging Old Debentures for New Notes pursuant to accepted
Exchange Offers will receive, in exchange for each $1,000 in principal amount of
Old Debentures exchanged, New Notes in a principal amount (rounded to the
nearest cent, with U.S. $0.005 to be taken as a full cent) equal to (a)
U.S.$1,000 times (b) the Old Debenture Exchange Price divided by (c) the New
Note Exchange Price; provided that New Notes will only be issued in
denominations of $1,000 or integral multiples thereof. In addition, each holder
exchanging Old Debentures for New Notes pursuant to accepted Exchange Offers
will receive an amount equal to the decrease in the aggregate principal amount
of New Notes issuable to such holder as a result of rounding such aggregate
principal amount downward to the nearest $1,000.
The New Note Exchange Price will be a price per $1,000 principal amount of
New Notes (calculated as described in the next sentence and rounded to the
nearest cent, with $0.005 to be taken as a full cent) intended to result in a
yield to maturity of the New Notes on the Exchange Date equal to the Reference
Yield of the New Notes. Specifically, the New Note Exchange Price will be a
price (rounded as described in the preceding sentence) equal to the value per
$1,000 principal amount of New Notes, assuming the New Notes will be repaid on
the maturity date thereof at the principal amount thereof plus accrued but
unpaid interest thereon to, but excluding, such maturity date, of all remaining
payments of principal thereof and interest thereon to be made through such
maturity date, discounted to the Exchange Date (in accordance with standard
market practice and in a manner consistent with the methodology set forth in
Schedule A and consistent with the hypothetical calculations set forth in
Schedule D, at a discount rate equal to the Reference Yield of the New Notes).
The Old Debenture Exchange Price will be a price per $1,000 principal
amount of Old Debentures (calculated as described in the next sentence and
rounded to the nearest cent, with $0.005 to be taken as a full cent) intended to
result in a yield to maturity of the Old Debentures on the Exchange Date equal
to (i) the 5 Year Benchmark Rate plus (ii) either (a) the 2002 Fixed Spread or
(b) the 2003 Fixed Spread, as the case may be. Specifically, the Old Debenture
Exchange Price will be a price (rounded as described in the preceding sentence)
equal to the value per $1,000 principal amount of Old Debenture, assuming the
Old Debenture will be repaid on the maturity date thereof at the principal
amount thereof plus accrued but unpaid interest thereon to, but excluding, such
maturity date, of all remaining payments of principal thereof and interest
thereon to be made through such maturity date, discounted to the Exchange Date
(in accordance with standard market practice and in a manner consistent with the
methodology set forth in Schedule A and consistent with the hypothetical
calculations set forth in Schedules B (in the case of the Old 2002 Debentures)
and C (in the case of the Old 2003 Debentures) at a discount rate equal to (i)
the 5 Year Benchmark Rate plus (ii) either (a) the 2002 Fixed Spread or (b) the
2003 Fixed Spread, as the case may be).
After the Price Determination Date, the New Coupon that will be received by
a holder pursuant to the Exchange Offer will be known and holders will be able
to ascertain the Old Debenture Exchange Prices, the New Note Exchange Price and
the exchange ratio in the manner described above, unless the Exchange Offer is
extended for a period longer than three business days. In the event the
16
Exchange Offer is extended for a period longer than three business days from the
previously scheduled Expiration Date, then a new Price Determination Date, which
would be two business days prior to the new Expiration Date, will be
established. If the extension is for three business days or less, no new Price
Determination Date will be established and the New Coupon, the Old Debenture
Exchange Price, the New Note Exchange Price and the exchange ratio will remain
as determined on the Price Determination Date prior to the extension of the
Exchange Offer.
As soon as practicable after the Price Determination Date, but in any event
before 9:00 a.m., New York City time, on the following business day, the Company
will publicly announce by press release to the Dow Jones News Service: the
Benchmark Treasury Rates, the Reference Yield of the New Notes, the New Note
Exchange Price and the Old Debenture Exchange Prices.
During the term of the Exchange Offer, holders of the Old Debentures can
obtain current information regarding the Benchmark Treasury Rates, the Reference
Yield of the New Notes, the Old Debenture Exchange Prices, the New Note Exchange
Price and other information regarding the terms of the Exchange Offer from the
Financial Advisor at (800) 828-3182. In addition, the Company intends to publish
information about the Exchange Offer, including the information described in the
preceding paragraph when available, on the MCM 'CorporateWatch' Service on
Telerate pages 41926-7 and on Bloomberg pages 7626-7.
In the event any dispute arises with respect to the Benchmark Treasury
Rates, the Reference Yield of the New Notes, the Old Debenture Exchange Prices,
the New Note Exchange Price, the New Coupon or any quotation or calculation with
respect to the Exchange Offer, the Company's determination shall be conclusive
and binding absent manifest error.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer will expire at 5:00 p.m., New York City time, on June
18, 1998, unless extended by the Company as provided herein. In the event that
the Exchange Offer is extended, the term 'Expiration Date' with respect to such
extended Exchange Offer shall mean the time and date on which the Exchange
Offer, as so extended, shall expire.
The Company expressly reserves the right, in its sole discretion, subject
to applicable law, to (i) extend or terminate the Exchange Offer and not accept
for exchange any tendered Old Debentures if (a) any of the conditions specified
in ' -- Conditions to the Exchange Offer' are not satisfied or waived or (b)
otherwise, (ii) waive any condition to the Exchange Offer and accept all Old
Debentures tendered pursuant to the Exchange Offer, (iii) extend the Exchange
Offer and retain all the Old Debentures tendered pursuant to the Exchange Offer
until the expiration of the Exchange Offer, subject, however, to the withdrawal
rights of holders as provided in, ' -- Withdrawal Rights', (iv) amend the terms
of the Exchange Offer and (v) modify the form of the consideration to be
provided pursuant to the Exchange Offer.
Any extension, termination or amendment will be followed as promptly as
practicable by a public announcement and notification to the Exchange Agent. In
the case of any extension, a public announcement will be issued prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which the Company may
choose to make any public announcement, the Company shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by release to the Dow Jones News Service or otherwise as required by law.
In the event of any extension of the Exchange Offer, all Old Debentures tendered
pursuant to the Exchange Offer and not subsequently withdrawn, will remain
subject to, and holders will continue to have withdrawal rights until the
expiration of, the Exchange Offer.
EFFECT OF TENDER
A tendering holder of Old Debentures that are exchanged in the Exchange
Offer will not be obligated to pay transfer taxes or any fees or commissions
with respect to the acquisition of their Old Debentures by the Company pursuant
to the Exchange Offer. See Instruction 7 of the accompanying
17
Letter of Transmittal. However, if the beneficial owner tenders through a
Custodian, such beneficial owner may be required to pay fees or commissions to
such institution.
ACCEPTANCE OF OLD DEBENTURES TENDERED FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange Old Debentures by accepting such Old Debentures for
exchange and in consideration therefor will issue a principal amount of New
Notes as determined in accordance with the terms of the Exchange Offer. New
Notes will be delivered on the Exchange Date. The Exchange Agent will act as
agent for the tendering holders for the purpose of receiving Old 2002 Debentures
and delivering New Notes to such holders. In all cases, Old 2002 Debentures will
be accepted for exchange pursuant to the Exchange Offer only after timely
receipt by the Exchange Agent of certificates representing Old Debentures (or
confirmation of a book-entry transfer), a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof or satisfaction of
DTC's ATOP procedures) and any other documents required thereby. The Old 2003
Debentures are held in book-entry form through DTC. Beneficial owners of Old
2003 Debentures must contact the broker, dealer, commercial bank, trust company
or other nominee, any of which may be a DTC participant ('Custodian'), through
whom such Old 2003 Debentures are held and direct such Custodian to tender such
Old 2003 Debentures pursuant to the Exchange Offer.
New Notes will be delivered only in book-entry form through DTC and only to
the DTC account of the tendering holder or the tendering holder's Custodian.
Accordingly, a holder who tenders Old Debentures must specify on the Letter of
Transmittal the DTC participant to which New Notes should be delivered and all
necessary account information to effect such delivery. Failure to provide such
information will render such holder's tender defective and the Company will have
the right, which it may waive, to reject such tender. The Company and the
Exchange Agent shall not incur any liability for delivering New Notes in
accordance with any instructions provided by a tendering holder.
The Company will be deemed to have accepted for exchange (and thereby to
have acquired) tendered Old Debentures as, if and when the Company gives oral
(promptly confirmed in writing) or written notice to the Exchange Agent of the
Company's acceptance of such Old Debentures for exchange. Old Debentures
accepted for exchange by the Company will be canceled.
If Old 2002 Debentures in a principal amount in excess of the principal
amount indicated as being tendered on the Letter of Transmittal are submitted,
an Old 2002 Debenture in principal amount equal to the excess principal amount
over the amount indicated as tendered in the Letter of Transmittal will be
issued to the tendering holder, at the Company's expense, in the same form in
which such security was tendered, as promptly as practicable following the
expiration or termination of the Exchange Offer. If any tendered Old 2002
Debentures are not accepted for exchange because of an invalid tender, the
occurrence of certain other events set forth herein or otherwise, such Old 2002
Debentures will be returned, at the Company's expense, to the tendering holder
thereof, as promptly as practicable following the expiration or termination of
the Exchange Offer. If any tendered Old 2003 Debentures are not accepted for
exchange because of an invalid tender, the occurrence of certain other events
set forth herein or otherwise, such Old 2003 Debentures will remain beneficially
held by the tendering holder or beneficial owner thereof.
PROCEDURES FOR TENDERING OLD DEBENTURES
Minimum Denominations. A holder may tender less than all Old Debentures
held by such holder. However, Old Debentures may be tendered only in
denominations of $1,000 or an integral multiple thereof.
Tender of Old Debentures Held in Physical Form. To tender Old 2002
Debentures held in physical form, a holder must (i) complete (including the
required information regarding delivery of New Notes through DTC) and sign the
appropriate Letter of Transmittal in accordance with the instructions set forth
therein and (ii) deliver the properly completed and executed Letter of
Transmittal, together with any other documents required by the Letter of
Transmittal, and the Old 2002 Debentures in physical
18
form to the Exchange Agent at the address set forth under 'Available
Information' prior to the Expiration Date.
Tender of Old Debentures Held Through a Custodian. To tender Old Debentures
held by a Custodian, the beneficial owner of the Old Debentures must contact the
Custodian and direct the Custodian to tender such Old Debentures in accordance
with the procedures set forth herein and in the appropriate Letter of
Transmittal.
The Exchange Agent and DTC have confirmed that the Exchange Offer is
eligible for ATOP. Accordingly, DTC participants may electronically transmit
their acceptance of the Exchange Offer by causing DTC to transfer Old Debentures
to the Exchange Agent in accordance with DTC's ATOP procedures for such a
transfer. DTC will then send an Agent's Message to the Exchange Agent.
The term 'Agent's Message' means a message transmitted by DTC, received by
the Exchange Agent and forming part of a Book-Entry Confirmation (as defined
herein), which states that DTC has received an express acknowledgment from the
DTC participant tendering Old Debentures which are the subject of such
Book-Entry Confirmation, that such DTC participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Company may enforce
such agreement against such DTC participant. In the case of an Agent's Message
relating to a guaranteed delivery, the term means a message transmitted by DTC
and received by the Exchange Agent, which states that DTC has received an
express acknowledgment from the DTC participant tendering Old Debentures that
such DTC participant has received and agrees to be bound by the Notice of
Guaranteed Delivery (as described below). Holders desiring to tender Old
Debentures on the Expiration Date should note that such holders must allow
sufficient time for completion of the ATOP procedures during the normal business
hours of DTC on that date.
If the Custodian holds Old Debentures in physical form, the Custodian must
follow the procedure set forth above under ' -- Procedures for Tendering Old
Debentures -- Tender of Old Debentures Held in Physical Form'.
If the Custodian holds Old Debentures in book-entry form through DTC (the
'Book-Entry Transfer Facility'), to tender such Old Debentures the Custodian
must (i) effect a book-entry transfer (a 'Book-Entry Confirmation') of all Old
Debentures to be tendered to the Exchange Agent's account at such Book-Entry
Transfer Facility prior to the Expiration Date or (ii) complete (including the
required information regarding delivery of New Notes through DTC) and sign the
appropriate Letter of Transmittal in accordance with the instructions set forth
therein and deliver the properly completed and executed Letter of Transmittal,
together with any other documents required by the Letter of Transmittal, to the
Exchange Agent at the address set forth under 'Available Information' prior to
the Expiration Date.
Book-Entry Delivery Procedures. The Exchange Agent will establish promptly
an account with respect to the Old Debentures at the Book-Entry Transfer
Facility for purposes of the Exchange Offer. Any financial institution that is a
participant in the Book-Entry Transfer Facility may make a book-entry delivery
of Old Debentures by causing the Book-Entry Transfer Facility to transfer Old
Debentures to the Exchange Agent's account. DELIVERY OF A LETTER OF TRANSMITTAL
TO A BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE VALID DELIVERY TO THE
EXCHANGE AGENT.
Any holder whose Old 2002 Debentures have been mutilated, lost, stolen or
destroyed will be responsible for obtaining replacement securities or for
arranging for indemnification with The Chase Manhattan Bank, as Trustee for the
Old Debentures. Holders may contact the Information Agent for assistance with
such matters.
IN ORDER FOR A TENDERING HOLDER TO BE ASSURED OF PARTICIPATING IN THE
EXCHANGE OFFER, SUCH HOLDER MUST TENDER OLD DEBENTURES IN ACCORDANCE WITH THE
PROCEDURES SET FORTH HEREIN AND IN THE APPROPRIATE LETTER OF TRANSMITTAL PRIOR
TO THE EXPIRATION DATE. THE METHOD OF DELIVERY OF OLD DEBENTURES AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE HOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED AND ENOUGH TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
19
Letters of Transmittal and Old Debentures must be sent only to the Exchange
Agent. Do not send Letters of Transmittal or Old Debentures to the Company, the
Trustee, the Information Agent or the Financial Advisor.
GUARANTEED DELIVERY PROCEDURES
If a holder of Old Debentures wishes to tender such Old Debentures and time
will not permit such holder's Old Debentures or other required documents to
reach the Exchange Agent prior to the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made through an Eligible Institution (as such term
is defined in the Letter of Transmittal), (ii) on or prior to 5:00 p.m., New
York City time, on the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed appropriate Notice
of Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail, hand delivery or by Agent's Message), setting
forth the name and address of the holder of Old Debentures and the amount of Old
Debentures tendered, stating that the tender is being made thereby and
guaranteeing that within three NYSE trading days after the date of execution of
the Notice of Guaranteed Delivery, the certificates for all physically tendered
Old 2002 Debentures, in proper form for transfer, or a Book-Entry Confirmation,
as the case may be, together with a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof or Agent's Message in lieu
thereof) with any required signature guarantees and any other documents required
by the Letter of Transmittal will be deposited by the Eligible Institution with
the Exchange Agent, and (iii) the certificates for all physically tendered Old
2002 Debentures, in proper form for transfer, or a Book-Entry Confirmation, as
the case may be, together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required signature
guarantees, and any other documents required by the Letter of Transmittal are
deposited by the Eligible Institution within three NYSE trading days after the
date of execution of the Notice of Guaranteed Delivery.
PROPER EXECUTION AND DELIVERY OF LETTER OF TRANSMITTAL
In general, all signatures on a Letter of Transmittal or a notice of
withdrawal must be guaranteed by an Eligible Institution; however, such
signatures need not be guaranteed if (a) the appropriate Letter of Transmittal
is signed by the holder of the Old Debenture tendered thereby or by a
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the holder of the Old Debenture tendered thereby and such
holder has not completed the portion entitled 'Special Delivery Instructions' on
the Letter of Transmittal, or (b) such Old Debenture tendered is for the account
of an Eligible Institution.
If the appropriate Letter of Transmittal is signed by the holder of the Old
Debenture tendered thereby or a participant in a Book-Entry Transfer Facility
whose name appears on a security position listing with respect to the Old
Debenture tendered thereby, the signature must correspond with the name as
written on the face of the Old Debenture or on the security position listing,
respectively, without any change whatsoever. If any of the Old Debentures
tendered thereby are held by two or more holders, all such holders must sign the
appropriate Letter of Transmittal. If any of the Old Debentures tendered thereby
are registered in different names on different Old Debentures, it will be
necessary to complete, sign and submit as many separate appropriate Letters of
Transmittal as there are different registrations.
If the appropriate Letter of Transmittal is signed by a person other than
the holder of the Old Debenture tendered thereby or a participant in a
Book-Entry Transfer Facility whose name appears on a security position listing
with respect to the Old Debenture tendered thereby, the Old Debenture must be
endorsed or accompanied by appropriate instruments of transfer, in either case,
signed exactly as the name of the holder appears on the face of the Old
Debenture or on the security position listing with respect to such tendered Old
Debenture. If the appropriate Letter of Transmittal or any Old Debenture, proxy
or instrument of transfer is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person must so indicate when signing,
and proper evidence satisfactory to the Exchange Agent of the authority of such
person so to act must be submitted.
20
New Notes will be delivered only in book-entry form through DTC and only to
the DTC account of the holder or the holder's Custodian. If Old 2002 Debentures
not tendered or not exchanged are to be delivered to a person other than the
holder of the Old 2002 Debentures tendered, or to an address other than that of
the holder of the Old 2002 Debentures tendered, such holder should indicate in
the portion of the appropriate Letter of Transmittal entitled 'Special Delivery
Instructions' the person and/or address to which such Old 2002 Debentures are to
be delivered. If Old 2002 Debentures not tendered or not exchanged are to be
issued to a person other than the holder of the Old 2002 Debentures tendered (i)
the employer identification or social security number of the person to whom
issuance is to be made must be indicated on the appropriate Letter of
Transmittal and (ii) Old 2002 Debentures must be endorsed or accompanied by
appropriate instruments of transfer, signed exactly as the name of the holder
appears on the face of the Old 2002 Debentures or the security position listing
with respect thereto, with the signature on the certificates or instruments of
transfer guaranteed by an Eligible Institution. If no such instructions are
given, any Old 2002 Debentures not tendered or exchanged will be delivered to
the holder of the Old 2002 Debentures tendered.
Because New Notes will be delivered only in book-entry form through DTC, a
holder who tenders Old Debentures must specify on the appropriate Letter of
Transmittal the DTC participant to which New Debentures should be delivered and
all necessary account information to effect such delivery. Such DTC participant
must be either the holder or a Custodian for the holder. Failure to provide such
information will render such holder's tender defective and the Company will have
the right, which it may waive, to reject such tender. Holders who anticipate
tendering other than through DTC are urged to contact promptly a Custodian that
has the capability to hold securities through DTC to arrange for receipt of any
New Notes to be delivered pursuant to the Exchange Offer and to obtain the
information necessary to complete the account information table in the
appropriate Letter of Transmittal.
No alternative, conditional, irregular or contingent tenders will be
accepted. By executing the appropriate Letter of Transmittal, the holder of Old
Debentures waives any right to receive any notice of the acceptance for exchange
of such holder's Old Debentures, except as otherwise provided herein.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Debentures will be determined by the
Company, whose determination shall be conclusive and binding. The Company
reserves the absolute right to reject any or all tenders that are not in proper
form or the acceptance of which may be, in the opinion of counsel for the
Company, unlawful. The Company also reserves the absolute right to waive any
condition of the Exchange Offer as set forth under ' -- Conditions to the
Exchange Offer' and any irregularities or conditions of tender as to particular
Old Debentures. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letters of Transmittal) shall
be conclusive and binding.
Unless waived, any irregularities in connection with tenders must be cured
within such time as the Company may determine. The Company, the Exchange Agent
and the Information Agent shall not be under any duty to give notification of
defects in such tenders and shall not incur liability for any failure to give
such notification. Tenders of Old Debentures will not be deemed to have been
made until such irregularities have been cured or waived. Any Old Debentures
received by the Exchange Agent that are not properly tendered and as to which
the irregularities have not been cured or waived will be returned by the
Exchange Agent to the holder, unless otherwise provided in the appropriate
Letter of Transmittal, as soon as practicable following the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer or any extension
of the Exchange Offer, the Company will not be required to issue New Notes and
may terminate the Exchange Offer by oral (promptly confirmed in writing) or
written notice to the Exchange Agent, or, at its option, modify or otherwise
amend the Exchange Offer with respect to such Old Debentures, if any of the
following conditions has not been satisfied, on or prior to the Expiration Date:
(a) there shall not have been any action taken or threatened, or any
statute, rule, regulation, judgment, order, stay, decree or injunction
promulgated, enacted, entered, enforced by or before any court or
governmental regulatory or administrative agency or authority or tribunal,
domestic or
21
foreign, which (i) challenges the making of the Exchange Offer or the
exchange of Old Debentures for New Notes pursuant to the Exchange Offer
(the 'Exchange'), or might, directly or indirectly, prohibit, prevent,
restrict or delay consummation of the Exchange Offer or the Exchange, or
might otherwise adversely affect in any material manner the Exchange Offer
or the Exchange or (ii) in the sole judgment of the Company, could
materially adversely affect the business, condition (financial or
otherwise), income, operations, properties, assets, liabilities or
prospects of the Company and its subsidiaries, taken as a whole, or
materially impair the contemplated benefits of the Exchange Offer or the
Exchange to the Company or might be material to holders of Old Debentures
in deciding whether to accept the Exchange Offer;
(b) there shall not have occurred or be likely to occur any event (i)
affecting the business condition (financial or otherwise), income,
operations, properties, assets, liabilities or prospects of the Company
that, in the sole judgment of the Company, would or might prohibit,
prevent, restrict or delay consummation of the Exchange Offer or the
Exchange (ii) that in the sole judgment of the Company will, or is
reasonably likely to, materially impact the contemplated benefits,
including economic benefits or accounting treatment, of the Exchange Offer
or the Exchange to the Company or (iii) that might be material to holders
of Old Debentures in deciding whether to accept the Exchange Offer;
(c) there shall not have occurred (i) any general suspension of or
limitation on trading in securities on the NYSE or in the over-the-counter
market (whether or not mandatory), (ii) any material adverse change in the
price of the Old Debentures, (iii) a material impairment in the general
trading market for debt securities, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks by federal or
state authorities in the United States (whether or not mandatory), (v) a
commencement or escalation of a war, armed hostilities or other national or
international crisis directly or indirectly relating to the United States,
(vi) any limitation (whether or not mandatory) by any governmental
authority on, or other event having a reasonable likelihood of affecting,
the extension of credit by banks or other lending institutions in the
United States, or (vii) any material adverse change in United States
securities or financial markets generally, or in the case of any of the
foregoing existing at the time of the commencement of the Exchange Offer, a
material acceleration or worsening thereof;
(d) the Trustee shall not have objected in any respect to, or taken
any action that could in the sole judgment of the Company adversely affect
the consummation of, the Exchange Offer or the Exchange nor shall the
Trustee have taken any action that challenges the validity or effectiveness
of the procedures used by the Company in making the Exchange Offer or the
Exchange;
(e) there shall not have occurred, been proposed or been announced any
tender or exchange offer with respect to any class of the Company's equity
securities, or any merger, acquisition, business combination or other
similar transaction with or involving the Company or any subsidiary
thereof;
(f) there shall not have occurred any change in the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries taken as a whole (including, without
limitation, any downgrade in the credit ratings of any securities of the
Company or any of its subsidiaries by Moody's or S&P or any announcement by
Moody's or S&P that it has placed any such rating under surveillance or
review with possible negative implications), which, in the sole judgment of
the Company, is or may be materially adverse to the Company; and
(g) (i) no person, entity or 'group' (as that term is used in Section
13(d)(3) of the Exchange Act) shall have acquired, or proposed to acquire,
beneficial ownership of more than 5% of the Company's outstanding common
stock, (ii) no group shall have been formed which beneficially owns more
than 5% of the Company's outstanding common stock and (iii) no person,
entity or group shall have filed a Notification and Report Form under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, or made a public
announcement reflecting an intent to acquire the Company or any of its
subsidiaries or any of their respective assets or securities.
If any of the foregoing conditions is not satisfied, the Company may (i)
terminate the Exchange Offer and return such Old Debentures to the holders who
tendered them, (ii) extend the Exchange
22
Offer and retain all tendered Old Debentures until the expiration of the
Exchange Offer, as extended, subject, however, to the withdrawal rights of
holders, see ' -- Withdrawal Rights' and ' -- Expiration Date; Extensions;
Termination; Amendments', or (iii) waive any of the conditions with respect to
the Exchange Offer and accept all Old Debentures tendered therein.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company, in whole or in part, in its sole discretion. Any
determination made by the Company concerning an event, development or
circumstance described or referred to above shall be conclusive and binding.
In addition, the Company reserves the right, in its sole discretion, to
purchase or make offers for any Old Debentures that remain outstanding
subsequent to the completion or termination of the Exchange Offer. The terms of
any such purchase or offer could differ from the terms of the Exchange Offer.
WITHDRAWAL RIGHTS
Tendered Old Debentures may be withdrawn by the holder prior to the
Expiration Date.
A holder of Old 2002 Debentures who tendered Old Debentures in physical
form may withdraw the Old 2002 Debentures tendered by providing a written notice
of withdrawal (or manually signed facsimile thereof) to the Exchange Agent, at
its address set forth under 'Available Information', prior to the Expiration
Date, which notice must contain: (i) the name of the person who tendered the Old
2002 Debentures; (ii) a description of the Old 2002 Debentures to be withdrawn;
(iii) the certificate number or numbers shown on the particular certificate or
certificates evidencing such Old 2002 Debentures; (iv) the aggregate principal
amount represented by such Old 2002 Debentures; (v) the signature of the holder
of such Old 2002 Debentures executed in the same manner as the original
signature on the Letter of Transmittal (including a signature guarantee, if such
original signature was guaranteed); and (vi) if such Old 2002 Debentures are
owned by a new beneficial owner, evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Old 2002 Debentures.
If a beneficial owner of Old Debentures tendered through a Custodian wishes
to withdraw the Old Debentures tendered, such beneficial owner must contact the
Custodian and direct the Custodian to withdraw such Old Debentures in accordance
with the following procedures. In order to withdraw such Old Debentures the
Custodian must provide a written notice of withdrawal (or manually signed
facsimile thereof) to the Exchange Agent, at its address set forth under
'Available Information', prior to the Expiration Date, which notice must
contain: (i) the name of the person who tendered the Old Debentures; (ii) a
description of the Old Debentures to be withdrawn; (iii) the certificate number
or numbers shown on the particular certificate or certificates evidencing such
Old 2002 Debentures (if Old 2002 Debentures were tendered in physical form);
(iv) the aggregate principal amount represented by such Old Debentures; and (v)
if such Old Debentures are owned by a new beneficial owner, evidence
satisfactory to the Company that the person withdrawing the tender has succeeded
to the beneficial ownership of the Old Debentures. If the Old Debentures were
tendered by book-entry transfer, the Custodian also must debit the Exchange
Agent's account at the Book-Entry Transfer Facility through which the tender was
made of all Old Debentures to be withdrawn.
A PURPORTED NOTICE OF WITHDRAWAL WHICH LACKS ANY OF THE REQUIRED
INFORMATION WILL NOT BE AN EFFECTIVE WITHDRAWAL OF A TENDER PREVIOUSLY MADE.
TENDERS MAY NOT BE WITHDRAWN AFTER THE EXPIRATION DATE.
Holders who have tendered in the Exchange Offer will continue to have
withdrawal rights following any extension of the Expiration Date. Any permitted
withdrawals of tenders of Old Debentures may not be rescinded, and any Old
Debentures so withdrawn will thereafter be deemed not validly tendered for
purposes of the Exchange Offer and the holder thereof will be deemed to have
rejected the Exchange Offer. However, withdrawn Old Debentures may be
re-tendered prior to the Expiration Date by following the procedures for
tendering described above.
All questions as to the validity (including time of receipt) of notices of
withdrawal will be determined by the Company, whose determination will be
conclusive and binding. None of the Company, the
23
Exchange Agent or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the transfer
and acquisition of Old Debentures pursuant to the Exchange Offer. If, however,
substitute Old Debentures for amounts not tendered or not exchanged are to be
delivered to, or are to be registered in the name of, any person other than the
holder of Old Debentures tendered, or if tendered Old Debentures are registered
in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
transfer to or acquisition by the Company of Old Debentures pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
holder or any other persons) shall be payable by the holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the appropriate Letter of Transmittal, the amount of such transfer taxes will be
billed directly to such holder and/or withheld from any payments due with
respect to the Old Debentures tendered by such holder.
FINANCIAL ADVISOR
The Company has engaged Goldman, Sachs & Co. to act as Financial Advisor in
connection with the Exchange Offer. Any holder who has questions concerning the
terms of the Exchange Offer or who would like current information regarding the
Benchmark Treasury Rates, the Reference Yield of the New Notes, the Old
Debenture Exchange Price, the New Note Exchange Price or the New Coupon may
contact the Financial Advisor at (800) 828-3182 or at the address set forth
under 'Available Information'.
The Company has agreed to pay the Financial Advisor a financial advisory
fee for its services and to reimburse the Financial Advisor for its reasonable
out-of-pocket expenses, including reasonable fees and expenses of legal counsel,
and the Company has agreed to indemnify the Financial Advisor against certain
liabilities, including certain liabilities under the federal securities laws, in
connection with the Exchange Offer. In the past, the Financial Advisor has
provided other investment banking and financial advisory services to the
Company.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed Exchange Agent for the Exchange
Offer. The Company will pay the Exchange Agent reasonable and customary fees for
its services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith. Letters of Transmittal and all correspondence in
connection with the Exchange Offer must be sent or delivered to the Exchange
Agent at the address set forth under 'Available Information'.
INFORMATION AGENT
Georgeson & Company Inc. has been appointed Information Agent for the
Exchange Offer. The Company will pay the Information Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith.
Any questions concerning the tender procedures or requests for assistance
or additional copies of this Offering Circular or the Letters of Transmittal may
be directed to the Information Agent at the address and telephone number set
forth under 'Available Information'. Holders of Old Debentures may also contact
the Financial Advisor or their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Exchange Offer.
24
DESCRIPTION OF NEW NOTES
The following summary of certain provisions of the New Notes and the
Indenture does not purport to be complete and is subject, and is qualified in
its entirety by reference, to all the provisions of the New Notes and the
Indenture, including the definitions therein of certain terms.
GENERAL
The New Notes will be issued under the Indenture dated as of October 1,
1985 between the Company and The Chase Manhattan Bank, as trustee, as
supplemented by the First Supplemental Indenture dated as of February 1, 1991
(the 'First Supplemental Indenture' and as the Second Supplemental Indenture
(the 'Second Supplemental Indenture') dated as of November 1, 1997 (as so
supplemented, the 'Indenture'). The following statements with respect to the New
Notes are subject to the detailed provisions of the Indenture. Whenever any
particular provision of the Indenture or any term used therein is referred to,
such provision or term is incorporated by reference as a part of the statement
in connection with which such reference is made, and the statement in connection
with which such reference is made is qualified in its entirety by such
reference.
The New Notes will be unsecured obligations of the Company and will mature
on July 1, 2005. The New Notes are not subject to redemption prior to maturity.
The New Notes will bear interest from the Exchange Date (i.e. June 25,
1998, unless the Expiration Date is extended) at the New Coupon, payable on
January 1 and July 1 of each year, commencing July 1, 1998, to the person in
whose name the New Note was registered at the close of business on the preceding
December 15 and June 15, respectively, subject to certain exceptions. In
addition, interest payable on the New Notes for the July 1, 1998 interest
payment date will be payable to holders of record on the Exchange Date.
The Company does not intend to apply for listing of the New Notes on the
NYSE or any other exchange.
The Old Debentures were issued under the same Indenture as the New Notes
will be issued under, except that the Second Supplemental Indenture did not
apply to the Old Debentures and the First Supplemental Indenture did not apply
to the Old 2002 Debentures. See ' -- Other Provisions'.
BOOK-ENTRY, DELIVERY AND FORM
The New Notes will be issued in the form of one or more fully registered
Global Notes. The Global Notes will be deposited with, or on behalf of DTC and
registered in the name of Cede & Co., DTC's nominee.
Beneficial interests in the Global Notes will be represented through
book-entry accounts of financial institutions acting on behalf of beneficial
owners as direct and indirect participants in DTC. Except as set forth below,
the Global Notes may be transferred, in whole and not in part, only to another
nominee of DTC or to a successor of DTC or its nominee.
DTC has advised as follows: It is a limited-purpose trust company which was
created to hold securities for its participating organizations ('DTC
participants') and to facilitate the clearance and settlement of securities
transactions in such securities between DTC participants through electronic
book-entry changes in accounts of DTC participants. DTC participants include
securities brokers and dealers, banks and trust companies, clearing corporations
and certain other organizations. Access to DTC's system is also available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC participant, either directly or
indirectly ('indirect participants'). Persons who are not DTC participants may
beneficially own securities held by DTC only through DTC participants or
indirect participants.
DTC advises that pursuant to procedures established by it (i) upon issuance
of the New Notes by the Company, DTC will credit the accounts of DTC
participants whose Old Debentures were exchanged pursuant to the Exchange Offer
with the principal amount of the New Notes so exchanged, and (ii) ownership of
beneficial interests in the Global Notes will be shown on, and the transfer of
that ownership will be effected only through, records maintained by DTC, the DTC
participants and the indirect participants. The laws of some states require that
certain persons take physical delivery in
25
definitive form of securities which they own. Consequently, the ability to
transfer beneficial interests in the Global Notes is limited to such extent.
So long as a nominee of DTC is the registered owner of the Global Notes,
such nominee for all purposes will be considered the sole owner or holder of the
New Notes under the Indenture. Except as provided below, owners of beneficial
interests in the Global Notes will not be entitled to have New Notes registered
in their names, will not receive or be entitled to receive physical delivery of
New Notes in definitive form, and will not be considered the owners or holders
thereof under the Indenture.
Neither the Company, the Trustee, any Paying Agent nor the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Principal and interest payments on the New Notes registered in the name of
DTC's nominee will be made by the Trustee to DTC. Under the terms of the
Indenture, the Company and the Trustee will treat the persons in whose names the
New Notes are registered as the owners of such New Notes for the purpose of
receiving payment of principal and interest on such New Notes and for all other
purposes whatsoever. Therefore, neither the Company, the Trustee nor any Paying
Agent has any direct responsibility or liability for the payment of principal or
interest on the New Notes to owners of beneficial interests in the Global Notes.
DTC has advised the Company and the Trustee that its present practice is, upon
receipt of any payment of principal or interest, to immediately credit the
accounts of the DTC participants with such payment in amounts proportionate to
their respective holdings in principal amount of beneficial interests in the
Global Notes as shown on the records of DTC. Payments by DTC participants and
indirect participants to owners of beneficial interests in the Global Notes will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in 'street name', and will be the responsibility of the DTC participants or
indirect participants.
If DTC is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within 90 days, the Company
will issue New Notes in definitive form in exchange for the Global Notes. In
addition, the Company may at any time determine not to have the New Notes
represented by Global Notes and, in such event, will issue New Notes in
definitive form in exchange for the Global Notes. In either instance, an owner
of a beneficial interest in the Global Notes will be entitled to have New Notes
equal in principal amount to such beneficial interest registered in its name and
will be entitled to physical delivery of such New Notes endorsed thereon in
definitive form. New Notes so issued in definitive form will be issued in
denominations of $1,000 and integral multiples thereof and will be issued in
registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
All payments of principal and interest on the New Notes will be made by the
Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the New
Notes will trade in DTC's Same-Day Funds Settlement System until maturity, and
secondary market trading activity in the New Notes will therefore be required by
DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the New Notes.
OTHER PROVISIONS
In general, provisions in the Indenture with respect to the Company's
limitations on liens, merger and consolidation of the Company, events of
default, defeasance and modification of the Indenture that apply to the Old
Debentures also will apply to the New Notes; except that pursuant to the Second
Supplemental Indenture (a) the New Notes will be subject to covenant defeasance
and (b) the clause in the merger and consolidation covenant prohibiting a
merger, consolidation or sale of substantially all of the Company's assets if,
as a result, such assets would be encumbered without equally securing the
outstanding debt under the old Indenture, has been eliminated.
26
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain U.S. Federal income tax
consequences of the Exchange Offer to holders of Old Debentures and of the
ownership and disposition of New Notes acquired pursuant to the Exchange Offer.
This summary is based on the Internal Revenue Code of 1986, as amended (the
'Code'), existing and proposed Treasury Regulations, Internal Revenue Service
('IRS') rulings, official pronouncements and judicial decisions, all as of the
date hereof and all of which are subject to change, possibly with retroactive
effect, or different interpretations. This summary is applicable only to persons
who hold Old Debentures (and who will hold New Notes) as capital assets. This
summary does not discuss all the U.S. Federal income tax consequences that may
be relevant to a holder of Old Debentures in light of the holder's particular
circumstances. In particular, this summary does not address any special rules
that may be applicable to insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, pass-through entities, persons that hold Old Debentures or New Notes
as part of an integrated investment (including a 'straddle') consisting of Old
Debentures or New Notes and one or more other positions, foreign corporations,
persons who are not citizens or residents of the United States, foreign estates,
foreign trusts or persons whose functional currency is other than the United
States dollar. In addition, this summary does not address any state or local tax
considerations that may be relevant to a holder's decision to exchange Old
Debentures for New Notes pursuant to the Exchange Offer.
THE FOLLOWING IS NOT TAX ADVICE TO ANY HOLDER OF OLD DEBENTURES. ALL
HOLDERS OF OLD DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE
UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE EXCHANGE OF OLD
DEBENTURES FOR NEW NOTES AND OF THE OWNERSHIP AND DISPOSTION OF NEW NOTES
RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
EXCHANGE OF OLD DEBENTURES FOR NEW NOTES
Assuming the Old Debentures and New Notes represent 'securities' for U.S.
Federal income tax purposes (as discussed below), an exchange of Old Debentures
for New Notes pursuant to the Exchange Offer (an 'Exchange') will constitute a
recapitalization under section 368(a)(1)(E) of the Code. In a recapitalization,
no loss may be recognized, and gain, if any, is generally recognized only to the
extent of 'boot' (which term does not include amounts attributable to accrued
but unpaid interest) that is received in the recapitalization. In the case of
the Exchange Offer, (i) the amount of money received in lieu of a fractional New
Note and (ii) the fair market value of any excess of the principal amount of the
New Notes received over the principal amount of the Old Debentures (the 'Excess
Principal Amount') surrendered will constitute 'boot'. Any gain recognized will
generally be treated as capital gain, but may be subject to ordinary income
treatment if the holder acquired the Old Debenture at a market discount, as
discussed below. In addition, a cash-basis holder of Old Debentures who
exchanges an Old Debenture for a New Note may be required to recognize as
interest income received on the Exchange Date (rather than when paid) an amount
attributable to interest accrued on such Old Debenture from June 1, 1998 (in the
case of an Old 2002 Debenture) and February 15, 1998 (in the case of an Old 2003
Debenture) through the Exchange Date.
If the exchange of Old Debentures for New Notes qualifies as a
recapitalization, a holder who acquires New Notes will have (i) a fair market
value tax basis in a portion of the New Notes corresponding to the Excess
Principal Amount; and (ii) a tax basis in the remainder of the New Notes equal
to the holder's adjusted tax basis in the Old Debentures surrendered in the
exchange, decreased by the amount of 'boot' (including the fair market value of
the Excess Principal Amount) received and increased by the amount of gain, if
any, recognized as a result of the receipt of such 'boot'. The holding period of
that portion of the New Notes corresponding to the Excess Principal Amount will
commence on the day following the Exchange Date and the holding period of the
remainder of the New Notes will include the period during which the holder held
the Old Debentures.
Whether an Exchange will constitute a recapitalization under section
368(a)(1)(E) of the Code as described above will depend, in part, on whether
both the Old Debentures and the New Notes are
27
'securities' for U.S. Federal income tax purposes. Although the treatment of the
New Notes is not entirely certain because, among other things, their stated term
is less than ten years, the Company believes that both the Old Debentures and
the New Notes should be treated as 'securities' for U.S. Federal income tax
purposes and that an Exchange should constitute a recapitalization within the
meaning of section 368(a)(1)(E) of the Code.
Some holders of Old Debentures may have acquired them at a 'market
discount'. For this purpose, 'market discount' is the excess (if any) of the
principal amount over the holder's acquisition price, subject to a statutory de
minimis exception. Gain recognized on the exchange of such Old Debentures for
New Notes (as discussed above) will be treated as ordinary income to the extent
of the portion of such market discount which has accrued from the acquisition
date of such Old Debentures to the Exchange Date. In addition, any unrecognized
accrued market discount on such Old Debentures will carry over to the New Notes,
and any unaccrued market discount on such Old Debentures will carry over to the
New Notes and will accrue over the term of the New Notes.
If an Exchange of Old Debentures for New Notes is not a recapitalization, a
holder would have a taxable event for purposes of U.S. Federal income taxation,
and must recognize capital gain or loss equal to the difference between (i) if
the New Notes are traded on an established market, the fair market value of the
New Notes on the Exchange Date plus any cash received in lieu of a fractional
New Note (or, if the New Notes are not traded on an established market, then the
fair market value of the Old Debentures) and (ii) the holder's tax basis of the
Old Debentures surrendered. Any gain may be subject to ordinary income treatment
if the holder acquired the Old Debentures at a market discount.
NEW NOTES
Stated Interest on New Notes. In general, interest at the New Coupon from
and after the Exchange Date will be ordinary income, taxable when accrued, in
the case of a holder utilizing the accrual method of accounting, or when
received, in the case of a holder utilizing the cash method of accounting.
Bond Premium. If a holder's tax basis in New Notes immediately after the
Exchange (determined in the manner discussed above) exceeds the principal amount
of such New Notes, such excess will constitute amortizable bond premium which
the holder may elect to amortize under a constant yield method under section 171
of the Code. A holder that elects to amortize bond premium must reduce the tax
basis in the New Notes by the amount so amortized. The amortizable bond premium
will be treated as an offset to interest income rather than as a separate
deduction item. An election to amortize bond premium under section 171 of the
Code by a holder will apply to all obligations owned or acquired by the holder
in the current and all subsequent taxable years and may not be revoked without
the permission of the IRS. If an election to amortize bond premium is not made,
a holder must include the full amount of each interest payment in income in
accordance with its regular method of accounting and will receive a tax benefit
from the premium only in computing gain or loss upon the redemption, sale or
other disposition of the New Notes.
Sale of the New Notes. In general, upon a sale, or other disposition of the
New Notes, a holder will recognize gain or loss equal to the difference between
(i) the amount realized on the disposition (other than amounts attributable to
accrued but unpaid interest which will be taxable as such) and (ii) the holder's
tax basis in the New Notes. Such gain or loss will generally be capital gain or
loss (subject to the market discount rules.)
BACKUP WITHHOLDING
A holder of New Notes may be subject to backup withholding at a rate of 31
percent with respect to interest paid or the proceeds of a redemption, sale or
other disposition of the New Notes, unless the holder provides its taxpayer
identification number and certain required certifications to the payor or
otherwise establishes an exemption. Any amounts so withheld would be allowed as
a credit against the holder's U.S. Federal income tax liability.
28
PLAN OF DISTRIBUTION
The Company will exchange New Notes for Old Debentures. Accordingly, the
Company will not receive any proceeds from the exchange of New Notes for Old
Debentures.
Based on an interpretation by the staff of the Division of Corporation
Finance of the Commission, the Company believes that the New Notes issued
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by any holder thereof without compliance with the registration
requirements of the Securities Act.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer and, to
the best of the Company's information and belief, each person participating in
the Exchange Offer is acquiring the New Notes in the ordinary course of business
and has no arrangement or understanding with any person to participate in the
distribution of the New Notes.
The Company has agreed to pay all expenses incident to the Exchange Offer
(other than commissions or concessions of any brokers or dealers).
VALIDITY OF NEW NOTES
The validity of the New Notes will be passed upon for the Company by J.
Edward Smith, Senior Counsel, Corporate and Finance, of the Company.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of the Company included in the Annual
Report on Form 10-K of the Company for the fiscal year ended December 31, 1997,
have been audited by Price Waterhouse LLP, independent accountants, as set forth
in their report dated January 28, 1998 accompanying such financial statements.
With respect to the unaudited consolidated financial information of the
Company for the three month periods ended March 31, 1998 and 1997, incorporated
by reference in this Offering Circular, Price Waterhouse reported that they have
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report dated April 22, 1998
incorporated by reference herein, states that they did not audit and they did
not express an opinion on that unaudited financial information. Price Waterhouse
has not carried out any significant or additional tests beyond those which would
have been necessary if their report had not been included. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied.
29
SCHEDULE A
FORMULA TO DETERMINE OLD 2002 DEBENTURE EXCHANGE PRICE
[Enlarge/Download Table]
R = $1,000 (the redemption price per $1,000 principal amount of 9 7/8% Debentures Due June 1, 2002).
YLD = The yield to the maturity date of the Old 2002 Debenture equal to the sum of the 5 Year Benchmark
Rate at the Price Determination Date and the 2002 Fixed Spread, expressed as a decimal number.
N = The number of regular semi-annual interest payments from (but excluding) the Exchange Date to (and
including) the Maturity Date.
S = The number of days from and including the most recent date to which interest has been paid to (but
excluding) the Exchange Date. The number of days is computed using the 30/360 day count method.
CPN = 0.09875 (the nominal rate of interest payment on the Old 2002 Debentures expressed as a decimal
number).
/ = Divide. The term immediately to the left of the division symbol is divided by the term immediately
to the right of the division symbol before any other addition or subtraction operations are
performed.
exp = Exponentiate. The term to the left of the exponentiation symbol is raised to the power indicated by
the term to the right of the exponentiation symbol.
N
[S]
K=1 = Summate. The term to the right of the summation symbol is separately calculated 'N' times
(substituting for the 'K' in that term each whole number between 1 and N, inclusive), and the
separate calculations are then added together.
PRICE = The Old 2002 Debenture Exchange Price.
PRICE = R
(1+YLD/2) exp (N - S/180)
[Download Table]
N
+ [S] 1,000 (CPN/2) - 1,000 (CPN/2)(S/180)
K=1 (1+YLD/2) exp (K - S/180)
A-1
FORMULA TO DETERMINE OLD 2003 DEBENTURE EXCHANGE PRICE
[Enlarge/Download Table]
R = $1,000 (the redemption price per $1,000 principal amount of 9.20% Debentures Due February 15, 2003).
YLD = The yield to the maturity date of the Old 2003 Debenture equal to the sum of the 5 Year Benchmark
Rate at the Price Determination Date and the 2003 Fixed Spread, expressed as a decimal number.
N = The number of regular semi-annual interest payments from (but excluding) the Exchange Date to (and
including) the Maturity Date.
S = The number of days from and including the most recent date to which interest has been paid to, but
excluding, the Exchange Date. The number of days is computed using the 30/360 day count method.
CPN = 0.092 (the nominal rate of interest payment on the Old 2003 Debentures expressed as a decimal
number).
/ = Divide. The term immediately to the left of the division symbol is divided by the term immediately
to the right of the division symbol before any other addition or subtraction operations are
performed.
exp = Exponentiate. The term to the left of the exponentiation symbol is raised to the power indicated by
the term to the right of the exponentiation symbol.
N
[S]
K=1 = Summate. The term to the right of the summation symbol is separately calculated 'N' times
(substituting for the 'K' in that term each whole number between 1 and N, inclusive), and the
separate calculations are then added together.
PRICE = The Old 2003 Debenture Exchange Price.
PRICE = R
(1+YLD/2) exp (N - S/180)
[Download Table]
N
+ [S] 1,000 (CPN/2) - 1,000 (CPN/2)(S/180)
K=1 (1+YLD/2) exp (K - S/180)
A-2
FORMULA TO DETERMINE NEW NOTE EXCHANGE PRICE
[Enlarge/Download Table]
R = $1,000 (the redemption price per $1,000 principal amount of Notes Due July 1, 2005).
YLD = The yield to the maturity date of the New Notes equal to the sum of the 7 Year Benchmark Rate at the
Price Determination Date and the 2005 Fixed Spread, expressed as a decimal number.
N = The number of regular semi-annual interest payments from (but excluding) the Exchange Date to (and
including) the Maturity Date.
S = The number of days from, and including January 1, 1998, to but excluding, the Exchange Date. The
number of days is computed using the 30/360 day count method.
CPN = The coupon rounded down in increments of 1/8 of 1% such that the New Bond Price is equal to or less
than $1,000.
/ = Divide. The term immediately to the left of the division symbol is divided by the term immediately
to the right of the division symbol before any other addition or subtraction operations are
performed.
exp = Exponentiate. The term to the left of the exponentiation symbol is raised to the power indicated by
the term to the right of the exponentiation symbol.
N
[S]
K=1 = Summate. The term to the right of the summation symbol is separately calculated 'N' times
(substituting for the 'K' in that term each whole number between 1 and N, inclusive), and the
separate calculations are then added together.
PRICE = The New Note Exchange Price.
PRICE = R
(1+YLD/2) exp (N - S/180)
[Download Table]
N
+ [S] 1,000 (CPN/2) - 1,000 (CPN/2)(S/180)
K=1 (1+YLD/2) exp (K - S/180) (1+YLD/2) exp (1 - S/180)
FORMULA TO DETERMINE EXCHANGE RATIO OF OLD DEBENTURES AND NEW NOTES
[Enlarge/Download Table]
$1,000 x Old Debenture Exchange Price = Principal amount of New Notes to be issued for each $1,000
New Note Exchange Price principal amount of Old Debentures tendered. Any amounts
not issued because of rounding downward to nearest $1,000
or integral multiple thereof will be paid in cash.
A-3
SCHEDULE B
Hypothetical Example for the Old 2002 Debenture Exchange Price
This Schedule B provides a hypothetical illustration of the calculation of
the Old 2002 Debenture Exchange Price based on hypothetical data, and should,
therefore be used solely for the purpose of obtaining an understanding of the
calculation of the Old 2002 Debenture Exchange Price, as quoted at a
hypothetical 5 Year Benchmark Rate, and should not be used or relied upon for
any other purpose.
[Download Table]
Example:
Hypothetical Price Determination Date 3:00 p.m., New York City time, on
May 18, 1998
Exchange Date June 25, 1998
Hypothetical 5 Year Benchmark Rate on the 5.625%
Price Determination Date
R $1,000
YLD 5.875%
CPN 9.875%
N 8
S 24
PRICE $1,138.59
SCHEDULE C
Hypothetical Example for the Old 2003 Debenture Exchange Price
This Schedule C provides a hypothetical illustration of the calculation of
the Old 2003 Debenture Exchange Price based on hypothetical data, and should,
therefore be used solely for the purpose of obtaining an understanding of the
calculation of the Old 2003 Debenture Exchange Price, as quoted at a
hypothetical 5 Year Benchmark Rate, and should not be used or relied upon for
any other purpose.
[Enlarge/Download Table]
Example:
Hypothetical Price Determination Date 3:00 p.m., New York City time, on
May 18, 1998
Exchange Date June 25, 1998
Hypothetical 5 Year Benchmark Rate on the Price 5.625%
Determination Date
R $1,000
YLD 5.905%
CPN 9.200%
N 10
S 130
PRICE $1,131.88
SCHEDULE D
Hypothetical Example for the New Note Exchange Price
This Schedule D provides a hypothetical illustration of the calculation of
the New Note Exchange Price based on hypothetical data, and should, therefore be
used solely for the purpose of obtaining an understanding of the calculation of
the New Note Exchange Price, as quoted at a hypothetical 7 Year Benchmark Rate,
and should not be used or relied upon for any other purpose.
[Download Table]
Example:
Hypothetical Price Determination Date 3:00 p.m., New York City time, on
May 18, 1998
Exchange Date June 25, 1998
Hypothetical 7 Year Benchmark Rate on the 5.726%
Price Determination Date
R $1,000
YLD 6.226%
CPN 6.125%
N 15
S 174
PRICE $994.34
Hypothetical Example for the Exchange Ratio of Old Debentures and New Notes
[Download Table]
Old 2002 Debenture Exchange Price $1,138.59
New Note Exchange Price $994.34
Principal Amount of New Notes to be issued per $1,000 x $1,138.59 = $1,145.07
$1,000 principal amount of Old 2002 ----------------------
Debentures exchanged $994.34
Old 2003 Debenture Exchange Price $1,131.88
New Note Exchange Price $994.34
Principal Amount of New Notes to be issued per $1,000 x $1,131.88 = $1,138.32
$1,000 principal amount of Old 2003 ----------------------
Debentures exchanged $994.34
Dates Referenced Herein and Documents Incorporated by Reference
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