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PRICING SUPPLEMENT NO. 1 DATED JULY 10, 1998 RULE 424(b)(5)
(TO PROSPECTUS DATED JUNE 9, 1997 AND FILE NO. 33-64225
PROSPECTUS SUPPLEMENT DATED JUNE 9, 1997)
NEWELL CO.
MEDIUM-TERM NOTES, SERIES A
$250,000,000
6.35% RESET PUT SECURITIES ("REPS{SM}")*
______________________________________________________________________
Trade Date: July 9, 1998
Original Issue Date: July 14, 1998
Principal Amount: $250,000,000
Initial Price to Public: 100% of Principal Amount, plus
accrued interest, if any, from
and including July 14, 1998
Purchase Price: 99.350% of Principal Amount,
plus accrued interest; if any,
from and including July 14,
1998
Interest Rate: To but excluding July 15,
2008, 6.35%. From and
including July 15, 2008 as
described under "ADDITIONAL
TERMS - INTEREST RATE AND
INTEREST PAYMENT DATES"
Interest Payment Dates: January 15 and July 15 of each
year, commencing January 15,
1999
Maturity Date: July 15, 2028 subject to the
Call Option and Put Option
referred to below
Call Option: The Notes may be called by the
Callholder prior to maturity,
as described under "ADDITIONAL
TERMS - CALL OPTION; PUT
OPTION"
Repayment/Put Option: The Notes are subject to
repayment by the Company prior
to the Maturity Date, pursuant
to the Put Option as described
under "ADDITIONAL TERMS - CALL
OPTION; PUT OPTION"
Discount to Agents
(as percentage of principal amount): .650% See also UNDERWRITING
Net Proceeds to Company
(as percentage of principal amount
and including proceeds received for
the Call Option): 103.289% See also
UNDERWRITING
2
As of the date hereof, $250,000,000 in aggregate principal amount of
Medium Term Notes, Series A, of the Company have been sold (including
the Notes to which this Pricing Supplement relates).
______________________________________________________________________
Form: /X/ Book-Entry /_/ Certificated
Original Issue Discount Note: /_/ Yes /X/ No
______________________________________________________________________
Agents: Morgan Stanley Dean Witter
Chase Securities Inc.
First Chicago Capital Markets, Inc.
Merrill Lynch & Co.
Agents acting in the capacity as indicated below:
/_/ Agent /X/ Principal
Other Provisions: See the Attachment
______________________________________________________________________
MORGAN STANLEY DEAN WITTER
CHASE SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
MERRILL LYNCH & CO.
____________________
*REPS is a service mark of Morgan Stanley Dean Witter & Co.
3
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE
PRICE OF THE NOTES. SPECIFICALLY, THE AGENT MAY OVER-ALLOT IN
CONNECTION WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE NOTES
IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
ADDITIONAL TERMS
THESE ADDITIONAL TERMS CONSTITUTE A PART OF PRICING SUPPLEMENT
NO. 1 DATED JULY 10, 1998 OF NEWELL CO. (THE COMPANY ) AND CONTAINS A
DESCRIPTION OF ADDITIONAL TERMS AND PROVISIONS APPLICABLE TO THE
COMPANY'S 6.35% RESET PUT SECURITIES (THE "NOTES") CONSTITUTING A
TRANCHE OF THE COMPANY'S MEDIUM-TERM NOTES, SERIES A. THE NOTES ARE
DESCRIBED IN THE PROSPECTUS AND THE PROSPECTUS SUPPLEMENT FOR THE
MEDIUM-TERM NOTES, SERIES A, REFERRED TO ABOVE, AND REFERENCE IS MADE
THERETO FOR A DETAILED SUMMARY OF ADDITIONAL PROVISIONS OF THE NOTES.
THE NOTES ARE FIXED RATE NOTES AS DESCRIBED IN THE PROSPECTUS
SUPPLEMENT, SUBJECT TO AND AS MODIFIED BY THE COUPON RESET PROCESS AND
OTHER PROVISIONS DESCRIBED BELOW. THE DESCRIPTION OF THE PARTICULAR
TERMS OF THE NOTES SET FORTH IN THIS PRICING SUPPLEMENT SUPPLEMENTS,
AND TO THE EXTENT INCONSISTENT THEREWITH REPLACES, THE DESCRIPTION OF
THE TERMS AND PROVISIONS OF THE "DEBT SECURITIES" IN THE PROSPECTUS
AND THE "NOTES"IN THE PROSPECTUS SUPPLEMENT. CAPITALIZED TERMS USED
BUT UNDEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN SUCH
PROSPECTUS AND PROSPECTUS SUPPLEMENT.
INTEREST RATE AND INTEREST PAYMENT DATES
The Notes will bear interest at the rate of 6.35% from and
including July 14, 1998 to but excluding July 15, 2008 (the "First
Coupon Reset Date"). The First Coupon Reset Date and July 15, 2018 are
each referred to herein as a Coupon Reset Date. To the extent that the
Company has not purchased the aggregate principal amount of the Notes,
in whole, the next Coupon Reset Date is referred to herein as the
Applicable Coupon Reset Date. Interest on the Notes will be payable
semi-annually on January 15 and July 15 of each year, commencing
January 15, 1999 (each, an "Interest Payment Date"). Interest will be
calculated based on a 360-day year consisting of twelve 30-day months.
On each Interest Payment Date, interest will be payable to the persons
in whose name the Notes are registered on the fifteenth calendar day
(whether or not a Business Day) immediately preceding the related
Interest Payment Date (each, a "Record Date"). "Business Day" means
any day other than a Saturday, a Sunday or a day on which banking
institutions in The City of New York are authorized or required by law
or regulation to be closed.
If the Callholder (as defined below) elects to purchase the Notes
pursuant to the Call Option (as defined below), the Calculation Agent
(as defined below) will reset the interest rate for the Notes
4
effective on the Applicable Coupon Reset Date, pursuant to the Coupon
Reset Process described below. In such circumstance, (i) the Notes
will be purchased by the Callholder at 100% of the principal amount
thereof on the Coupon Reset Date, on the terms and subject to the
conditions described herein (interest accrued to but excluding the
Applicable Coupon Reset Date will be paid by the Company on such date
to the holders of the Notes on the most recent Record Date), and (ii)
from and including the Applicable Coupon Reset Date, the Notes will
bear interest at the rate determined by the Calculation Agent in
accordance with the procedures set forth under "-Coupon Reset Process
if Notes are Called" below.
MATURITY DATE
The Notes will mature on July 15, 2028 (the "Maturity Date").
However, holders of the Notes will be entitled to receive 100% of the
principal amount thereof on the Applicable Coupon Reset Date from
either (i) the Callholder, if the Callholder purchases the Notes
pursuant to the Call Option, or (ii) the Company, by exercise of the
Put Option (as defined below) by the Trustee for and on behalf of the
holders of the Notes, if the Callholder does not purchase the Notes
pursuant to the Call Option. See "Call Option; Put Option" below.
For persons holding the Notes (or an interest therein) on the
Applicable Coupon Reset Date, the effect of the operation of the Call
Option and Put Option will be that such holders will be entitled to
receive, and will be required to accept, 100% of the principal amount
of such Notes (plus accrued interest) on the Applicable Coupon Reset
Date in satisfaction of the Company's obligations to the holders of
the Notes. Interest accrued to but excluding the Applicable Coupon
Reset Date will be paid by the Company on such date to the holders of
the Notes on the most recent Record Date.
CALL OPTION; PUT OPTION
(i) CALL OPTION. Pursuant to the terms of the Notes, the
Callholder, by giving notice to the Trustee (the "Call Notice"), has
the right to purchase the aggregate principal amount of Notes, in
whole but not in part (the "Call Option"), on the Applicable Coupon
Reset Date, at a price equal to 100% of the principal amount thereof
(the "Call Price") (interest accrued to but excluding the Applicable
Coupon Reset Date will be paid by the Company on such date to the
holders of the Notes on the most recent Record Date). In order for the
Callholder to exercise the Call Option, the Call Notice is required to
be given to the Trustee, in writing, prior to 4:00 p.m., New York
time, no later than fifteen calendar days prior to the Applicable
Coupon Reset Date for the Notes. The Call Notice may not be revoked by
the Callholder.
If the Callholder exercises its rights under the Call Option,
unless terminated in accordance with its terms, (i) not later than
5
2:00 p.m., New York time, on the Business Day prior to the Applicable
Coupon Reset Date, the Callholder will deliver the Call Price in
immediately available funds to the Trustee for payment of the Call
Price on the Applicable Coupon Reset Date and (ii) the holders of
Notes will be required to deliver and will be deemed to have delivered
the Notes to the Callholder against payment therefor on the Applicable
Coupon Reset Date through the facilities of the Depositary. No holder
of any Notes or any interest therein will have any right or claim
against the Callholder as a result of the Callholder's decision
whether or not to exercise the Call Option or performance or
nonperformance of its obligations with respect thereto.
The Call Option provides for certain circumstances under which
the Call Option may be terminated (as set forth below). If the Call
Option is terminated, notice of such termination will be promptly
given in writing to the Trustee by the Callholder. If the Call Option
is not exercised or if the Call Option otherwise terminates, the
Trustee will be required to exercise the Put Option described below.
Except for the events specified in clauses (i) through (iii)
below, with respect to which termination of the Call Option is at the
Callholder's option, the Call Option will automatically and
immediately terminate, no payment will be due hereunder from the
Callholder, and the Coupon Reset Process will terminate, if any of the
following occurs: (i) an Event of Default occurs and is continuing
under Sections 501(1) or 501(2) of the Indenture; (ii) a default,
event of default or similar condition or event (however described) in
respect of the Company or any of its subsidiaries has occurred under
one or more agreements or instruments relating to indebtedness of the
Company or any of its material subsidiaries (individually or
collectively) in an aggregate amount of not less than $25,000,000,
which has resulted in such indebtedness becoming due and payable under
such agreements or instruments before it would otherwise have been due
and payable and such acceleration has not been rescinded or the
indebtedness so accelerated remains unpaid; (iii) the Company or any
of its material subsidiaries (individually or collectively) has
defaulted in making one or more payments on the due date thereof in an
aggregate principal amount of not less than $25,000,000 under such
agreements or instruments (after giving effect to any applicable
notice requirement or grace period) and such defaulted payments remain
unpaid; (iv) an Event of Default has occurred and is continuing under
Sections 501(5) or 501(6) of the Indenture; (v) the Callholder fails
to deliver the Call Notice to the Trustee prior to 4:00 p.m., New York
time, on the fifteenth calendar day prior to the Coupon Reset Date;
(vi) on the Bid Date (as defined below), fewer than two Dealers (as
defined below) submit timely Bids (as defined below) substantially as
provided below; (vii) the Callholder fails to pay the Call Price by
2:00 p.m., New York time, on the Business Day prior to the Coupon
Reset Date; or (viii) a Defeasance (as defined in the Indenture) or a
Covenant Defeasance (as defined in the Indenture) has occurred
pursuant to Section 1402 or Section 1403, respectively, of the
Indenture with respect to the Notes.
6
Immediately following the original issuance of the Notes, the
"Callholder" will be Morgan Stanley & Co. International Limited.
Thereafter, the Callholder from time to time may assign all (but not
less than all) its rights under the Call Option to a substitute
Callholder, in each case without notice to or consent of the holders
of the Notes. Under certain circumstances, the Company has the right
or the obligation to reacquire the Call Option.
(ii) PUT OPTION. If the Call Option is not exercised or if the
Call Option otherwise terminates, the Trustee will be obligated to
exercise the right of the holders of the Notes to require the Company
to purchase the aggregate principal amount of Notes, in whole but not
in part (the "Put Option"), on the Applicable Coupon Reset Date at a
price equal to 100% of the principal amount thereof (the "Put Price"),
plus accrued but unpaid interest to but excluding such Applicable
Coupon Reset Date, in each case, to be paid by the Company to the
holders on the Applicable Coupon Reset Date. If the Trustee exercises
the Put Option, then the Company shall deliver the Put Price in
immediately available funds to the Trustee by no later than 12:00
noon, New York time, on the Applicable Coupon Reset Date, and the
holders of the Notes will be required to deliver and will be deemed to
have delivered the Notes to the Company against payment therefor on
the Applicable Coupon Reset Date through the facilities of the
Depositary. By its purchase of Notes, each holder irrevocably agrees
that the Trustee shall exercise the Put Option relating to such Notes
for or on behalf of such Notes as provided herein. No holder of any
Notes or any interest therein has the right to consent or object to
the exercise of the Trustee's duties under the Put Option.
The transactions described above will be executed on the
Applicable Coupon Reset Date through the Depositary in accordance with
the procedures of the Depositary, and the accounts of participants
will be debited and credited and the Notes delivered by book-entry as
necessary to effect the purchases and sales thereof. For further
information with respect to transfers and settlement through the
Depositary, see "Description of the Notes-Book-Entry System" in the
Prospectus Supplement.
NOTICE TO HOLDERS BY TRUSTEE
In anticipation of the exercise of the Call Option or the Put
Option on the Applicable Coupon Reset Date, the Trustee will notify
the Holders of the Notes, not less than 30 days nor more than 60 days
prior to the Applicable Coupon Reset Date, that all Notes shall be
delivered on the Applicable Coupon Reset Date through the facilities
of the Depositary against payment of the Call Price by the Callholder
under the Call Option or payment of the Put Price by the Company under
the Put Option. The Trustee will notify the holders of the Notes once
it is determined whether the Call Price or the Put Price shall be
delivered.
7
COUPON RESET PROCESS IF NOTES ARE CALLED
The following discussion describes the steps to be taken in order
to determine the interest rate to be paid on the Notes on and after
the Applicable Coupon Reset Date in the event the Call Option has been
exercised with respect to the Notes.
Under the Notes and pursuant to a Calculation Agency Agreement,
Morgan Stanley & Co. Incorporated has been appointed the calculation
agent for the Notes (in such capacity as calculation agent, the
"Calculation Agent"). If the Callholder exercises the Call Option,
then the following steps (the "Coupon Reset Process") will be taken in
order to determine the interest rate to be paid on the Notes from and
including such Applicable Coupon Reset Date to but excluding the next
Applicable Coupon Reset Date, or if there are no more Applicable
Coupon Reset Dates, the Maturity Date. The Company and the
Calculation Agent will use reasonable efforts to cause the actions
contemplated below to be completed in as timely a manner as possible.
(a) No later than five Business Days prior to the
Applicable Coupon Reset Date, the Company will provide the
Calculation Agent with (i) a list (the "Dealer List"), containing
the names and addresses of five dealers, one of whom shall be
Morgan Stanley & Co. Incorporated, from whom the Company desires
the Calculation Agent to obtain Bids for the purchase of the
Notes and (ii) such other material as may reasonably be requested
by the Calculation Agent to facilitate a successful Coupon Reset
Process.
(b) Within one Business Day following receipt by the
Calculation Agent of the Dealer List, the Calculation Agent will
provide to each dealer ("Dealer") on the Dealer List (i) a copy
of the Pricing Supplement dated July 10, 1998, together with the
Prospectus Supplement dated June 9, 1997 and Prospectus dated
June 9, 1997, relating to the offering of the Notes
(collectively, the "Pricing Supplement"), (ii) a copy of the form
of Notes and (iii) a written request that each Dealer submit a
Bid to the Calculation Agent by 12:00 noon, New York time, on the
third Business Day prior to the Applicable Coupon Reset Date (the
"Bid Date"). "Bid" means an irrevocable written offer given by a
Dealer for the purchase of all of the Notes, settling on the
Applicable Coupon Reset Date, and shall be quoted by such Dealer
as a stated yield to maturity on Notes ("Yield to Maturity").
Each Dealer shall also be provided with (i) the name of the
Company, (ii) an estimate of the Purchase Price (which shall be
stated as a U.S. dollar amount and be calculated by the
Calculation Agent in accordance with paragraph (c) below), (iii)
the principal amount and maturity of the Notes and (iv) the
method by which interest will be calculated on the Notes.
(c) The purchase price for the Notes in connection with the
Coupon Reset Process after the exercise of the Call Option (the
8
"Purchase Price") shall be equal to (i) the sum of the principal
amount of the Notes, and (ii) an amount (the "Notes Difference")
which shall be equal to the difference, if any, on the Applicable
Coupon Reset Date of (A) the discounted present value to the
Applicable Coupon Reset Date of a bond with a maturity of ten
(10) years which has an interest rate of 5.485%, semi-annual
interest payments on each January 15 and July 15, commencing
January 15, 1999, and a principal amount equal to the principal
amount of the Notes, and assuming a discount rate equal to the
Treasury Rate minus (B) such principal amount of Notes. The
"Treasury Rate" means the per annum rate equal to the offer side
yield to maturity of the current on-the-run ten-year United
States Treasury Security per Telerate page 500, or any successor
page, at 12:00 noon, New York time, on the Bid Date (or such
other time or date, or reference for such information, that may
be agreed upon by the Company and the Calculation Agent).
(d) The Calculation Agent will provide written notice to
the Company as soon as practicable, on the Bid Date, setting
forth (i) the names of each of the Dealers from whom the
Calculation Agent received Bids on the Bid Date, (ii) the Bid
submitted by each such Dealer and (iii) the Purchase Price as
determined pursuant to paragraph (c) above. Except as provided
below, the Calculation Agent will thereafter select from the Bids
received the Bid with the lowest Yield to Maturity (the "Selected
Bid"); PROVIDED, HOWEVER, that (i) if the Calculation Agent has
not received a timely Bid from a Dealer on or before the Bid
Date, the Selected Bid shall be the lowest of all Bids received
by such time, and (ii) if any two or more of the lowest Bids
submitted are equivalent, the Company shall in its sole
discretion select any of such equivalent Bids (and such selected
Bid shall be the Selected Bid). The Calculation Agent will set
the Coupon Reset Rate equal to the interest rate that will
amortize the Notes Difference fully over the term of the Notes at
the Yield to Maturity indicated by the Selected Bid. The
Calculation Agent will notify the Dealer that submitted the
Selected Bid by 4:00 p.m., New York time, on the Bid Date.
(e) Immediately after calculating the Coupon Reset Rate for
the Notes, the Calculation Agent will provide written notice to
the Company and the Trustee, setting forth the Coupon Reset Rate.
The Coupon Reset Rate for the Notes will be effective from and
including the Applicable Coupon Reset Date to but excluding the
next Applicable Coupon Reset Date, or if there are no more
Applicable Coupon Reset Dates, the Maturity Date.
(f) The Callholder will sell the Notes to the Dealer that
made the Selected Bid at the Purchase Price, such sale to be
settled on the Applicable Coupon Reset Date in immediately
available funds.
9
The Calculation Agency Agreement provides that the Calculation
Agent for the Notes may resign at any time as Calculation Agent, such
resignation to be effective ten Business Days after the delivery to
the Company and the Trustee of notice of such resignation. In such
case, the Company may appoint a successor Calculation Agent for the
Notes.
The Calculation Agent, in its individual capacity, may buy, sell,
hold and deal in the Notes and may exercise any vote or join in any
action which any holder of the Notes may be entitled to exercise or
take as if it were not the Calculation Agent. The Calculation Agent,
in its individual capacity, may also engage in any transaction with
the Company as if it were not the Calculation Agent.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States Federal
income tax considerations relating to the purchase, ownership and
disposition of the Notes by an initial holder of the Notes who
purchases the Notes on the Original Issue Date. This summary is based
upon current provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), existing and proposed Treasury regulations
promulgated thereunder and current administrative rulings and court
decisions currently in effect, all of which are subject to change,
possibly with retroactive effect. The discussion does not deal with
all Federal tax considerations applicable to all categories of
investors (including insurance companies, tax-exempt organizations,
financial institutions or broker-dealers) some of which may be subject
to special rules. In addition, this summary is limited to holders who
will hold the Notes as "capital assets" (generally, property held for
investment) within the meaning of Section 1221 of the Code. This
summary only addresses the United States Federal income tax
considerations of the Notes until the First Coupon Reset Date.
INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX
CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE NOTES.
Prospective investors should note that no rulings have been or
are expected to be sought from the Internal Revenue Service (the
"Service") with respect to any of the Federal income tax
considerations discussed below, and no assurance can be given that the
Service will not take contrary positions.
TREATMENT OF NOTES
Although there is no authority on point characterizing
instruments such as the Notes, and the matter is not free from doubt,
the Company intends to treat the Notes as fixed rate debt instruments
that mature on the First Coupon Reset Date for United States Federal
income tax purposes. The issue price of the Notes will be equal to the
10
first price at which a substantial amount of the Notes are sold for
money (excluding sales to bond houses, brokers or similar persons or
organizations acting in the capacity as underwriters, placement agents
or wholesalers) without regard to any amount paid by the Callholder as
option premium with respect to the Call Option. So viewed, each holder
must include in gross income the stated interest paid or accrued on
the Notes in accordance with its usual method of accounting. Upon the
sale, exchange, redemption or other disposition by a holder of Notes,
the holder should recognize capital gain or loss equal to the
difference between the amount realized from the disposition of the
Notes (exclusive of amounts attributable to the payment of accrued
interest not previously included in income, which will be taxable as
ordinary income) and the holder's adjusted tax basis in the Notes at
the time of the sale, exchange, redemption or other disposition. A
holder's adjusted tax basis in the Notes generally will equal the
holder's purchase price for such Notes. Pursuant to the Taxpayer
Relief Act of 1997, in the case of an individual holder, any capital
gain recognized on the disposition of the Notes will generally be
subject to U.S. Federal income tax at a stated maximum rate of (i)
20%, if the holder's holding period in the Notes was more than 18
months at the time of such sale, exchange, redemption or other
disposition, or (ii) 28%, if the holder's holding period in such Notes
was more than one year, but not more than 18 months, at the time of
such sale, exchange, redemption, or other disposition. The ability to
use capital losses to offset ordinary income in determining taxable
income is generally limited.
It is possible that the Service will disagree with or that a
court will not uphold the foregoing treatment of the Notes. In
particular, the Service could seek to treat the Notes as maturing on
the Maturity Date rather than the First Coupon Reset Date, in which
case (i) the issue price of the Notes would include the premium paid
by the Callholder with respect to the Call Option, and (ii) the holder
would be treated as selling a Call Option to the Callholder for an
amount equal to the premium paid to the Callholder for the Call
Option. The amount deemed received as consideration for sale of the
Call Option would be treated as an option premium paid to such holder
(and consequently would not be recognized as income on the writing of
the Call Option). Because of the Coupon Reset Process, if the Notes
were treated as maturing on the Maturity Date, holders would be
subject to certain Treasury Regulations dealing with contingent
payment debt instruments (the "Contingent Debt Regulations"). Under
the Contingent Debt Regulations, each holder would be required
(regardless of such holder's usual method of accounting) to include in
gross income original issue discount for each interest accrual period
in an amount equal to the product of the adjusted issue price of the
Notes at the beginning of each interest accrual period and a projected
yield to maturity of the Notes. The projected yield to maturity would
be based on the "comparable yield" (I.E., the yield at which the
Company would issue a fixed rate debt instrument maturing on the
Maturity Date, with terms and conditions otherwise similar to those of
the Notes), which would be higher than the stated interest rate on the
11
Notes prior to the First Coupon Reset Date. In addition, the character
of any gain or loss recognized on the sale, exchange, retirement or
other disposition of the Notes could differ from that set forth in the
preceding paragraph. For example, if the Contingent Debt Regulations
applied, any gain recognized on the sale of the Notes would be treated
as interest income, while any losses would generally be ordinary to
the extent of previously accrued original issue discount, and any
excess would be capital loss. The ability to use capital losses to
offset ordinary income in determining taxable income is generally
limited.
FOREIGN HOLDERS OF NOTES
Interest paid with respect to the Notes to a holder that is not a
United States person (a "Foreign Holder") generally will not be
subject to the 30% withholding tax generally imposed with respect to
U.S. source interest paid to such persons, provided that such holder
is not engaged in a trade or business in the United States in
connection with which it holds such Notes, does not bear certain
relationships to the Company and fulfills certain certification
requirements. Under such certification requirements, the holder must
certify, under penalties of perjury, that it is not a "United States
person" and is the beneficial owner of the Notes, and must provide its
name and address. For this purpose, "United States person" means a
citizen or resident of the United States, a corporation, partnership,
or other entity created or organized in or under the laws of the
United States or any State thereof (including the District of
Columbia), an estate the income of which is includible in gross income
for United States Federal income tax purposes, regardless of its
source, or a trust subject to the primary supervision of a court
within the United States and the control of one or more U.S. persons
with respect to all substantial decisions.
A Foreign Holder generally will not be subject to United States
Federal income tax with respect to any gain recognized upon the
disposition of Notes unless (i) such gain is effectively connected
with the conduct by the Foreign Holder of a trade or business in the
United States, (ii) in the case of any individual holder, such Foreign
Holder is present in the United States for 183 days or more in the
taxable year during which the disposition occurs and certain other
conditions are met or (iii) the Notes are treated as subject to the
Contingent Debt Regulations and the holder fails to satisfy the
certification requirements of the preceding paragraph.
BACKUP WITHHOLDING
Payments made on the Notes and proceeds from the sale of Notes
will not be subject to a "backup" withholding tax of 31% unless, in
general, the holder fails to comply with certain reporting procedures
and is not an exempt recipient under applicable provisions of the
Code.
12
Recently issued Treasury regulations (the "Final Withholding
Regulations"), which are generally effective with respect to payments
made after December 31, 1998, consolidate and modify the current
certification requirements and means by which holders may claim
exemption from United States federal income tax withholding on foreign
persons and from backup withholding. Foreign Holders claiming benefits
under an income tax treaty may be required to obtain a taxpayer
identification number and to certify their eligibility under the
treaty's limitation of benefits article in order to comply with the
Final Withholding Regulations. Because the application of the Final
Withholding Regulations will vary depending upon a holder's particular
circumstances, all holders are urged to consult their own tax advisors
regarding the application of the Final Withholding Regulations to
them.
UNDERWRITING
The settlement date for the purchase of the Notes will be
July 14, 1998, as agreed upon by the Company and the Agents pursuant
to Rule 15c6-1 under the Securities Exchange Act of 1934.
Under the terms and subject to the conditions set forth in the
Terms Agreement, dated the date hereof (the Terms Agreement ), among
the Agents named below and the Company, such agents have severally
agreed to purchase, and the Company has agreed to sell to them the
principal amounts of the Notes set forth opposite their respective
names below:
Name Principal Amount
---- ----------------
Morgan Stanley & Co. Incorporated $160,000,000
Chase Securities Inc. 30,000,000
First Chicago Capital Markets, Inc. 30,000,000
Merrill Lynch, Pierce,
Fenner & Smith Incorporated 30,000,000
-----------
Total $250,000,000
============
Under the terms of the Terms Agreement, the Agents are committed
to take and pay for all of the Notes if any are taken. In addition,
under the terms of the Terms Agreement, the Agents have agreed to
13
reimburse the Company for certain expenses relating to the offering of
the Notes.
In order to facilitate the offering of the Notes, the Agents may
engage in transactions that stabilize, maintain or otherwise affect
the prices of the Notes. Specifically, the Agents may overallot in
connection with the offering, creating a short position in the Notes
for its own account. In addition, to cover overallotments or to
stabilize the price of the Notes, the Agents may bid for, and
purchase, the Notes in the open market. Finally, the Agents may
reclaim selling concessions allowed to a dealer for distributing the
Notes in the offering, if the Agents repurchase previously distributed
Notes in transactions to cover short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or
maintain the market prices of the Notes above independent market
levels. The Agents are not required to engage in these activities, and
may end any of these activities at any time.