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Rule 424(b)(3)
Registration No. 33-53807
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 30, 1994)
$500,000,000
[LOGO OF BLACK & DECKER APPEARS HERE]
MEDIUM-TERM NOTES, SERIES A
WITH MATURITIES OF NINE MONTHS OR MORE FROM DATES OF ISSUE
--------------
The Black & Decker Corporation (the "Corporation") may offer from time to
time its Medium-Term Notes, Series A either within or outside the United States
or both simultaneously. The Medium-Term Notes, Series A (the "Notes") offered
by this Prospectus Supplement are offered in an aggregate initial offering
price not to exceed $500,000,000 (or the equivalent thereof in one or more
foreign denominated currencies or units based on or relating to currencies,
including European Currency Units), subject to reduction, under certain
circumstances as the result of the sale of other securities of the Corporation
under the Prospectus to which this Prospectus Supplement relates. The Notes
will be offered at varying maturities of nine months or more from their dates
of issue and may be subject to redemption at the option of the Corporation or
repayment at the option of the Holder, in each case, in whole or in part, prior
to the maturity date thereof (as further defined herein, the "Stated Maturity")
as set forth in the Pricing Supplement applicable to this Prospectus Supplement
(a "Pricing Supplement"). Each Note will be denominated in United States
dollars or in other currencies or units based on or relating to currencies (the
"Specified Currency") as set forth in the applicable Pricing Supplement. See
"Important Currency Information" and "Currency Risks."
(continued on next page)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY
SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
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<TABLE>
<CAPTION>
Agents'
Price to Commission Proceeds to
Public (1) or Discount(2) Corporation (2)(3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note............................... 100% .125%--.750% 99.875%--99.250%
- ---------------------------------------------------------------------------------------------------------------
Total.................................. $500,000,000 $625,000--$3,750,000 $499,375,000--$496,250,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Unless otherwise specified in the Pricing Supplement relating thereto, each
Note will be issued at 100% of the principal amount.
(2) The Corporation will pay Lehman Brothers Inc. (including its affiliate
Lehman Government Securities Inc.), Citicorp Securities, Inc., Goldman,
Sachs & Co., Morgan Stanley & Co. Incorporated, NationsBanc Capital
Markets, Inc. and Salomon Brothers Inc, as agents (together with any other
agent appointed by the Corporation from time to time, an "Agent," and
collectively, the "Agents") a commission, in the form of a discount,
ranging from .125% to .750% of the principal amount of any Note, depending
upon its Stated Maturity, sold through such Agent. Commissions for Notes
with Stated Maturities in excess of 30 years, if any, will be negotiated at
the time of sale. Any Agent, acting as principal, also may purchase Notes
at a discount for resale at prices related to market prices at the time of
resale. No commission will be payable on any Note sold directly by the
Corporation. The Corporation has agreed to indemnify each Agent against
certain liabilities, including certain liabilities under the Securities Act
of 1933, as amended.
(3) Before deducting expenses payable by the Corporation estimated at $860,000.
--------------
The Notes are being offered on a continuing basis by the Corporation through
the Agents, each of which has agreed to use its reasonable best efforts to
solicit offers to purchase the Notes. The Corporation has reserved the right to
sell Notes to any Agent, acting as principal, for resale to investors or to
another broker-dealer (acting as a principal for purposes of resale) at varying
prices related to prevailing market prices at the time of resale, as determined
by such Agent. The Corporation has reserved the right to sell the Notes to or
through additional agents and directly to investors on its own behalf. Unless
otherwise specified in an applicable Pricing Supplement, the Notes will not be
listed on any securities exchange, and there can be no assurance that the Notes
will be sold or that there will be a secondary market for the Notes. The
Corporation reserves the right to withdraw, cancel or modify the offer made
hereby without notice. The Corporation or the Agent that solicits any offer to
purchase the Notes may reject any offer in whole or in part. See "Plan of
Distribution."
--------------
LEHMAN BROTHERS
CITICORP SECURITIES, INC.
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
September 9, 1994
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(Continued from previous page)
Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in United States dollars will be issued only in denominations of
$1,000 or an integral multiple of $1,000. If the Notes are to be denominated in
a foreign currency or a composite currency, the authorized denominations and
currency exchange rate information will be set forth in the applicable Pricing
Supplement. The Notes may be issued as Indexed Notes, the principal amount of
which payable at Stated Maturity is determined by the fluctuation between a
Denominated Currency (as defined below) and an Indexed Currency (as defined
below) as set forth under "Description of Notes--Indexed Notes" and as set
forth in the applicable Pricing Supplement.
The interest rate, if any, or the formula for the determination of any such
interest rate applicable to each Note and, the formula, if any, for determining
the principal amount payable upon maturity of each Note and other variable
terms of the Notes as described herein will be established by the Corporation
at the date of issuance of each Note and will be set forth in the applicable
Pricing Supplement. Interest rates, interest rate and principal formulae, if
any, and other variable terms, if any, are subject to change by the
Corporation, but except as otherwise set forth herein no such change will
affect the interest rate or interest rate formula for any Note theretofore
issued or which the Corporation has agreed to sell. Unless otherwise indicated
in the applicable Pricing Supplement, each Note will bear interest at a fixed
rate (a "Fixed Rate Note"), which may be zero in the case of certain Notes
issued at a price representing a discount from the principal amount payable at
Stated Maturity, or at a floating rate as set forth therein and specified in
the Pricing Supplement applicable to the Note (a "Floating Rate Note"). A Fixed
Rate Note may pay a level amount in respect of both interest and principal
amortized over the life of the Note (an "Amortizing Note"). The applicable
Pricing Supplement will specify whether the rate of interest on a Floating Rate
Note is determined by reference to one or more of the CD Rate, the CMT Rate,
the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Effective Rate, the J.J. Kenny Rate, LIBOR, the Prime Rate or the
Treasury Rate (each, an "Interest Rate Basis"), or any other interest rate
formula, as adjusted by any Spread or Spread Multiplier and will specify such
other terms applicable to such Note. See "Description of Notes."
Interest on each Fixed Rate Note, other than an Amortizing Note, will accrue
from its date of issue or the last date to which interest has been paid or duly
provided for and, unless otherwise specified in the applicable Pricing
Supplement, will be payable semiannually on each February 1 and August 1 and at
Maturity (as defined below) and upon redemption or repayment, if applicable.
Interest on each Floating Rate Note will accrue from its date of issue at rates
determined as set forth therein and will be payable on the dates set forth
therein and in the applicable Pricing Supplement. Unless otherwise specified in
an applicable Pricing Supplement, the rate of interest on each Floating Rate
Note will be reset daily, weekly, monthly, quarterly, semi-annually or
annually, as set forth therein and specified in the applicable Pricing
Supplement. Unless otherwise specified in an applicable Pricing Supplement,
each Note will be issued in fully registered form and will be represented by
either a global certificate (a "Global Security") registered in the name of a
nominee of The Depository Trust Corporation (or such other depositary as is
identified in the applicable Pricing Supplement), as Depositary (the
"Depositary") (each such Note represented by a Global Security being referred
to herein as a "Book-Entry Note") or a certificate issued in definitive form (a
"Certificated Note"), as set forth in the applicable Pricing Supplement.
Interests in Book-Entry Notes will be shown on and transfers thereof will be
effected only through, records maintained by the Depositary (with respect to
beneficial interests of participants) and its participants. See "Description of
Notes--Book-Entry System."
The Specified Currency, any applicable interest rate or interest rate or
principal formula, the Issue Price, the Stated Maturity, any Interest Payment
Dates (each as defined below), any redemption and repayment provisions, whether
such Note will be a Global Note or a Book-Entry or Certificated Note and any
other terms applicable to each Note will be established at the time of issuance
of the Note and set forth in the applicable Pricing Supplement. See
"Description of Notes."
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IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Notes and the Indenture set forth in
the accompanying Prospectus (in which the Notes are referred to as "Debt
Securities") under the heading "Description of Debt Securities" to which
description reference is hereby made. Capitalized terms set forth below that
are not otherwise defined herein have the meanings specified in the Indenture
or the Notes.
GENERAL
The Notes constitute a single series of Securities for purposes of the
Indenture and are limited to an aggregate initial offering price of
$500,000,000 (or the equivalent thereof in one or more foreign denominated
currencies or units based on or relating to currencies, including European
Currency Units), subject to reduction under certain circumstances as a result
of the sale of the other Debt Securities of the Corporation under the
accompanying Prospectus. Currency amounts in this Prospectus Supplement, the
accompanying Prospectus and any Pricing Supplement are stated in United States
dollars ("$," "dollars," "U.S. dollars" or "U.S.$"), unless otherwise indicated
in the applicable Pricing Supplement. The Corporation may from time to time
sell additional series of Debt Securities including additional series of medium
term notes.
The Notes will be offered on a continuing basis and each Note will mature
nine months or more from its date of issue, as selected by the initial
purchaser and agreed to by the Corporation, and may be subject to redemption at
the option of the Corporation or repayment at the option of the Holder prior to
Stated Maturity as set forth below under "Redemption and Repayment." Each Note
will be denominated in U.S. dollars or in such other Specified Currency as is
specified in the applicable Pricing Supplement. Each Note will be either (i) a
Fixed Rate Note which may bear interest at a rate of zero in the case of a Note
issued at an Issue Price (as defined below) representing a discount from the
principal amount payable at Stated Maturity (a "Zero-Coupon Note") or (ii) a
Floating Rate Note which will bear interest at a rate determined by reference
to the interest rate or combination of interest rate bases (the "Base Rate")
specified in the applicable Pricing Supplement which may be adjusted by a
Spread and/or Spread Multiplier (each as defined below).
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note in fully registered form without coupons. Except as set forth
below under "Book-Entry System," Book-Entry Notes will not be issuable in
certificated form.
Unless otherwise specified in an applicable Pricing Supplement, Notes
denominated in U.S. dollars will be issuable in denominations of $1,000 and
integral multiples of $1,000. The authorized denominations of any Note
denominated in other than U.S. dollars will be the amount of the Specified
Currency for such Note equivalent, at the noon U.S. dollar buying rate
specified in The City of New York as specified by the Federal Reserve Bank of
New York (the "Market Exchange Rate") on the first Business Day in The City of
New York and the country issuing such currency (or, in the case of European
Currency Units ("ECU"), Brussels) next preceding the date on which the
Corporation accepts the offer to purchase the Note, to U.S. $1,000 (rounded
down to an integral multiple of 10,000 units of such Specified Currency) and
any greater amount that is an integral multiple of 10,000 units of such
Specified Currency. If any of the Notes are to be
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denominated in a Specified Currency other than U.S. dollars, or if the
principal (and premium, if any), and any interest on any of the Notes not
denominated in U.S. dollars is to be payable at the option of the Holder or the
Corporation, in U.S. dollars, the applicable Pricing Supplement will provide
additional information, including applicable exchange rate information,
pertaining to the terms of the Notes and other matters of interest to the
Holders thereof.
"Business Day," with respect to any particular location, means each Monday,
Tuesday, Wednesday, Thursday and Friday, which is neither a legal holiday nor a
day on which banking institutions in such location are authorized or obligated
by law to close. "Market Day" means with respect to any Note other than a LIBOR
Note, any Business Day in The City of New York and, with respect to any LIBOR
Note, any Business Day in The City of New York on which dealings in deposits in
U.S. dollars are transacted in the London interbank markets. "Index Maturity"
means, with respect to a Floating Rate Note, the period to maturity of the
instrument or obligation on which the interest rate formula is based, as
specified in the applicable Pricing Supplement.
"Original Issue Discount Note" means (i) a Note, including any Zero-Coupon
Note, that has a stated redemption price at maturity that exceeds its Issue
Price by at least 0.25% of its principal amount multiplied by the number of
full years from the Original Issue Date to the Stated Maturity (each as defined
below) for such Note and (ii) any other Note designated by the Corporation as
issued with original issue discount for United States federal income tax
purposes.
The Pricing Supplement relating to each Note will describe the following
terms: (i) the Specified Currency with respect to the Note (and, if such
Specified Currency is other than U.S. dollars, certain other terms relating to
the Note, including the authorized denominations); (ii) the price (expressed as
a percentage of the aggregate principal amount thereof) at which Notes will be
issued (the "Issue Price"); (iii) the date on which the Note will be issued
(the "Original Issue Date"); (iv) the date on which the Note will mature (the
"Stated Maturity") and whether the Stated Maturity may be extended by the
Corporation, and if so, the Extension Periods and the Final Maturity Date (each
as defined below); (v) whether the Note is a Fixed Rate Note or a Floating Rate
Note; (vi) if the Note is a Fixed Rate Note, whether it is an Amortizing Note;
(vii) if the Note is a Fixed Rate Note, the rate per annum at which it will
bear interest, if any, the Interest Payment Date or Dates (as defined below)
and, if so specified in the applicable Pricing Supplement, that such rate may
be changed by the Corporation prior to the Stated Maturity and, if so, the
basis or formula for such change, if any; (viii) if the Note is a Floating Rate
Note, the Base Rate, the Initial Interest Rate, the Interest Reset Period, the
Interest Payment Period, the Index Maturity, the Maximum Interest Rate, if any,
the Minimum Interest Rate, if any, the Spread, if any, the Spread Multiplier,
if any (all as defined below), and any other terms relating to the particular
method of calculating the interest rate for the Note and, if so specified in
the applicable Pricing Supplement, that any such Spread or Spread Multiplier
may be changed by the Corporation prior to the Stated Maturity and, if so, the
basis or formula for such change, if any; (ix) whether the Note is an Original
Issue Discount Note, and if so, the yield to maturity; (x) whether the Note may
be redeemed at the option of the Corporation, or repaid at the option of the
Holder, prior to the Stated Maturity, and, if so, the provisions relating to
such redemption or repayment; (xi) whether such Note will be issued initially
as a Book-Entry or a Certificated Note; and (xii) any other term of the Note
not inconsistent with the provisions of the Indenture.
The Notes will constitute unsecured and unsubordinated indebtedness of the
Corporation and will rank pari passu with the Corporation's other unsecured and
unsubordinated indebtedness.
Certificated Notes may be presented for registration of transfer or exchange
at the Trustee's New York office.
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PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise specified in the applicable Pricing Supplement and Note,
payments of principal of (and premium, if any) and interest, if any, on all
Notes will be made in the applicable Specified Currency; provided, however,
that payments of principal of (and premium, if any) and interest, if any, on
Notes denominated in other than U.S. dollars will nevertheless be made in U.S.
dollars (i) at the option of the Holders thereof under the procedures described
below and (ii) at the option of the Corporation in the case of the imposition
of exchange controls or other circumstances beyond the control of the
Corporation as described below.
Unless otherwise specified in the applicable Pricing Supplement and Note,
payments with respect to Certificated Notes to be made in U.S. dollars of
interest, if any, and, in the case of Amortizing Notes, principal (and premium,
if any) on Notes (other than interest and, in the case of Amortizing Notes,
principal payable at Stated Maturity or upon earlier redemption or repayment)
will be made by mailing a check to the Holder at the address of such Holder
appearing on the security register for the Notes on the applicable Regular
Record Date, or, at the option of the Corporation, by wire transfer to such
account as may have been appropriately designated in writing no later than the
relevant Regular Record Date by such person and maintained with a bank located
in the United States. Notwithstanding the foregoing, a Holder of $10,000,000 or
more in aggregate principal amount of Certificated Notes of like tenor and
terms shall be entitled to receive such payments in U.S. dollars by wire
transfer of immediately available funds, but only if appropriate payment
instructions have been received in writing by the Paying Agent not less than 15
Business Days prior to the applicable Interest Payment Date. Payment of the
principal of (and premium, if any) and any interest due with respect to any
Certificated Note at Maturity to be made in U.S. dollars will be made in
immediately available funds upon surrender of the Note at the Corporate Trust
Office of the Trustee, acting as Paying Agent, provided that the Certificated
Note is presented to the Paying Agent in time for the Paying Agent to make
payment in such funds in accordance with its normal procedures.
Unless otherwise specified in the applicable Pricing Supplement and Note,
payments of interest and principal (and premium, if any) with respect to any
Note to be made in a Specified Currency other than U.S. dollars will be made by
wire transfer to such account, with a bank located in the country issuing the
Specified Currency (or, with respect to Notes denominated in ECUs, Brussels) or
other jurisdiction acceptable to the Corporation and the Trustee as shall have
been designated at least 15 days prior to the Interest Payment Date or Stated
Maturity, as the case may be, by the Holder of the Note on the relevant Regular
Record Date or at Maturity, provided that, in the case of payment of principal
of (and premium, if any) and any interest due at Maturity, the Note is
presented to the Paying Agent in time for the Paying Agent to make payment in
such funds in accordance with its normal procedures. Such designation shall be
made by filing the appropriate information with the Trustee at its Corporate
Trust Office and, unless revoked, any such designation made with respect to any
Note by a Holder will remain in effect with respect to any further payments
with respect to such Note payable to such Holder. If a payment with respect to
any such Note cannot be made by wire transfer because the required designation
has not been received by the Trustee on or before the requisite date or for any
other reason, a notice will be mailed to the Holder at its registered address
requesting a designation pursuant to which such wire transfer can be made, and,
upon the trustee's receipt of such designation, such payment will be made
within 15 days of such receipt. The Corporation will pay any administrative
costs imposed by banks in connection with making payments by wire transfer, but
any tax, assessment or governmental charge imposed upon payments will be borne
by the Holders of the Notes in respect of which such payments are made.
Beneficial owners of Book-Entry Notes are expected to be paid in accordance
with the Depositary's and its participants' procedures in effect from time to
time as described below under "Book-Entry System."
If so specified in the applicable Pricing Supplement and Note, except as
provided in the next paragraph, payments of interest, if any, and principal
(and premium, if any) with respect to any Note denominated in other than U.S.
dollars will be made in U.S. dollars if the Holder of the Note on the relevant
Regular Record Date or at Maturity, as the case may be, has transmitted a
written election with signature guarantee for such
S-5
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payment in U.S. dollars to the Trustee at its Corporate Trust Office in The
City of New York, on or prior to such Regular Record Date or the date 15 days
prior to Maturity, as the case may be. Such request may be in writing (mailed
or hand delivered) or by cable, telex or other form of facsimile transmission.
Any such request made with respect to any Note by a Holder will remain in
effect with respect to any further payments of interest, if any, and principal
(and premium, if any) with respect to the Note payable to such Holder, unless
such request is revoked on or prior to the relevant Regular Record Date or the
date 15 days prior to Maturity, as the case may be.
The U.S. dollar amount to be received by a Holder of a Note denominated in
other than U.S. dollars who elects to receive payments in U.S. dollars will be
based on the highest dealing quotation in The City of New York received by the
Currency Determination Agent (as defined below) as of 11:00 a.m., New York City
time, on the second Business Day next preceding the applicable payment date
(or, if different, on the Business Day on which a spot trade in the Specified
Currency must be executed in order to settle on the Payment Date) from three
(or two if three are not available) recognized foreign exchange dealers (one of
which may be the Currency Determination Agent) for the purchase by the quoting
dealer of the Specified Currency for U.S. dollars for settlement on such
payment date in the aggregate amount of the Specified Currency payable to all
Holders of Notes electing to receive U.S. dollar payments and at which the
applicable dealer commits to execute a contract. If two such bid quotations are
not available on the applicable Business Day preceding the date of payments of
such principal (and premium, if any) or interest with respect to any Note, such
payment will be based on the Market Exchange Rate as of the applicable Business
Day preceding the applicable payment date. If the Market Exchange Rate for such
date is not then available, such payment will be based on the most recently
available Market Exchange Rate for the Specified Currency. All currency
exchange costs associated with any payment in U.S. dollars on any such Note
will be borne by the Holder thereof by deductions from such payment. Unless
otherwise provided in the applicable Pricing Supplement, Marine Midland Bank
will be the Currency Determination Agent (the "Currency Determination Agent")
with respect to the Notes.
If the principal of (and premium, if any) or interest, if any, on any Note is
payable in any currency other than U.S. dollars and the Specified Currency is
not available due to the imposition of exchange controls or other circumstances
beyond the control of the Corporation, the Corporation will be entitled to
satisfy its obligations to Holders of the Notes by making such payment in U.S.
dollars on the basis of the Market Exchange Rate on the last date such
Specified Currency was available (the "Conversion Date"). Any payment made
under such circumstances in U.S. dollars where the required payment is in other
than U.S. dollars will not constitute an Event of Default under the Indenture.
If payment in respect of a Note is required to be made in any currency unit
(e.g., ECU) and such currency unit is unavailable due to the imposition of
exchange controls or other circumstances beyond the Corporation's control, then
all payments in respect of the Note shall be made in U.S. dollars until such
currency unit is again available. The amount of each payment in U.S. dollars
shall be computed on the basis of the equivalent of the currency unit in U.S.
dollars, which shall be determined by the Currency Determination Agent on the
following basis: (1) the component currencies of the currency unit for this
purpose (the "Component Currencies") shall be the currency amounts that were
components of the currency unit as of the Conversion Date for such currency
unit; (2) the equivalent of the currency unit in U.S. dollars shall be
calculated by aggregating the U.S. dollar equivalents of the Component
Currencies; and (3) the U.S. dollar equivalent of each of the Component
Currencies shall be determined by the Currency Determination Agent on the basis
of the Market Exchange Rate for each such Component Currency that is available
as of the third Business Day prior to the date on which the relevant payment is
due and for each such Component Currency that is unavailable, if any, as of the
Conversion Date for such Component Currency.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency
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shall be replaced by the amounts of such two or more currencies, the sum of
which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Corporation or its agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on Holders of Notes.
Any payment due on any day which is not a Market Day (and, in the case of any
Note denominated in other than U.S. dollars, a Business Day in the country
issuing the Specified Currency (or, in the case of ECUs, Brussels)) need not be
made on such day, but may be made on the next such succeeding Market Day (or,
in the case of a LIBOR Note, if the next such succeeding Market Day falls in
the next calendar month, the next such preceding Market Day), with the same
force and effect as if made on the due date, and no interest shall be payable
on the date of payment for the period from and after the due date.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described in the Prospectus under "Description of Debt
Securities--Default and Remedies," the amount of principal due and payable with
respect to the Note shall be the Amortized Face Amount of the Note as of the
date of such declaration. The "Amortized Face Amount" of an Original Issue
Discount Note shall be an amount equal to the sum of (i) the aggregate
principal amount of the Note multiplied by the Issue Price set forth in the
applicable Pricing Supplement plus (ii) the portion of the difference between
the Issue Price and the principal amount of the Note that has accrued at the
Yield to Maturity set forth in the Pricing Supplement (computed in accordance
with generally accepted United States bond yield computation principles) to
such date of declaration, but in no event shall the Amortized Face Amount of an
Original Issue Discount Note exceed its principal amount.
INTEREST AND INTEREST RATES
Each Note will bear interest, if any, from its date of original issue (the
"Original Issuance Date") or from the most recent Interest Payment Date to
which interest on such Note has been paid or duly provided for at a fixed rate
or rates per annum, or at a rate or rates per annum determined pursuant to a
Base Rate stated therein and in the applicable Pricing Supplement that may be
adjusted by a Spread or Spread Multiplier, until the principal thereof is paid
or made available for payment. Interest, if any, will be payable on each
Interest Payment Date and at Maturity. "Maturity" means the date on which the
principal of a Note or an installment of principal becomes due and payable in
full in accordance with its terms and the terms of the Indenture, whether at
Stated Maturity or by declaration of acceleration, call for redemption,
repayment or otherwise. Interest (other than defaulted interest which may be
paid on a special record date or otherwise according to the Indenture) will be
payable to the Holder at the close of business on the Regular Record Date next
preceding such Interest Payment Date; provided, however, that interest payable
at Maturity (or upon redemption, if applicable) will be payable to the person
to whom principal shall be payable. The first payment of interest on any Note
originally issued between a Regular Record Date for such Note and the
succeeding Interest Payment Date will be made on the Interest Payment Date
following the next succeeding Regular Record Date for such Note to the
registered owner on such next Regular Record Date. The Internal Revenue Service
might take the position that any such Note issued between a Regular Record Date
and the related Interest Payment Date should be treated as having been issued
with original issue discount for Federal income tax purposes which could affect
the reporting of income by certain holders. See "Certain United States Tax
Consequences."
Interest rates, Base Rates, Spreads and Spread Multipliers are subject to
change by the Corporation from time to time but no such change will affect any
Note theretofore issued or which the Corporation has agreed to sell. The
Interest Payment Dates and the Regular Record Dates for each Fixed Rate Note
shall be as described below under "Fixed Rate Notes." The Interest Payment
Dates for each Floating Rate Note shall be as indicated in the applicable
Pricing Supplement, and the Regular Record Dates for a Floating Rate Note will
be the fifteenth day (whether or not a Business Day) next preceding each
Interest Payment Date.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issuance Date at
the annual rate or rates stated thereon and in the applicable Pricing
Supplement. Payments of interest on any Fixed Rate Note with respect to any
Interest Payment Date will include interest accrued to but excluding that
Interest Payment Date. Fixed
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Rate Notes may bear one or more annual rates of interest during the periods or
under the circumstances specified therein and in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
interest on Fixed Rate Notes will be computed on the basis of a 360-day year of
twelve 30-day months. With respect to Fixed Rate Notes other than Amortizing
Notes, unless otherwise specified in an applicable Pricing Supplement, the
Interest Payment Dates for the Fixed Rate Notes will be February 1 and August 1
of each year, and the Regular Record Dates will be January 15 and July 15 of
each year. Payments of principal and interest on Amortizing Notes, which are
Securities for which payments of principal and interest are made in equal
installments over the life of the Security, will be made either quarterly on
each February 1, May 1, August 1 and November 1 or semiannually on each
February 1 and August 1 as set forth in the applicable Pricing Supplement, and
at maturity or upon earlier redemption or repayment. With respect to Amortizing
Notes, payments will be applied first to interest due and payable thereon and
then to the reduction of the unpaid principal amount thereof. A table setting
forth repayment information in respect of each Amortizing Note will be provided
to the original purchaser and will be available, upon request to subsequent
Holders.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Original Issuance Date to
the first Interest Reset Date (as defined below) for such Note at the Initial
Interest Rate set forth on the face thereof and in the applicable Pricing
Supplement. Thereafter, the interest rate on each Floating Rate Note for each
Reset Period (as defined below) will be equal to the interest rate calculated
by reference to the Base Rate specified on the face thereof and in the
applicable Pricing Supplement, plus or minus a percentage per annum (the
"Spread"), if any, or times a fixed factor (the "Spread Multiplier"), if any.
The Spread or Spread Multiplier for a Floating Rate Note may be subject to
adjustment during a Reset Period under circumstances specified therein and in
the applicable Pricing Supplement.
The Corporation will appoint, and enter into an agreement with, an agent (a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in the applicable Pricing Supplement, the Calculation Agent
for each Floating Rate Note will be Marine Midland Bank.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "Reset
Period" for the Note, and the first day of each Reset Period being an "Interest
Reset Date"), as specified on the face thereof and in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Reset Dates will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week, in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week; in the case of the
Floating Rate Notes that reset monthly, the third Wednesday of each month; in
the case of Floating Rate Notes that reset quarterly, the third Wednesday of
each March, June, September and December; in the case of Floating Rate Notes
that reset semiannually, the third Wednesday of each of two months of each year
specified on the face thereof and in the applicable Pricing Supplement; and, in
the case of Floating Rate Notes that reset annually, the third Wednesday of one
month of each year specified on the face thereof and in the applicable Pricing
Supplement; provided, however, that (i) the rate of interest in effect from the
Original Issuance Date to the first Interest Reset Date will be the Initial
Interest Rate specified on the face thereof and (ii) the interest rate in
effect for the 10 days immediately prior to the Stated Maturity, or the date of
redemption, if applicable, of a Floating Rate Note will be that in effect on
the tenth day preceding the Stated Maturity or the date of redemption. If an
Interest Reset Date for a Floating Rate Note would otherwise be a Market Day,
the Interest Reset Date for the Floating Rate Note shall be postponed to the
next day that is a Market Day, except that, in the case of a LIBOR Note, if
such Market Day is the next succeeding calendar month, such Interest Reset Date
shall be the immediately preceding Market Day.
The interest rate for each Reset Period will be the rate determined by the
Calculation Agent on the Calculation Date pertaining to such Reset Period by
reference to the Interest Determination Date pertaining to such Reset Period.
The Calculation Date and the Interest Determination Date pertaining to a Reset
Period for each type of Floating Rate Note are as follows: unless otherwise
specified in the applicable Pricing
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Supplement, the Interest Determination Date pertaining to a Reset Period for
(a) a Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), (b) a Federal Funds Effective Rate Note (the "Federal Funds Interest
Determination Date"), (c) a CD Rate Note (the "CD Interest Determination
Date"), (d) a LIBOR Note (the "LIBOR Interest Determination Date"), (e) a Prime
Rate Note (the "Prime Interest Determination Date"), (f) a CMT Rate Note (the
"CMT Interest Determination Date") or (g) a J.J. Kenny Rate Note (the "J.J.
Kenny Interest Determination Date") will be the second Market Day prior to the
Interest Reset Date that commences each Reset Period. Unless otherwise
specified in the applicable Pricing Supplement, the Interest Determination Date
pertaining to an Interest Reset Date for an Eleventh District Cost of Funds
Rate Note (the "Eleventh District Interest Determination Date") will be the
last business day of the month immediately preceding such Interest Reset Date
on which the Federal Home Bank ("FHLB") of San Francisco publishes the Index
(as defined below). Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date pertaining to a Reset Period for a
Treasury Rate Note (the "Treasury Interest Determination Date") will be the day
of the week in which the Interest Reset Date that commences such Reset Period
falls on which Treasury bills would normally be auctioned. Treasury bills are
usually sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is usually held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as a result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Interest Determination Date pertaining to the Reset Period
commencing in the next succeeding week. If an auction date shall fall on any
Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date
shall instead be the first Business Day immediately following such auction
date. Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date" pertaining to any Interest Determination Date shall be the
earlier of (i) the tenth calendar day after the Interest Determination Date or,
if such day is not a Market Day, the next succeeding Market Day or (ii) the
Market Day preceding the applicable Interest Payment Date or Maturity.
Except as provided below, interest on Floating Rate Notes will be payable, in
the case of Floating Rate Notes that reset daily, weekly or monthly, on the
third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as specified on the face thereof and in
the applicable Pricing Supplement; in the case of Floating Rate Notes that
reset quarterly, on the third Wednesday of March, June, September and December
of each year; in the case of Floating Rate Notes that reset semiannually, on
the third Wednesday of each of two months of each year specified on the face
thereof and in the applicable Pricing Supplement; and, in the case of the
Floating Rate Notes that reset annually, on the third Wednesday of one month of
each year specified on the face thereof and in the applicable Pricing
Supplement (each such day being an "Interest Payment Date").
Each payment of interest on a Floating Rate Note will include interest
accrued from and including the Original Issue Date, or the next preceding
Interest Payment Date, to but excluding the applicable Interest Payment Date or
the date of Maturity, as the case may be; provided, however, that if such Note
resets daily or weekly, interest payable on any Interest Payment Date, other
than interest payable on any date on which principal for such Note is payable,
will include interest accrued from but excluding the second preceding Regular
Record Date to and including the next preceding Regular Record Date. Accrued
interest from the date of issue or from the last date to which interest has
been paid is calculated by multiplying the face amount of a Note by an accrued
interest factor. This accrued interest factor is computed by adding the
interest factors calculated for each day from the Original Issuance Date, or
from the last date to which interest has been paid, to but excluding the date
for which accrued interest is being calculated. Unless otherwise specified in
the applicable Pricing Supplement, the interest factor (expressed as a decimal
rounded upward, if necessary, to the nearest one hundred-thousandth of a
percentage point (e.g., 9.876541%, or .09876541, being rounded to 9.87655%, or
.0987655, respectively)) for each such day is computed by dividing the interest
rate (expressed as a decimal rounded upward, if necessary, to the nearest one
hundred-thousandth of a percentage point) applicable to such date by 360, in
the case of Commercial Paper Rate Notes, Federal Funds Effective Rate Notes, CD
Rate Notes, Prime Rate Notes, Eleventh District Cost of Funds Rate Notes and
LIBOR Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes or CMT Rate Notes or by 365 days in the case of J.J. Kenny
Rate Notes.
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The Calculation Agent will, upon the request of the Holder of any Floating
Rate Note, provide the interest rate then in effect and, if different, the
interest rate that will become effective as a result of a determination made
on the most recent Interest Determination Date with respect to the Note.
Any Floating Rate Note may also have either or both of the following: (i) a
maximum numerical interest rate limitation, or ceiling, on the rate of
interest that may accrue during any Reset Period and (ii) a minimum numerical
interest rate limitation, or floor, on the rate of interest that may accrue
during any Reset Period. The interest rate on the Notes will in no event be
higher than the maximum rate permitted by New York law as the same may be
modified by United States law of general application. Under present New York
law, the
maximum rate of interest is 25% per annum on a simple interest basis. This
limit may not apply to Notes in which $2,500,000 or more has been invested,
including Notes purchased by an Agent or Agents in such aggregate principal
amount or more for resale to investors.
Commercial Paper Rate Notes
A Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any) specified in the Commercial Paper Rate Note and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on
that date for commercial paper having the Index Maturity designated in the
applicable Pricing Supplement as such rate is published by the Board of
Governors of the Federal Reserve system in "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication of the Board of
Governors ("H.15(519)") under the heading "Commercial Paper." In the event
that such rate is not published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of the
rate on such Commercial Paper Interest Determination Date for commercial paper
having the Index Maturity designated in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 p.m. Quotations for U.S. Government Securities"
("Composite Quotations") under the heading "Commercial Paper." If by 3:00
P.M., New York City time, on such Calculation Date such rate is not yet
published in Composite Quotations, then the Commercial Paper Rate for such
Commercial Paper Interest Determination Date shall be calculated by the
Calculating Agent and shall be the Money Market Yield of the arithmetic mean
(each as rounded to the nearest one hundred-thousandth of a percentage point)
of the offered rates of three leading dealers of commercial paper in The City
of New York selected by the Calculating Agent as of 11:00 A.M. New York City
time, on such Commercial Paper Interest Determination Date, for commercial
paper having the Index Maturity designated in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA," or its
equivalent, from a nationally recognized securities rating agency; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Commercial Paper Rate with
respect to such Commercial Paper Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Interest
Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage rounded to
the nearest one hundred-thousandth of a percentage point) calculated in
accordance with the following formula:
Money Market Yield = D X 360 X 100
-------------
360 - D X M
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days of the interest period for which interest is being calculated.
Federal Funds Effective Rate Notes
A Federal Funds Effective Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Effective Rate and the Spread
or Spread Multiplier, if any) specified in the Federal Funds Effective Rate
Note and in the applicable Pricing Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Effective Rate" means, with respect to any Federal Funds Interest
Determination Date, the rate on that day for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not so published
by 9:00 A.M.,
New York City time, on the Calculation Date pertaining to such Federal Funds
Interest Determination Date, the Federal Funds Effective Rate will be the rate
on such Federal Funds Interest Determination Date as published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Federal Funds
Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean (rounded to the nearest one hundred-thousandth of a
percentage point) of the rates as of 11:00 A.M., New York City time, on such
Federal Funds Interest Determination Date for the last transaction in overnight
Federal Funds arranged by three leading brokers of Federal Funds transactions
in The City of New York selected by the Calculation Agent; provided, however,
that if the brokers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Federal Funds Effective Rate with
respect to such Federal Funds Interest Determination Date will be the Federal
Funds Effective Rate in effect on such Federal Funds Interest Determination
Date.
CD Rate Notes
A CD Rate Note will bear interest at the rate (calculated with reference to
the CD Rate and the Spread or Spread Multiplier, if any), specified in the CD
Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such
date for negotiable certificates of deposit having the Index Maturity
designated in the applicable Pricing Supplement as published in H.15(519) under
the heading "CDs (Secondary Market)" or, if not so published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such CD Interest
Determination Date, the CD Rate will be the rate on such CD Interest
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit." If such rate is not
published by 3:00 P.M., New York City time, on such Calculation Date, then the
CD Rate on such CD Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean (each as rounded to the
nearest one hundred-thousandth of a percentage point) of the secondary market
offered rates as of the opening of business, New York City time, on such CD
Interest Determination Date, of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United States
money market banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index
Maturity designated in the applicable Pricing Supplement in a denomination of
$5,000,000; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoted as mentioned in this sentence, the CD Rate
with respect to such CD Interest Determination Date will be the CD Rate in
effect on such CD Interest Determination Date.
LIBOR Notes
Each LIBOR Note will bear interest for each Reset Period at the interest rate
(calculated with reference to LIBOR on the LIBOR Interest Determination Date
for such Reset Period and the Spread or Spread Multiplier, if any) specified in
such Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR" will
be determined by the Calculation Agent as follows:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will be, as
specified in the applicable Pricing Supplement, either: (a) the arithmetic mean
of the offered rates for deposits in the Designated Deposit Currency (as
defined below) having the Index Maturity designated in the applicable Pricing
Supplement, commencing on the second Market Day immediately following such
LIBOR Interest Determination Date, that appear on the Reuters Screen LIBO Page
as of 11:00 A.M., London time, on such LIBOR Interest Determination Date, if at
least two such offered rates appear on the Reuters Screen LIBO Page ("LIBOR
Reuters"), or (b) the rate for deposits in the Designated Deposit Currency
having the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second Market Day immediately
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following such LIBOR Interest Determination Date, that appears on Telerate Page
3750 as of 11:00 A.M., London time, on such LIBOR Interest Determination Date
("LIBOR Telerate"). "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace page LIBO on that service for the purpose of displaying London
interbank offered rates of major banks). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or such other page as may
replace the 3750 page on that service or such other service or services as may
be nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates for the Designated Deposit Currency). If neither
LIBOR Reuters nor LIBOR Telerate is specified in the applicable Pricing
Supplement, LIBOR will be determined as if LIBOR Telerate had been specified.
If at least two such offered rates appear on the Reuters Screen LIBO Page, the
rate in respect of such LIBOR Interest Determination Date will be the
arithmetic mean of such offered rates as determined by the Calculation Agent.
If fewer than two offered rates appear on the Reuters Screen LIBO Page, or if
no rate appears on Telerate Page 3750, as applicable, LIBOR in respect of such
LIBOR Interest Determination Date will be determined as if the parties had
specified the rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer than
two offered rates appear on the Reuters Screen LIBO Page, as specified in
(i)(a) above, or on which no rate appears on Telerate Page 3750, as specified
in (i)(b) above, as applicable, LIBOR will be determined on the basis of the
rates at which deposits in the Designated Deposit Currency having the Index
Maturity designated in the applicable Pricing Supplement are offered at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date by four major banks in the London interbank market selected by the
Calculation Agent (the "Reference Banks") to prime banks in the London
interbank market, commencing on the second Market Day immediately following
such LIBOR Interest Determination Date and in a principal amount equal to an
amount of not less than $1,000,000 that is representative for a single
transaction in such market at such time. The Calculation Agent will request the
principal London office of each of the Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, LIBOR in respect of
such LIBOR Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR in respect to such
LIBOR Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 A.M., New York City time, on such LIBOR Interest
Determination Date by three major banks in The City of New York selected by the
Calculation Agent for loans in the Designated Deposit Currency to leading
European banks having the Index Maturity designated in the applicable Pricing
Supplement, commencing on the second London Business Day immediately following
such LIBOR Interest Determination Date and in a principal amount equal to an
amount of not less than $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if the banks
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, LIBOR with respect to such LIBOR Interest Determination Date
will be the interest rate otherwise in effect on such LIBOR Interest
Determination Date. "Designated Deposit Currency" means, with respect to any
LIBOR Note, the currency (including a currency unit), if any, designated in the
applicable LIBOR Note as the Designated Deposit Currency. If no such currency
is designated in the applicable LIBOR Note, the Designated Deposit Currency
shall be U.S. dollars.
Prime Rate Notes
Each Prime Rate Note will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Determination Date, the rate set forth in
H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is
not yet published by 9:00 a.m., New York City time, on the Calculation Date,
the Prime Rate for such Interest Determination Date will be the arithmetic mean
of the rates of interest publicly announced by each bank named on the Reuters
Screen NYMF Page as such bank's prime rate or base lending rate as in effect
for such Interest Determination Date as quoted on the Reuters Screen NYMF Page
on such Interest Determination Date, or, if fewer than four such rates appear
on the Reuters Screen
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NYMF Page for such Interest Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 360 as the close of business on such Interest
Determination Date by at least two of the three major money center banks in The
City of New York selected by the Calculation Agent from which quotations are
required. If fewer than two quotations are provided, the Prime Rate shall be
calculated by the Calculation Agent and shall be determined as the arithmetic
mean on the basis of the prime rates in The City of New York on such date by
the appropriate number of substitute banks or trust companies organized and
doing business under the laws of the United States, or any State thereof,
having total equity capital of at least U.S. $500 million and being subject to
supervision or examination by a Federal or State authority, selected by the
Calculation Agent to quote such rate or rates; provided, however, that if the
Prime Rate is not published in H.15(519) and the banks or trust companies
selected as aforesaid are not quoting as mentioned in this sentence, the Prime
Rate for such Interest Reset Period will be the same as the Prime Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the Prime Rate Notes for which
the Prime Rate is being determined shall be the Initial Interest Rate).
"Reuters Screen NYMF Page" means the display designated as page "NYMF" on the
Reuters Monitor Money Rates Service (or such other page as may replace the NYMF
Page on that service for the purpose of displaying prime rates or base lending
rates of major United States banks).
Treasury Rate Notes
Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if
any) specified in such Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity designated in the applicable
Pricing Supplement as published in H.15(519) under the heading "U.S. Government
Treasury bills--auction average (investment)" or, if not so published by 3:00
P.M., New York City time, on the Calculation Date pertaining to the Reset
Period to which such Treasury Interest Determination Date pertains, the auction
average rate (expressed as a bond equivalent, rounded upward, if necessary, to
the nearest one hundred-thousandth of a percentage point, on the basis of a
year of 365 days or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury bills having the Index
Maturity designated in the applicable Pricing Supplement are not published or
reported as provided above by 3:00 P.M., New York City time, on such
Calculation Date or if no such auction is held in a particular week, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be a yield
to maturity (expressed as a bond equivalent, rounded upward, if necessary, to
the nearest one hundred-thousandth of a percentage point, on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of 3:30 P.M., New York
City time, on such Treasury Interest Determination Date, for three leading
primary U.S. government securities dealers selected, after consultation with
the Corporation, by the Calculation Agent for the issue of Treasury bills with
a remaining maturity closest to the Index Maturity designated in the applicable
Pricing Supplement; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate with respect to such Treasury Interest
Determination Date will be the interest rate otherwise in effect on such
Treasury Interest Determination Date.
CMT Rate Notes
CMT Rate Notes will bear interest at the rates (calculated with reference to
the CMT Rate and the Spread or Spread Multiplier, if any) specified in such CMT
Rate Notes and any applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the designated CMT Telerate Page under the caption "Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
approximately 3:45 p.m.," under the column for the Designated CMT Maturity
Index for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT
Rate Interest Determination Date and (ii) if the Designated CMT Telerate Page
is 7052, the week, or the month, as applicable, ended immediately preceding the
week in which the Related CMT Rate Interest Determination Date occurs. If such
rate is no longer displayed on the relevant page, or if not displayed by 3:00
P.M., New York City time, on the related Calculation Date, then the CMT Rate
for such CMT Rate Interest Determination Date will be such Treasury Constant
Maturity Rate for the Designated CMT Maturity Index as published in the
relevant H.15(519). If such rate is no longer published, or if not published by
3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for such CMT Rate Interest Determination Date will be such Treasury
Constant Maturity Rate for the Designated CMT Maturity Index (or other United
States Treasury rate for the Designated CMT Maturity Index) for the CMT Rate
Interest Determination Date with respect to such Interest Reset Date as may
then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the relevant H.15(519). If such
information is not provided by 3:00 p.m., New York City time, on the related
Calculation Date, then the CMT Rate for the CMT Rate Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity, based on the arithmetic mean of the secondary market closing offer
side prices as of approximately 3:30 P.M., New York City time, on the CMT
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Referenced Dealer") in The City of New York selected by the Calculation Agent
(from five such Referenced Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct, non-callable fixed rate
obligations of the United States ("Treasury Note") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to
maturity of not less than such Designated CMT Maturity Index minus one year. If
the Calculation Agent cannot obtain three such Treasury Note quotations, the
CMT Rate for such CMT Rate Interest Determination Date will be calculated by
the Calculation Agent and will be a yield to maturity based on the arithmetic
mean of the secondary market offer side prices as of approximately 3:30 P.M.,
New York City time, on the CMT Rate Interest Determination Date of three
Referenced Dealers in The City of New York (from five such Referenced Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for Treasury Notes with original
maturity of the number of years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closest to the Designated CMT
Maturity Index and in an amount of at least $100,000,000. If three or four (and
not five) of such Referenced Dealers are quoting as described above, then the
CMT Rate will be based on the arithmetic mean of the offer prices obtained and
neither the highest nor lowest of such quotes will be eliminated; provided,
however, that if fewer than three Referenced Dealers selected by the
Calculation Agent are quoting as described herein, the CMT Rate will be the CMT
Rate in effect on such CMT Rate Interest Determination Date. If two Treasury
Notes with an original maturity as described in the third preceding sentence,
have remaining terms to maturity equally close to the Designated CMT Maturity
Index, the quotes for the CMT Rate Note with the shorter remaining term to
maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturity as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
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"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be two years.
Eleventh District Cost of Funds Rate
Eleventh District Cost of Funds Rate Notes will bear interest at the rates
(calculated with reference to the Eleventh District Cost of Funds Rate and the
Spread or Spread Multiplier, if any) specified in such Eleventh District Cost
of Funds Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Floating
Rate Note for which the interest rate is determined with reference to the
Eleventh District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate
Interest Determination Date"), the rate equal to the monthly weighted average
cost of funds for the calendar months preceding such Eleventh District Cost of
Funds Rate Interest Determination Date as set forth under the caption "Eleventh
District" on Telerate page 7058 as of 11:00 A.M., San Francisco time, on such
Eleventh District Cost of Funds Rate Interest Determination Date. If such rate
does not appear on the Telerate page 7058 on any related Eleventh District Cost
of Funds Rate Interest Determination Date, the Eleventh District Cost of Funds
Rate for such Eleventh District Cost of Funds Rate Interest Determination Date
shall be the monthly weighted average cost of funds paid by member institutions
of the Eleventh Federal Home Loan Bank District that was most recently
announced (the "Index") by the FHLB of San Francisco as such cost of funds for
the calendar month preceding the date of such announcement. If the FHLB of San
Francisco fails to announce such rate for the calendar month next preceding
such Eleventh District Cost of Funds Rate Interest Determination Date, then the
Eleventh District Cost of Funds Rate for such Eleventh District Cost of Funds
Rate Interest Determination Date will be the Eleventh District Cost of Funds
Rate in effect on such Eleventh District Cost of Funds Rate Interest
Determination Date. "Telerate Page 7058" means the display on the Dow Jones
Telerate Service on such page (or such other page as may replace such page on
that service for the purpose of displaying the Eleventh District Cost of Funds
Rate) for the purpose of displaying the monthly average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District.
J.J. Kenny Rate Notes
J.J. Kenny Rate Notes will bear interest at the rate (calculated with
reference to the J.J. Kenny Rate and the Spread or Spread Multiplier, if any)
specified in such J.J. Kenny Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "J.J. Kenny
Rate" means, with respect to any Interest Determination Date relating to a J.J.
Kenny Rate Note or any Floating Rate Note for which the Interest Rate is
determined with reference to the J.J. Kenny Rate (a "J.J. Kenny Rate Interest
Determination Date"), the rate in the high grade weekly index (the "Weekly
Index") on such date made available by Kenny Information Systems ("Kenny") to
the Calculation Agent. The Weekly Index is, and shall be, based upon 30-day
yield evaluations at par of bonds, the interest of which is exempt from federal
income taxation under the Internal Revenue Code of 1986, as amended (the
"Code"), of not less than five high grade component issuers selected by Kenny
which shall include, without limitation, issuers of general obligation bonds.
The specific issuers included among the component issuers may be changed from
time to time by Kenny in its discretion. The bonds on which the Weekly Index is
based shall not include any bonds on which the interest is subject to a minimum
tax or similar tax under the Code, unless all tax-exempt bonds are subject to
such tax. In the event that Kenny ceases to make available such Weekly Index, a
successor indexing agent will be selected by the Calculation Agent, such index
to reflect the prevailing rate for bonds rated in the highest short-term rating
category by Moody's Investor Service, Inc. and Standard & Poor's
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Corporation in respect of issuers most closely resembling the high grade
component issuers selected by Kenny for its Weekly Index, the interest on which
is (A) variable on a weekly basis, (B) exempt from federal income taxation
under the Code, and (C) not subject to a minimum tax or similar tax under the
Code, unless all tax-exempt bonds are subject to such tax. If such successor
indexing agent is not available, the rate for any J.J. Kenny Rate Interest
Determination Date shall be 67% of the rate determined as if the Treasury Rate
option had been originally selected.
INDEXED NOTES
The Corporation may from time to time offer Notes, the principal amount of
which payable at Stated Maturity is determined by the rate of exchange between
the currency or currency unit in which such Notes (the "Indexed Notes") are
denominated (the "Denominated Currency") and the other currency or currency
unit designated as the Indexed Currency in the applicable Pricing Supplement
(the "Indexed Currency"). Unless otherwise indicated in the applicable Pricing
Supplement, Holders of Indexed Notes will be entitled to receive a principal
amount of such Indexed Notes exceeding the amount designated as the face amount
of such Indexed Notes in the applicable Pricing Supplement (the "Face Amount")
if, at Stated Maturity, the rate at which the Denominated Currency can be
exchanged for the Indexed Currency is greater than the rate of such exchange
designated as the Base Exchange Rate in the applicable Pricing Supplement (the
"Base Exchange Rate"), and will be entitled to receive a principal amount of
such Indexed Notes less than the Face Amount of such Indexed Notes, if, at
Stated Maturity, the rate at which the Denominated Currency can be exchanged
for the Indexed Currency is less than such Base Exchange Rate. Information as
to the relative historical value (which information is not necessarily
indicative of relative future value) of the applicable Denominated Currency
against the applicable Indexed Currency, any exchange controls applicable to
such Denominated Currency or Indexed Currency, and the tax consequences to
Holders of Indexed Notes will be set forth in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, interest
will be payable by the Corporation in the Denominated Currency based on the
Face Amount of the Indexed Note and at the rate and time and in the manner set
forth herein and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, principal of
an Indexed Note will be payable by the Corporation in the Denominated Currency
at Stated Maturity in an amount equal to the Face Amount of the Indexed Note,
plus or minus an amount determined by the determination agent specified in the
applicable Pricing Supplement (the "Determination Agent") by reference to the
differences between the Base Exchange Rate and the rate at which the
Denominated Currency can be exchanged for the Indexed Currency as determined on
the second Exchange Rate Date prior to the Stated Maturity of such Indexed Note
(the "Determination Date") by the Determination Agent in the manner specified
in the applicable Pricing Supplement, on the Determination Date, for an amount
of Indexed Currency equal to the Face Amount of such Indexed Note multiplied by
the Base Exchange Rate, with the Denominated Currency for settlement at Stated
Maturity (such rate of exchange, as so determined, is hereinafter referred to
as the "Spot Rate"). The principal amount of the Indexed Notes determined by
the Determination Agent to be payable at Stated Maturity will be payable to the
Holders thereof in the manner set forth herein and in the applicable Pricing
Supplement. In the absence of manifest error, the determination by the
Determination Agent of the Spot Rate and the principal amount of Indexed Notes
payable at Stated Maturity shall be final and binding on the Corporation and
the Holders of such Indexed Notes.
Unless otherwise specified in the applicable Pricing Supplement, on the basis
of the aforesaid determination by the Determination Agent, (i) if the Base
Exchange Rate equals the Spot Rate for any Indexed Note, then the principal
amount of such Indexed Note payable at Stated Maturity would be equal to the
Face Amount of such Indexed Note; (ii) if the Spot Rate exceeds the Base
Exchange Rate (i.e., the Denominated Currency has appreciated against the
Indexed Currency during the term of the Indexed Note), then the principal
amount payable would be greater than the Face Amount of such Indexed Note;
(iii) if the Spot Rate is less than the Base Exchange Rate (i.e., the
Denominated Currency has depreciated against the
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Indexed Currency during the term of the Indexed Note) but is greater than one-
half of the Base Exchange Rate, then the principal amount so payable would be
less than the Face Amount of such Indexed Note; and (iv) if the Spot Rate is
less than or equal to one-half of the Base Exchange Rate, then the Spot Rate
will be deemed to be one-half of the Base Exchange Rate and no principal amount
of the Indexed Note would be payable at Stated Maturity.
Unless otherwise specified in the applicable Pricing Supplement, the formulas
to be used by the Determination Agent to determine the principal amount of an
Indexed Note payable at Stated Maturity will be as follows:
If the Spot Rate equals or exceeds the Base Exchange Rate, the principal
amount of an Indexed Note payable at Maturity shall equal:
Face Amount + (Face Amount X Spot Rate - Base Exchange Rate)
------------------------------
Spot Rate
If the Base Exchange Rate exceeds the Spot Rate, the principal amount of an
Indexed Note payable at Maturity (which shall, in no event, be less than zero)
shall equal:
Face Amount - (Face Amount X Base Exchange Rate - Spot Rate)
------------------------------
Spot Rate
If the formulas set forth above are applicable to an Indexed Note, the
maximum principal amount payable at Maturity in respect of such Indexed Note
would be an amount equal to twice the Face Amount and the minimum principal
amount so payable would be zero.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS
AS TO THE RISKS OF AN INVESTMENT IN INDEXED NOTES. SUCH INDEXED NOTES ARE NOT
AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY TRANSACTIONS.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued at a price less than their redemption price at Maturity,
resulting in such Notes being treated as if they were issued with original
issue discount for Federal Income Tax purposes (the "Original Issue Discount
Notes"). Such Original Issue Discount Notes may currently pay no interest or
interest at a rate which at the time of issuance is below market rate. See
"Certain United States Tax Consequences." Certain additional considerations
relating to any Original Issue Discount Notes may be described in the Pricing
Supplement relating thereto.
DUAL CURRENCY NOTES
The Corporation may from time to time offer Notes (the "Dual Currency Notes")
as to which the Corporation has a one-time option, exercisable on any one of
the dates specified in the applicable Pricing Supplement (each an "Option
Election Date") in whole, but not in part, with respect to all Dual Currency
Notes issued on the same day and having the same terms (a "Tranche"), of
thereafter making all payments of principal (premium, if any) and interest, if
any, (which payments would otherwise be made in the Specified Currency of such
Notes) in the optional currency specified in the applicable Pricing Supplement
(the "Option Payment Currency"). Information as to the relative value of the
Specified Currency compared to the Option Payment Currency will be set forth in
the applicable Pricing Supplement.
The Pricing Supplement for each issuance of Dual Currency Notes will specify,
among other things, the Specified Currency and Option Payment Currency of such
issuance and the Designated Exchange Rate for
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such issuance, which will be a fixed exchange rate used for converting amounts
denominated in the Specified Currency into amounts denominated in the Optional
Payment Currency (the "Designated Exchange Rate"). The Pricing Supplement will
also specify the Option Election Dates and Interest Payment Dates for the
related issuance of Dual Currency Notes. Each Option Election Date will be a
certain number of days before an Interest Payment Date or the Stated Maturity,
as set forth in the applicable Pricing Supplement, and will be the date on
which the Corporation may select whether to make all scheduled payments due
thereafter in the Optional Payment Currency rather than in the Specified
Currency.
If the Corporation makes such an election, the amount payable in the Optional
Payment Currency shall be determined using the Designated Exchange Rate
specified in the applicable Pricing Supplement. If such election is made,
notice of such election shall be mailed in accordance with the terms of the
applicable Tranche of Dual Currency Notes within two Business Days of the
Option Election Date and shall state (i) the first date, whether an Interest
Payment Date or the Stated Maturity, on which scheduled payments in the
Optional Payment Currency will be made and (ii) the Designated Exchange Rate.
Any such notice by the Corporation, once given, may not be withdrawn. The
equivalent value in the Specified Currency of payments made after such election
may be less, at the then current exchange rate, than if the Corporation had
made such payment in the Specified Currency.
For federal income tax purposes, Holders of Dual Currency Notes may be
subject to rules which differ from the general rules applicable to Holders of
other types of Notes offered hereby. See "Certain United States Tax
Consequences." The applicable Pricing Supplement will describe any special tax
consequences to Holders of Dual Currency Notes.
AMORTIZING NOTES
The Corporation may from time to time offer Amortizing Notes. Unless
otherwise specified in the applicable Pricing Supplement, interest on each
Amortizing Note will be computed on the basis of a 360-day year of twelve 30-
day months. Payments with respect to Amortizing Notes will be applied first to
interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. Further information concerning additional terms and
conditions of any issue of Amortizing Notes will be provided in the applicable
Pricing Supplement. A table setting forth repayment information in respect of
each Amortizing Note will be included in the applicable Pricing Supplement and
set forth on such Note.
RENEWABLE NOTES
The Corporation may from time to time offer Notes that will mature on an
Interest Payment Date specified in the applicable Pricing Supplement occurring
in or prior to the twelfth month following the Original Issue Date of such
Notes (the "Initial Maturity Date") unless the term of all or any portion of
any such Note (a "Renewable Note") is renewed in accordance with the procedures
described below.
On the Interest Payment Date occurring in the sixth month (unless a different
interval (a "Special Election Interval") is specified in the applicable Pricing
Supplement) prior to the Initial Maturity Date of a Renewable Note (the
"Initial Renewal Date") and on the Interest Payment Date occurring in each
sixth month (or in the last month of each Special Election Interval) after such
Initial Renewal Date (each, together with the Initial Renewal Date, a "Renewal
Date"), the term of such Renewable Note may be extended to the Interest Payment
Date occurring in the twelfth month (or, if a Special Election Interval is
specified in the applicable Pricing Supplement, the last month in a period
equal to twice the Special Election Interval) after such Renewal Date, if the
Holder of such Renewable Note elects to extend the term of such Renewable Note
or any portion thereof as described below. If a Holder does not elect to extend
the term of any portion of the principal amount of a Renewable Note during the
specified period prior to any Renewal Date, such portion will become due and
payable on the Interest Payment Date occurring in the sixth month (or the last
month in the Special Election Interval) after such Renewal Date (the "New
Maturity Date").
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The Holder of a Renewable Note may elect to renew the term of such Renewable
Note or, if specified in the applicable Pricing Supplement, any portion
thereof, by delivering a notice to such effect to the Trustee (or any duly
appointed paying agent) at the Corporate Trust Office not less than 15 nor more
than 30 days prior to the Renewal Date (unless another period is specified in
the applicable Pricing Supplement as the "Special Election"). Such election
will be irrevocable and will be binding upon each subsequent Holder of such
Renewable Note. An election to renew the term of a Renewable Note may be
exercised with respect to less than the entire principal amount of such
Renewable Note only if so specified in the applicable Pricing Supplement and
only in such a principal amount, or integral multiple in excess thereof, as is
specified in the applicable Pricing Supplement. Notwithstanding the foregoing,
the term of any Renewable Note may not be extended beyond its Date of Maturity
specified for such Renewable Notes in the applicable Pricing Supplement.
If the Holder does not elect to renew the term, such Renewable Note must be
presented to the Trustee (or any duly appointed paying agent) simultaneously
with notice of such election (or, in the event notice of such election,
together with a guarantee of delivery within five Business Days, is transmitted
on behalf of a Holder from a member of a national securities exchange, the
National Association of Securities Dealers, Inc. (the "NASD"), or a commercial
bank or trust company in the United States, within five Business Days of the
date of such notice). With respect to a Renewable Note, that is a Certificated
Note, as soon as practicable following receipt of such Renewable Note, the
Trustee (or any duly appointed paying agent) shall issue and exchange therefor
in the name of such Holder (i) a Note, in a principal amount equal to the
principal amount of such exchanged Renewable Note for which the election not to
renew the term thereof was exercised, with terms identical to those specified
on such Renewable Note (except for the Original Issue Date and the Initial
Interest Rate and except that such Note shall have a fixed, non-renewable
Stated Maturity on the New Maturity Date) and (ii) if such election is made
with respect to less than the full principal amount of such Holder's Renewable
Note, a replacement Renewable Note, in a principal amount equal to the
principal amount of such exchanged Renewable Note for which an election to
renew was made, with terms identical to such exchanged Renewable Notes.
NOTES LINKED TO COMMODITY PRICES, EQUITY INDICES AND OTHER FACTORS
The Corporation may from time to time offer Notes, the principal amount of
which at Stated Maturity, or the amount of interest payable on an Interest
Payment Date, is determined by reference to one or more commodity prices,
equity indices or other factors and on such other terms as may be set forth in
the applicable Pricing Supplement.
INTEREST RATE RESET
If the Corporation has the option with respect to any Note to reset the
interest rate, in the case of a Fixed Rate Note, or to reset the Spread or
Spread Multiplier, in the case of a Floating Rate Note, the Pricing Supplement
relating to such Note will indicate such option, and, if so, (i) the date or
dates on which such interest rate or such Spread or Spread Multiplier, as the
case may be, may be reset (each an "Optional Reset Date") and (ii) the basis or
formula, if any, for such resetting.
The Corporation may exercise such option with respect to a Note by notifying
the Paying Agent of such exercise at least 45 but not more than 60 days prior
to an Optional Reset Date for such Note. Not later than 40 days prior to such
Optional Reset Date, the Paying Agent will mail to the Holder of such Note a
notice (the "Reset Notice"), first class, postage prepaid, setting forth (i)
the election of the Corporation to reset the interest rate, in the case of a
Fixed Rate Note, or the Spread or Spread Multiplier, in the case of a Floating
Rate Note, (ii) such new interest rate or such new Spread or Spread Multiplier,
as the case may be, and (iii) the provisions, if any, for redemption during the
period from such Optional Reset Date to the next Optional Reset Date or, if
there is no such next Optional Reset Date, to the Stated Maturity of such Note
(each such period a "Subsequent Interest Period"), including the date or dates
on which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period.
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Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, the Corporation may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread or Spread Multiplier, in
the case of a Floating Rate Note, in either case provided for in the Reset
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread or Spread Multiplier, in the case of a Floating Rate Note,
for the Subsequent Interest Period commencing on such Optional Reset Date by
mailing or causing the Paying Agent to mail notice of such higher interest rate
or higher Spread or Spread Multiplier, as the case may be, first class, postage
prepaid to the Holder of such Note. Such notice shall be irrevocable. All Notes
with respect to which the interest rate or Spread or Spread Multiplier is reset
on an Optional Reset Date will bear such higher interest rate, in the case of a
Fixed Rate Note, or higher Spread or Spread Multiplier, in the case of a
Floating Rate Note.
If the Corporation elects to reset the interest rate or the Spread or Spread
Multiplier of a Note, the Holder of such Note will have the option to elect
repayment of such Note by the Corporation on any Optional Reset Date at a price
equal to the principal amount thereof plus any accrued interest to such
Optional Reset Date. In order for a Note to be so repaid on an Optional Reset
Date, the Holder thereof must follow the procedures set forth below under
"Redemption and Repayment" for optional repayment, except that the period for
delivery of such Note or notification to the Paying Agent shall be at least 25
but not more than 35 days prior to such Optional Reset Date and except that a
Holder who has tendered a Note for repayment pursuant to a Reset Notice, may,
by written notice to the Paying Agent, revoke any such tender for repayment
until the close of business on the tenth day prior to such Optional Reset Date.
EXTENSION OF MATURITY
If the Corporation has the option to extend the Stated Maturity of any Note
for one or more whole year periods (each an "Extension Period") up to but not
beyond the date (the "Final Maturity Date") set forth in the Pricing Supplement
relating to such Note, such Pricing Supplement will indicate such option and
the basis or formula, if any, for setting the interest rate or the Spread or
Spread Multiplier, as the case may be, applicable to any such Extension Period.
The Corporation may exercise such option with respect to a Note by notifying
the Paying Agent of such exercise at least 45 but not more than 60 days prior
to the Stated Maturity of such Note in effect prior to the exercise of such
option (the "Original Stated Maturity"). No later than 40 days prior to the
Original Stated Maturity, the Paying Agent will mail to the Holder of such Note
a notice (the "Extension Notice") relating to such Extension Period, first
class, postage prepaid, setting forth (i) the election of the Corporation to
extend the Stated Maturity of such Note, (ii) the new Stated Maturity, (iii) in
the case of a Fixed Rate Note, the interest rate applicable to the Extension
Period or, in the case of a Floating Rate Note, the Spread or Spread Multiplier
applicable to the Extension Period, and (iv) the provisions, if any, for
redemption during the Extension Period, including the date or dates on which or
the period or periods during which and the price or prices at which such
redemption may occur during the Extension Period. Upon the mailing by the
Paying Agent of an Extension Notice to the Holder of a Note, the Stated
Maturity of such Note shall be extended automatically as set forth in the
Extension Notice, and, except as modified by the Extension Notice and as
described in the next paragraph, such Note will have the same terms as prior to
the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity for a Note, the Corporation may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Extension
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread or Spread Multiplier, in the case of a Floating Rate Note,
for the Extension Period by mailing or causing the Paying Agent to mail notice
of such higher interest rate or higher Spread or Spread Multiplier, as the case
may be, first class, postage prepaid, to the Holder of such Note. Such notice
shall be irrevocable. All Notes with respect to which the Stated Maturity is
extended will bear such higher interest rate, in the case of a Fixed Rate Note,
or higher Spread or Spread Multiplier, in the case of a Floating Rate Note, for
the Extension Period.
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If the Corporation elects to extend the Stated Maturity of a Note, the Holder
of such Note will have the option to elect repayment of such Note by the
Corporation at the Original Stated Maturity at a price equal to the principal
amount thereof plus any accrued interest to such date. In order for a Note to
be so repaid on the Original Stated Maturity, the Holder thereof must follow
the procedures as set forth below under "Redemption and Repayment" for optional
repayment, except that the period for delivery of such Note or notification to
the Paying Agent shall be at least 25 but not more than 35 days prior to the
Original Stated Maturity and except that a Holder who has tendered a Note for
repayment pursuant to an Extension Notice may, by written notice to the Paying
Agent, revoke any such tender for repaying until the close of business on the
tenth day prior to the Original Stated Maturity.
REDEMPTION AND REPAYMENT
Unless one or more Redemption Dates are specified in the applicable Pricing
Supplement, the Notes will not be redeemable prior to their Stated Maturity. If
one or more Redemption Dates are so specified with respect to any Note, the
applicable Pricing Supplement will also specify one or more redemption prices
(expressed as a percentage of the principal amount of such Note) ("Redemption
Prices") and the redemption period or periods ("Redemption Periods") during
which such Redemption Prices shall apply. Unless otherwise specified in the
applicable Pricing Supplement, any such Note shall be redeemable at the option
of the Corporation at the specified Redemption Price applicable to the
Redemption Period during which such Note is to be redeemed, together with
interest accrued to the Redemption Note. Unless otherwise specified in the
applicable Pricing Supplement, the Notes will not be subject to any sinking
fund. The Corporation may redeem any of the Notes that are redeemable and
remain outstanding either in whole or from time to time in part, upon not less
than 30 nor more than 60 days' notice. In the event of a redemption in part of
any Note, a new Note for the amount of the unredeemed portion shall be issued
in the name of the Holder upon cancellation of the redeemed Note.
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be repaid prior to Stated Maturity or that such Note will be
repayable at the option of the Holder on a date or dates specified prior to
Stated Maturity at a price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to date of repayment.
In order for a Note that is redeemable at the option of the Holder to be
repaid, the Paying Agent must receive at least 30 days but not more than 45
days prior to the repayment date (a) appropriate wire instructions and (b)
either (i) the Note with the form entitled "Option to Elect Repayment" attached
to the Note duly completed or (ii) a telegram, telex, facsimile transmission or
letter from a member of a national securities exchange or the NASD, or a
commercial bank or trust company in the United States setting forth the name of
the Holder of the Note, the principal amount of the Note, the portion of the
principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of the Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid with the form entitled "Option to Elect Repayment" attached to the Note
duly completed will be received by the Paying Agent not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter and such Note and form duly completed must be received by the Paying
Agent by such fifth Business Day. Exercise of the repayment option by the
Holder of a Note shall be irrevocable, except as otherwise described above
under "Interest Rate Reset" and "Extension of Maturity." The repayment option
may be exercised by the Holder of a Note for less than the entire principal
amount of the Note provided that the principal amount of the Note remaining
outstanding after repayment is an authorized denomination. No transfer or
exchange of any Note (or, in the event that any Note is to be repaid in part,
the portion of the Note to be repaid) will be permitted after exercise of a
repayment option. All questions as to the availability, eligibility (including
time of receipt) and acceptance of any Note for repayment will be determined by
the Corporation, whose determination will be final, binding and non-appealable.
If a Note is represented by a Global Security, the Depositary's nominee will
be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the
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Depositary's nominee will timely exercise a right to repayment with respect to
a particular Note, the beneficial owner of such Note must instruct the broker
or other direct or indirect participant through which it holds an interest in
such Note to notify the Depositary of its desire to exercise a right to
repayment. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner
should consult the broker or other direct or indirect participant through which
it holds an interest in a Note in order to ascertain the cut-off time by which
such an instruction must be given in order for timely notice to be delivered to
the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note is
an Original Issue Discount Note, the amount payable on such Note in the event
of redemption or repayment prior to its Stated Maturity shall be the Amortized
Face Amount of such Note, as specified in the applicable Pricing Supplement, as
of the Redemption Date or the date of repayment, as the case may be.
REPURCHASE
The Corporation may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Corporation may be held or
resold or, at the discretion of the Corporation, may be surrendered to the
Trustee or Paying Agent for cancellation.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes having the same Specified Currency,
Original Issue Date, Date of Maturity, reset, extension, redemption and
repayment provisions, if any, Interest Payment Dates, Regular Record Dates,
and, in the case of Fixed Rate Notes, interest rate, or, in the case of
Floating Rate Notes, Base Rate, Initial Interest Rate, Index, Maturity,
Interest Reset Period, Interest Reset Dates, Interest Payment Period, Spread,
if any, Spread Multiplier, if any, Maximum Interest Rate, if any, and Minimum
Interest Rate, if any, will be represented by a single fully registered
certificate in definitive form (a "Global Security"). Each Global Security
representing Book-Entry Notes will be deposited with, or on behalf of, the
Depositary and registered in the name of the Depositary or its nominee. Book-
Entry Notes will not be exchangeable for Certificated Notes at the option of
the Holder and, except as set forth below, will not otherwise be issuable in
definitive form.
One Global Security will be issued for each issue of the Notes, each in the
aggregate principal amount of such issue, and will be deposited with the
Depositary. If, however, the aggregate principal amount of any issue exceeds
$150 million, one Global Security will be issued with respect to each $150
million of principal amount and an additional Global Security will be issued
with respect to any remaining principal amount of such issue.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants
("Direct Participants") include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. The
Depositary is owned by a number of its Direct Participants, by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the NASD. Access to
the Depositary's system is also available to others such as securities brokers
and dealers (including the Agents), banks and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly. The rules applicable to the Depositary and its
Participants are on file with the Securities and Exchange Commission.
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Purchases of Book-Entry Notes under the Depositary's system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Notes on the Depositary's records. The ownership interest of each actual
purchaser of each Book-Entry Note ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from the Depositary of their purchase,
but Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Book-
Entry Notes are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interest in Book-Entry Notes, except
in the event that use of the book-entry system for the Book-Entry Notes is
discontinued.
To facilitate subsequent transfers, all Global Securities deposited by
Participants with the Depositary are registered in the name of the Depositary's
partnership nominee, Cede & Co. The deposit of Global Securities with the
Depositary and their registration in the name of Cede & Co. effect no change in
beneficial ownership. The Depositary has no knowledge of the actual Beneficial
Owners of the Book-Entry Notes; the Depositary's records reflect only the
identity of the Direct Participants to those accounts such Book-Entry Notes are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all Book-Entry
Notes within an issue are being redeemed, and unless otherwise notified by
either Corporation or the Trustee, the Depositary's current practice is to
determine by lot the amount of interest of each Direct Participant in such
issue to be redeemed.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
Book-Entry Notes. Under its usual procedures, the Depositary will mail an
Omnibus Proxy to the Corporation as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Book-Entry Notes are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
Payments of principal, premium, if any, and interest, if any, on the Book-
Entry Notes will be made to the Depositary. The Depositary's practice is to
credit direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless the Depositary has reason to believe that it will not receive payment on
such date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as in the case with securities
held for the accounts of customers in bearer form or registered in "street
name" and will be the responsibility of such Participant and not of the
Depositary, any Agents, or the Corporation, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to the Depositary is the responsibility of the
Corporation or the Agents, disbursement of such payments to Direct Participants
shall be the responsibility of the Depositary, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Book-Entry Notes
repaid by the Corporation, through its Participant, to the Trustee, and shall
effect delivery of such Book-Entry Notes by causing the Direct Participant to
transfer the Participant's interest in the Book-Entry Notes, on the
Depositary's records, to the Paying Agent. The requirement for physical
delivery of Book-Entry Notes in connection with a demand
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for purchase or a mandatory purchase will be deemed satisfied when the
ownership rights in the Book-Entry Notes are transferred by Direct Participants
on the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Corporation or the Trustee. Under such circumstances,
in the event that a successor securities depositary is not obtained,
Certificated Notes are required to be printed and delivered in exchange for the
Book-Entry Notes represented by the Global Securities held by the Depositary.
The Corporation may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depositary). In
that event, Certificated Notes will be printed and delivered in exchange for
the Book-Entry Notes represented by the Global Securities held by the
Depositary.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the
Corporation believes to be reliable, but the Corporation takes no
responsibility for the accuracy thereof.
Neither the Corporation, the Trustee, any Paying Agent nor the registrar for
the Notes will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interest in a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each Note in the Specified Currency for
such Note. Currently, there are limited facilities in the United States for
conversion of U.S. dollars into foreign currencies and vice versa, and banks
generally do not offer non-U.S. dollar checking or savings account facilities
in the United States. However, if requested by a prospective purchaser of Notes
denominated in a Specified Currency other than U.S. dollars, the Agent
soliciting the offer to purchase will arrange for the conversion of U.S.
dollars into such Specified Currency to enable the purchaser to pay for such
Notes. Such requests must be made on or before the fifth Business Day preceding
the date of delivery of the Notes, or by such other date as determined by the
Agent which presents the offer to the Corporation. Each such conversion will be
made by the relevant Agent on such terms and subject to such conditions,
limitations and charges as such Agent may from time to time establish in
accordance with its regular foreign exchange practice. All costs of exchange
will be borne by the relevant purchaser of the Notes.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in, or the payment of which is
determined with reference to, a Specified Currency other than U.S. dollars
entails significant risks that are not associated with similar investments in a
security denominated in U.S. dollars. Similarly, an investment in an Indexed
Note entails significant risks that are not associated with an investment in
non-Indexed notes. Such risks include, without limitation, the possibility of
significant changes in rates of exchange between U.S. dollars and the Specified
Currency (or, in the case of each Indexed Note, the rate of exchange between
the Denominated Currency and the Indexed Currency for such Indexed Note),
including changes resulting from official redenomination with respect to such
Specified Currency (or, in the case of each Indexed Note, with respect to the
Denominated Currency on the Indexed Currency therefor) and the possibility of
the imposition or modification of foreign exchange controls with respect to the
Specified Currency. Such risks generally depend on factors over which the
Corporation has no control, such as economic and political events and the
supply
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of and demand for the relevant currencies. In recent years, rates of exchange
between Specified Currencies have been highly volatile, and such volatility may
be expected in the future. Fluctuations in any particular exchanges that have
occurred in the past are not necessarily indicative, however, of fluctuations
in the rate that may occur during the term of any Note. Depreciation of a
foreign currency or units of a foreign composite currency in which a Note is
denominated against the U.S. dollar would result in a decrease in the effective
yield of such Note below its coupon rate, and in certain circumstances could
result in a loss to the investor on a U.S. dollar basis. Similarly,
depreciation of the Denominated Currency with respect to an Indexed Note
against the applicable Indexed Currency would result in the principal amount
payable with respect to such Indexed Note at the Stated Maturity being less
than the Face Amount of such Indexed Note which, in turn, would decrease the
effective yield of such Indexed Note below its applicable interest rate and
could also result in a loss to the investor.
The Notes provide that, in the event of an official redenomination of a
foreign currency (including, without limitation, an official redenomination of
a foreign currency that is a composite currency) the obligations of the
Corporation with respect to payments on Notes denominated in such currency
shall, in all cases be deemed immediately following such redenomination to
provide for the payment of that amount of redenominated currency representing
the amount for such obligations immediately before such redenomination. The
Notes do not provide for any adjustment to any amount payable under the Notes
as a result of (a) any change in the value of a foreign currency relative to
any other currency due solely to fluctuations in exchange rates or (b) any
redenomination of any component currency of any composite currency (unless such
composite currency is itself officially redenominated).
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a foreign currency for making payments with respect to a Note denominated in
such currency. There can be no assurances that exchange controls will not
restrict or prohibit payments of principal or interest in any currency or
currency unit. Even if there are not actual exchange controls, it is possible
that, with respect to any particular Note, the foreign currency for such Note
will not be available to the Corporation to make payments of interest and
principal then due because of circumstances beyond the control of the
Corporation. In that event, the Corporation will make such payments in the
manner set forth below under "Payment Currency."
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT, AND THE
APPLICABLE PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL OF THE RISKS OF AN
INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE
VALUE OF, A CURRENCY (INCLUDING ANY COMPOSITE CURRENCY) OTHER THAN U.S.
DOLLARS, AND THE CORPORATION DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE
PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS
SUPPLEMENT OR THE DATE OF THE APPLICABLE PRICING SUPPLEMENT OR AS SUCH RISKS
MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED IN AN INVESTMENT IN SUCH
NOTES, WHICH ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers of Notes who are United States Holders, as that term is
defined herein, and the Corporation disclaims any responsibility to advise
prospective purchasers who are residents of countries other than the United
States with respect to any matter that may affect the purchase or holding of,
or receipt of payments of principal, premium, if any, or interest, if any, in
respect of, Notes. Such persons should consult their own counsel with regard to
such matters.
The Pricing Supplement relating to Notes denominated in a Specified Currency
other than U.S. dollars or relating to Indexed Notes will contain information
concerning historical exchange rates for such Specified
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Currency or Denominated Currency against the U.S. dollar or other relevant
currency (including, in the case of Indexed Notes, the applicable Indexed
Currency), a description of such currency or currencies, and any exchange
controls affecting such currency or currencies. The information therein
concerning exchange rates is furnished as a matter of information only and
should not be regarded as indicative of the range or trend in fluctuations in
currency exchange rates that may occur in the future.
PAYMENT CURRENCY
Except as set forth in the applicable Pricing Supplement, if payment on a
Note is required to be made in a Specified Currency other than U.S. dollars and
such currency is unavailable due to the imposition of exchange controls or
other circumstances beyond the Corporation's control, or is no longer used by
the government of the country issuing such currency for the settlement of
transactions by public institutions of or within the international banking
community, then all payments with respect to such Note shall be made in U.S.
dollars until such currency is again available or so used. The amount so
payable on any date in such foreign currency shall be converted to U.S. dollars
on the basis of the Market Exchange Rate on the last date such Specified
Currency was available. See "Description of Notes--Payment of Principal and
Interest."
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into
two or more currencies, the amount of the original component currency as a
component shall be replaced by the amounts of such two or more currencies
having an aggregate value on the date of division equal to the amount of the
former component currency immediately before such division.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. Courts in the United States customarily have not
rendered judgments for money damages denominated in any currency other than
U.S. dollars. If a Note is denominated in a Specified Currency other than U.S.
dollars, any judgment under New York law will be rendered in the foreign
currency of the underlying obligation and converted into U.S. dollars at a rate
of exchange prevailing on the date of entry of judgment or decree.
CERTAIN UNITED STATES TAX CONSEQUENCES
Set forth below is a summary of certain U.S. federal income tax
considerations of importance to Holders of the Notes. The summary concerns
Holders who hold the Notes as capital assets and not special classes of
Holders, such as dealers in securities or currencies, financial institutions,
insurance companies, regulated investment companies, persons who hold the Notes
as part of a conversion transaction or as part of a straddle with other
investments, persons who hold the Notes as a hedge against currency risks or
who hedge any currency risks of holding the Notes, tax-exempt investors or U.S.
Holders (as defined below) whose functional currency is other than the U.S.
dollar. The discussion below is based on existing provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated
thereunder, judicial decisions and administrative rulings, all of which are
subject to change or alternative construction with possible retroactive effect.
On February 2, 1994, final Treasury regulations under the original issue
discount ("OID") provisions of the Code (the "OID Regulations") were published
in the Federal Register. The OID Regulations, which replaced certain proposed
OID regulations that were issued on December 21, 1992, generally apply to debt
instruments issued on or after April 4, 1994. The following discussion is based
on the OID Regulations.
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UNITED STATES TAX CONSIDERATIONS FOR U.S. HOLDERS
GENERAL
As used herein, "U.S. Holder" means a Holder of a Note who is a citizen or
resident of the United States, a corporation or partnership (including an
entity treated as a corporation or partnership for U.S. tax purposes) or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, an estate or trust the income of which is
subject to U.S. federal income taxation regardless of its source, and any other
Holder whose ownership of a Note is effectively connected with the conduct of a
trade or business in the United States.
PAYMENTS OF INTEREST
Interest on the Notes generally will be taxable to a U.S. Holder as ordinary
interest income at the time it is accrued or received, depending in part on the
U.S. Holder's method of accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
General. Notes with a term greater than one year may be issued with OID for
U.S. federal income tax purposes. OID is the excess of the "stated redemption
price at maturity" of a Note over its "issue price." If this excess is less
than .25% of the Note's stated redemption price at maturity multiplied by the
number of complete years to its maturity or, in the case of an Amortizing Note,
its weighted average maturity (a "de minimis amount"), the amount of OID is
considered to be zero. The "stated redemption price at maturity" of a Note is
all amounts payable on the Note however designated other than payments of
"qualified stated interest." The "issue price" of an issue of Notes is defined
as the first price at which a substantial amount of such Notes has been sold,
other than to bond houses, brokers or similar persons or organizations acting
as underwriters, placement agents or wholesalers. "Qualified stated interest"
generally is stated interest that is unconditionally payable in cash or in
property (other than debt instruments of the issuer) at least annually at a
single fixed rate (a single fixed rate is a rate that appropriately takes into
account the length of time between payments). If a Note has certain interest
payment characteristics (e.g., teaser rates or interest holidays), then such
Note may also be treated as having OID for U.S. federal income tax purposes
even if such Note were issued at an issue price which does not otherwise result
in OID.
Accrual of OID. U.S. Holders are required to include OID in income before the
receipt of cash attributable to such income, regardless of such U.S. Holders'
method of accounting for tax purposes. The amount of OID includible in income
by the initial U.S. Holder of a Note is the sum of the daily portions of OID
with respect to such Note for each day during the taxable year or portion of
the taxable year in which such U.S. Holder held such Note. The amount of OID
which accrues in an accrual period is an amount equal to the excess (if any) of
(a) the product of the Note's "adjusted issue price" at the beginning of such
accrual period and its yield to maturity (determined on the basis of
compounding at the end of each accrual period and appropriately adjusted to
take into account the length of the particular accrual period) over (b) the sum
of the qualified stated interest payments, if any, allowable to the accrual
period. The daily portion of OID is determined by allocating to each day in any
accrual period a ratable portion of the amount of OID which accrues during the
accrual period. The "adjusted issue price" of a Note at the beginning of any
accrual period is the sum of the issue price of such Note plus the OID
allocable to all prior accrual periods reduced by payments on the Note other
than qualified stated interest. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the debt instrument,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the first day or the last day
of an accrual period. Under these rules, U.S. Holders generally will have to
include in income increasingly greater amounts of OID in successive accrual
periods.
Floating Rate Notes. The Floating Rate Notes are treated as either "variable
rate debt instruments" or Contingent Notes (as defined below). The OID
Regulations provide special rules for determining the amount
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and accrual of qualified stated interest and OID on a Floating Rate Note. Under
the OID Regulations, a Floating Rate Note will qualify as a variable rate debt
instrument if (a) its issue price does not exceed the total noncontingent
principal payments due under such Floating Rate Note by more than a specified
de minimis amount and (b) it provides for stated interest, paid or compounded
at least annually, at (where applicable) current values of (i) one or more
"qualified floating rates," (ii) a single fixed rate and one or more qualified
floating rates, (iii) a single "objective rate," or (iv) a single fixed rate
and a single objective rate that is a "qualified inverse floating rate," as
such terms are defined under the OID Regulations. The definitions of such terms
and their application, if any, to a particular Floating Rate Note will be
described in the related Pricing Supplement.
If a Floating Rate Note that qualifies as a variable rate debt instrument
provides for stated interest at either a single qualified floating rate or a
single objective rate that is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually, then such stated
interest will constitute qualified stated interest, and will be taxable to the
U.S. Holder as ordinary interest income at the time it is accrued or received,
depending on such U.S. Holder's method of accounting for tax purposes. Such a
Floating Rate Note thus generally will not be treated as having OID unless its
stated principal amount exceeds its issue price and such excess is greater than
or equal to a specified de minimis amount. OID, if any, on such a Floating Rate
Note is allocated to an accrual period under the method described above.
Any Floating Rate Note that qualifies as a variable rate debt instrument
generally will be converted into a fixed rate instrument, and the amount and
accrual of qualified stated interest and OID on such Floating Rate Note are
then determined by applying the general OID rules. The method for converting
such a Floating Rate Note to a fixed rate instrument will depend on its
characteristics. Such a Floating Rate Note providing for a qualified floating
rate or a qualified inverse floating rate is converted by substituting a fixed
rate (the "equivalent" fixed rate) equal to the value of the qualified floating
rate or qualified inverse floating rate as of such Floating Rate Note's issue
date. Such a Floating Rate Note providing for an objective rate (other than a
qualified inverse floating rate) is converted by substituting an equivalent
fixed rate that reflects the yield that is reasonably expected on such Floating
Rate Note. In the case of a Floating Rate Note that qualifies as a variable
rate debt instrument and provides for stated interest at one or more qualified
floating rates or a qualified inverse floating rate and additionally provides
for stated interest at a single fixed rate, the fixed rate is converted into a
qualified floating rate (or a qualified inverse floating rate if such Floating
Rate Note provides for a qualified inverse floating rate). The qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Floating Rate Note as of the
Floating Rate Note's issue date is approximately the same as the fair market
value of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Such a Floating Rate Note is then converted into an equivalent
fixed rate debt instrument as described above. In the event that the amount of
qualified stated interest or OID assumed to have accrued or been paid with
respect to the equivalent fixed rate debt instrument of a Floating Rate Note
that qualifies as a variable rate debt instrument differs from the amount of
qualified stated interest or OID actually accrued or paid on such Floating Rate
Note during an accrual period, the OID Regulations provide for appropriate
adjustments to be made to the amount of qualified stated interest or OID
assumed to have accrued or been paid.
CONTINGENT NOTES
Notes may be issued under circumstances in which the amount and/or timing of
interest and principal on the Notes is subject to a contingency ("Contingent
Notes"). For example, the Corporation may issue Notes under which the total
noncontingent payments are less than the issue price or Indexed Notes under
which interest and/or principal is determined by reference to multiple formulae
based on the values of specified stocks, commodities, foreign currencies or
other such personal property. If a Floating Rate Note does not qualify as a
variable rate debt instrument under the OID Regulations, then the Floating Rate
Note would be treated as a Contingent Note. It is not entirely clear under
current law how a Floating Rate Note would be
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taxed in such case. The proper U.S. federal income tax treatment of a
Contingent Note will be described in the related Pricing Supplement.
SHORT-TERM NOTES
Notes that have a fixed maturity of one year or less ("Short-Term Notes")
will be treated as having been issued with acquisition discount. U.S. Holders
who report income for U.S. federal income tax purposes under the accrual
method, and certain other holders including banks and dealers in securities,
are required to accrue acquisition discount on Short-Term Notes on a straight-
line basis unless an election is made to accrue the acquisition discount under
a constant yield method (based on daily compounding). In general, an individual
or other cash method U.S. Holder is not required to accrue such acquisition
discount unless the U.S. Holder elects to do so. If such an election is not
made, any gain recognized by the U.S. Holder on the sale, exchange or maturity
of the Short-Term Note will be ordinary income to the extent of the acquisition
discount accrued on a straight-line basis, or upon election under the constant
yield method (based on daily compounding), through the date of sale or
maturity, and a portion of the deductions otherwise allowable to the U.S.
Holder for interest on borrowings allocable to the Short-Term Note will be
deferred until a corresponding amount of income is realized.
MARKET DISCOUNT AND PREMIUM
If a U.S. Holder acquires a Note at a price below its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity), or
acquires a Note issued with OID at a price below its adjusted issue price as of
the purchase date, the amount of the difference will be treated as "market
discount." If the market discount exceeds a de minimis amount, any gain on the
sale, exchange or retirement of the Note is treated as ordinary interest income
at the time of the disposition to the extent of the accrued market discount,
unless the U.S. Holder elects (the "current inclusion election") to accrue
market discount in income on a current basis. In addition, a U.S. Holder who
does not make the current inclusion election is required to defer deductions
for a portion of such Holder's interest expense on any indebtedness incurred to
purchase or carry such Note. Market discount is normally accrued on a straight-
line basis, but a Holder may elect to use a constant yield method of accrual.
A U.S. Holder who purchases a Note for an amount above its adjusted issue
price immediately after its purchase and less than or equal to its stated
redemption price at maturity will be considered to have purchased such Note at
an "acquisition premium." Under the acquisition premium rules, the amount of
OID which such U.S. Holder must include in its gross income with respect to
such Note for any taxable year (or portion thereof in which the U.S. Holder
holds such Note) will be reduced (but not below zero) by the portion of the
acquisition premium properly allocable to the period.
If a U.S. Holder purchases a Note for an amount above its stated redemption
price at maturity, such U.S. Holder will be considered to have purchased the
Note with "amortizable bond premium" equal in amount to such excess. A U.S.
Holder may elect to amortize such premium using a constant yield method over
the remaining term of the Note and may offset interest otherwise required to be
included in respect of the Note during any taxable year by the amortized amount
of such excess for the taxable year. However, if the Note may be optionally
redeemed after the U.S. Holder acquires it at a price in excess of its stated
redemption price at maturity, special rules would apply which could result in a
deferral of the amortization of some bond premium until later in the term of
the Note.
ELECTION TO TREAT ALL INTEREST AND PREMIUM AS OID
U.S. Holders who acquire Notes on or after April 4, 1994, may elect
irrevocably to include all interest (including stated interest, acquisition
discount, OID, de minimis OID, market discount, de minimis market discount, and
unstated interest, as adjusted by any amortizable bond premium or acquisition
premium on a debt instrument) in income by using the constant yield method
applicable to OID, subject to certain limitations and exceptions.
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DISPOSITION OF A NOTE
U.S. Holders of Notes recognize gain or loss on the sale, redemption,
exchange or other disposition of such Notes. This gain or loss is measured by
the difference between the amount of cash received (except to the extent
attributable to accrued interest) and the U.S. Holder's adjusted tax basis in
the Note. A U.S. Holder's adjusted tax basis for determining gain or loss on a
sale or disposition of a Note generally will be such U.S. Holder's cost
increased by any amounts included in income, other than qualified stated
interest, and reduced by any amortized premium and cash received other than
qualified stated interest. Gain or loss on the sale, exchange or redemption of
a Note generally will be long-term capital gain or loss if the Note has been
held as a capital asset for more than one year, except to the extent that gain
represents accrued market discount or acquisition discount not previously
included in the U.S. Holder's income.
FOREIGN CURRENCY NOTES
Notes may be denominated in, or interest or principal on the Notes may be
determined by reference to, a foreign currency or foreign currency unit (e.g.,
the ECU) ("Foreign Currency Notes"). In this case, for U.S. federal income tax
purposes, U.S. Holders of Foreign Currency Notes may need to determine the U.S.
dollar equivalent of amounts includible in income and separately calculate any
foreign exchange gain or loss arising from holding a Foreign Currency Note.
Treatment of Interest Income and OID. With respect to interest income and
OID, a U.S. Holder of a Foreign Currency Note who is an accrual basis taxpayer
generally will be required to translate the interest income or OID for an
accrual period into U.S. dollars at the average exchange rate for such accrual
period. Alternatively, a U.S. Holder may elect to translate accrued interest
income or OID into U.S. dollars at the spot rate in effect on the last day of
such accrual period. If elected, this alternative method must be applied
consistently to all debt instruments held by such U.S. Holder from year to
year.
A U.S. Holder of a Foreign Currency Note who is an accrual basis taxpayer
recognizes foreign exchange gain or loss on the receipt of a payment of accrued
interest income. Such exchange gain or loss generally will be measured by the
difference between (a) the U.S. dollar equivalent of the interest received
translated at the spot rate in effect on the date of payment, and (b) the U.S.
dollar equivalent of the accrued interest income translated at the average
exchange rates used to include such accrued interest in income. Cash basis
taxpayers generally will translate interest income and OID into U.S. dollars at
the spot exchange rate in effect on the date of payment. No foreign exchange
gain or loss will be realized with respect to the receipt of such interest
income or OID (other than the gain or loss which may be realized upon
disposition of any foreign currency received).
Treatment of Principal. With respect to payments of principal on a Foreign
Currency Note, a U.S. Holder (regardless of such U.S. Holder's method of
accounting) recognizes foreign exchange gain or loss measured by the difference
between (a) the U.S. dollar equivalent of the principal payment received
translated at the spot rate on the date of each payment, and (b) the U.S.
dollar equivalent of the principal amount paid translated at the spot rate in
effect on the date such U.S. Holder acquired the Note.
Market Discount. Market discount on a Foreign Currency Note is first
determined in the relevant foreign currency. Accrued market discount which,
under the rules discussed above, is taken into income upon the receipt of a
principal payment or upon the retirement or disposition of the Foreign Currency
Note, is translated into U.S. dollars on the disposition date and no part of
such accrued market discount is treated as exchange gain or loss. Where a U.S.
Holder makes an election to include accrued market discount on a current basis,
the market discount is translated into U.S. dollars on the basis of the average
exchange rate in effect during such accrual period, and the exchange gain or
loss is determined upon the receipt of any principal payment or upon the
disposition of the Foreign Currency Note in a manner similar to that described
above with respect to accrued interest.
S-30
<PAGE>
Acquisition Premium. Acquisition premium is computed in the relevant foreign
currency, and reduces OID accordingly. Exchange gain or loss is realized with
respect to such acquisition premium by treating the portion of premium
amortized with respect to any period as a return of principal. Accordingly,
exchange gain or loss will be computed by comparing the relevant exchange rate
at the date of purchase and the dates on which the acquisition premium reduces
OID.
Treatment of Foreign Exchange Gains and Losses. In general, foreign exchange
gain realized under the rules described above will be considered ordinary
income and includible in the taxable income of a U.S. Holder as interest
income. Foreign exchange loss realized under the rules described above
generally will be considered an ordinary loss deductible from taxable income
as interest expense to the extent provided for in the Code.
Dispositions of Foreign Currency. Foreign currency received by a U.S. Holder
with respect to a Foreign Currency Note will have a tax basis equal to its
U.S. dollar value at the time such foreign currency is received. Foreign
currency that is purchased generally will have a tax basis equal to its U.S.
dollar cost of acquisition. Any gain or loss recognized on a sale or
disposition of foreign currency will be ordinary income or loss.
Dual and Multi-Currency Notes. Notes may be issued in circumstances where
interest payments on the Notes are denominated in or determined by reference
to one currency and the principal portion of the Notes may be denominated in
or determined by reference to another currency ("Dual Currency Notes"). In
addition, Notes may be issued in circumstances where interest or principal are
denominated in or determined by reference to more than one currency ("Multi-
Currency Notes"). The federal income tax treatment of Dual and Multi-Currency
Notes will be described in an applicable Pricing Supplement.
UNITED STATES TAX CONSIDERATIONS FOR FOREIGN PURCHASERS
Set forth below is a summary of certain U.S. federal income tax consequences
for U.S. Alien Holders of the Notes. For purposes of this discussion, "U.S.
Alien" means any person who, for U.S. federal income tax purposes, is a
foreign corporation, a nonresident alien individual, a nonresident alien
fiduciary of a foreign estate or trust, or a foreign partnership one or more
of the members of which is, for U.S. federal income tax purposes, a foreign
corporation, a nonresident alien individual, or a nonresident alien fiduciary
of a foreign estate or trust.
Assuming certain certification requirements are satisfied (which generally
can be satisfied by providing Internal Revenue Service Form W-8, identifying
the beneficial owner of the instrument as a U.S. Alien and disclosing the U.S.
Alien's name and address), under current U.S. federal income and estate tax
laws:
(a) Payments of principal and interest (including OID) on a Note to a
Holder of a Note who is a U.S. Alien will not be subject to U.S. federal
income tax or withholding tax, provided that, in the case of interest and
OID, (i) the payments are not effectively connected with a U.S. trade or
business, (ii) the Holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Corporation entitled to vote, (iii) the Holder is not a controlled foreign
corporation related to the Corporation through stock ownership, and (iv)
the Holder is not a bank receiving interest pursuant to a loan agreement
entered into in the ordinary course of its trade or business;
(b) A U.S. Alien Holder of a Note will not be subject to U.S. federal
income tax on gain realized on the sale, exchange or redemption of a Note
if such gain is not effectively connected with a U.S. trade or business
and, in the case of a U.S. Alien Holder who is an individual, such Holder
is not present in the United States for a total of 183 days or more during
the taxable year in which such gain is realized; and
(c) A Note held by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to U.S.
federal estate tax as a result of such individual's death, unless the
individual actually or constructively owns 10% or more of the total
combined voting power of all classes of stock of the Corporation entitled
to vote or the interest received on such Note is effectively connected with
the conduct by such Holder of a U.S. trade or business.
S-31
<PAGE>
BACKUP WITHHOLDING
Under current U.S. federal income tax law, a 31% "backup" withholding tax is
applied to certain interest and principal payments made to, and to the proceeds
of sales before maturity by, certain U.S. persons if such persons fail to
supply taxpayer identification numbers and certain other information in the
required manner. Interest paid with respect to a Note and received by a U.S.
Alien will not be subject to backup withholding if the person required to
withhold has received appropriate certification statements. The applicable
certification procedures require that the Holder certify as to its status as a
U.S. Alien and provide its name and address.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Corporation through
the Agents, each of which has agreed to use its reasonable best efforts to
solicit purchases of the Notes. The Corporation will pay each Agent a
commission of from .125% to .750% of the principal amount of each Note,
depending upon its Stated Maturity, sold through such Agent. Commissions for
Notes with Stated Maturities in excess of 30 years will be negotiated at the
time of sale. Each Agent will have the right, in its discretion reasonably
exercised, to reject in whole or in part any offer to purchase Notes received
by such Agent. The Corporation also may sell to any Agent, acting as principal,
at a discount to be agreed upon at the time of sale, for resale to one or more
investors or to another broker-dealer (acting as principal for purposes of
resale) at varying prices related to prevailing market prices at the time of
resale, as determined by such Agent. In addition, the Corporation reserves the
right to sell the Notes to or through additional agents and directly to
investors on its own behalf in those jurisdictions where it is authorized to do
so. Sales of Notes to or through additional agents shall be on the same terms
and conditions (including commission rates) other than immaterial changes as
would apply to sales to or through Agents. In such circumstances, the
Corporation will have the sole right to accept offers to purchase Notes and may
reject any proposed purchase of Notes in whole or in part. In the case of sales
made directly by the Corporation, no commission will be payable.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Act"). The Corporation has agreed to
indemnify each Agent against certain liabilities, including certain liabilities
under the Act, or to contribute to payments each Agent may be required to make
in respect thereof. The Corporation has agreed to reimburse the Agents for
certain of the Agents' expenses, including, but not limited to, the fees and
expenses of counsel to the Agents.
The Corporation has been advised by each Agent that it may from time to time
purchase and sell Notes in the secondary market, but that it is not obligated
to do so. There can be no assurance that there will be a secondary market for
the Notes or liquidity in the secondary market if one develops. From time to
time, each Agent may make a market in the Notes.
Lehman Brothers Inc., Citicorp Securities, Inc., Goldman, Sachs & Co., Morgan
Stanley & Co. Incorporated, NationsBanc Capital Markets, Inc. and Salomon
Brothers Inc each have from time to time performed various investment banking
services for the Corporation for which customary compensation has been
received. In addition, affiliates of Citicorp Securities, Inc. and NationsBanc
Capital Markets, Inc. are lenders under the Corporation's principal credit
facility and provide various commercial banking services to the Corporation.
Lehman Brothers Inc. also acts as a dealer for the Corporation's commercial
paper program.
ERISA MATTERS
The Corporation, the Agents, and their respective affiliates may each be
considered a "party in interest" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and a "disqualified person"
under corresponding provisions of the Code, with respect to many employee
benefit plans. "Prohibited Transactions" within the meaning of ERISA and the
Code may result if the Notes are acquired by an employee benefit plan with
respect to which the Corporation, the Agents or any of their respective
affiliates is a party in interest, unless the Notes are acquired pursuant to an
applicable exemption. Any employee benefit plan or other entity subject to such
provisions of ERISA or the Code proposing to acquire the Notes should consult
with its legal counsel.
S-32
<PAGE>
PROSPECTUS
$500,000,000
[LOGO OF BLACK & DECKER APPEARS HERE]
DEBT SECURITIES
--------------
The Black & Decker Corporation (the "Corporation") from time to time may
offer debt securities in one or more series (the "Debt Securities"), which Debt
Securities may consist of debentures, notes or other unsecured evidences of
indebtedness, in an amount sufficient to result in an aggregate initial
offering price not to exceed $500,000,000 (or the equivalent in one or more
foreign denominated currencies or units based on or relating to currencies,
including European Currency Units). The Debt Securities may be offered as
separate series in amounts, at prices, and on terms to be determined by market
conditions at the time of sale. The Debt Securities may be sold in United
States dollars or one or more foreign denominated currencies or units based on
or relating to currencies, and the principal of (and premium, if any) and
interest, if any, on the Debt Securities may likewise be payable in United
States dollars or one or more foreign denominated currencies or units based on
or relating to currencies. The Debt Securities may be issued in registered or
bearer form. Debt Securities issued in bearer form, subject to certain
exceptions, will not be offered or sold to persons who are within the United
States or to United States persons. See "Limitations on Issuance of Bearer
Securities." All or a portion of the Debt Securities may be evidenced by a
Global Security or Global Securities.
The accompanying Prospectus Supplement and Pricing Supplement (if applicable)
set forth, with regard to the Debt Securities in respect of which this
Prospectus is being delivered, the title, aggregate principal amount, currency
denominations, maturity, rate (which may be fixed or variable) and time of
payment of any interest, any terms for redemption at the option of the
Corporation or the holder, any terms for sinking fund payments, any listing on
a securities exchange, the initial public offering price and any other terms in
connection with the offering and sale of the Debt Securities or a series of the
Debt Securities.
The Corporation may sell Debt Securities to or through underwriters or
dealers, and also may sell Debt Securities directly to other purchasers or
through agents. If underwriters are used in the sale, the Debt Securities may
be offered to the public either through underwriting syndicates represented by
one or more managing underwriters or directly by one or more of such firms. See
"Plan of Distribution." The accompanying Prospectus Supplement sets forth the
names of any underwriters, dealers or agents involved in the sale of the Debt
Securities in respect of which this Prospectus is being delivered, the
principal amounts, if any, to be purchased by underwriters or dealers, and the
compensation, if any, of those underwriters, dealers or agents. The net
proceeds to the Corporation from the sale of the Debt Securities in respect of
which this Prospectus is being delivered are set forth in the Prospectus
Supplement or in the Pricing Supplement (if applicable). See "Plan of
Distribution" for possible indemnification arrangements for underwriters,
dealers and agents.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
--------------
August 30, 1994
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR IN AN APPLICABLE PROSPECTUS SUPPLEMENT OR
PRICING SUPPLEMENT IN CONNECTION WITH ANY OFFER MADE BY THIS PROSPECTUS AND
SUCH PROSPECTUS SUPPLEMENT AND PRICING SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE CORPORATION OR ANY UNDERWRITER, DEALER, AGENT OR OTHER PERSON. NEITHER
THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT OR PRICING
SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT AND PRICING SUPPLEMENT
DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 5th Street,
N.W., Washington, D.C. 20549, and at the following regional offices of the
Commission: New York Office, Seven World Trade Center, 13th Floor, New York,
New York 10048; and Chicago Office, Northwestern Atrium Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 5th Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, such reports,
proxy statements and other information can be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, and
the Pacific Stock Exchange Incorporated, 301 Pine Street, San Francisco,
California 94104.
The Corporation has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments, documents incorporated by reference and
exhibits, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Debt Securities offered
hereby. This Prospectus and the Prospectus Supplement, which constitute a part
of the Registration Statement, do not contain all the information set forth in
the Registration Statement, certain parts of which are contained in exhibits to
the Registration Statement or otherwise have been omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement and to the documents incorporated therein
by reference. Copies of the Registration Statement are on file at the offices
of the Commission and may be obtained upon payment of the fees prescribed by
the Commission, or examined without charge at the public reference facilities
of the Commission described above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Corporation's Annual Report on Form 10-K for the year ended December 31,
1993, Quarterly Reports on Form 10-Q for the quarters ended April 3, 1994 and
July 3, 1994 and Current Report on Form 8-K dated January 20, 1994, are
incorporated by reference herein and made a part hereof. All documents filed by
the Corporation with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference and to be a part of this Prospectus from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such a
statement. A statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Prospectus.
2
<PAGE>
The Corporation will provide, without charge, to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any and all of
the documents incorporated herein by reference other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference in
such documents). Requests should be directed to The Black & Decker Corporation,
701 East Joppa Road, Towson, Maryland 21286, Attention: Corporate Affairs,
(800) 992-3042.
----------------
FOR FLORIDA RESIDENTS
Emhart (U.K.) Limited, a subsidiary of the Corporation located in the United
Kingdom, from time to time has provided spare parts to be incorporated into
machinery used in the production of glass containers manufactured by
Cubaequipos of Havana, Cuba. Transactions with Cubaequipos are subject to the
provisions of the Cuban Assets Control Regulations and have been consummated in
accordance with all applicable United States laws and regulations pursuant to
specific licenses issued from time to time thereunder by the Office of Foreign
Assets Control ("OFAC") of the United States Department of the Treasury. OFAC
issued a license to complete the delivery of spare parts pursuant to a contract
that predated the Cuban Democracy Act of 1992. The Cuban Democracy Act of 1992
prohibits OFAC from issuing additional licenses after October 23, 1992, except
in connection with contracts entered into prior to that date. At this time, it
is not clear whether OFAC will issue any additional licenses in light of the
prohibitions set forth in the Cuban Democracy Act of 1992.
The information set forth above is accurate as of the date hereof. Current
information concerning the Corporation's business dealings with the government
of Cuba or with any person or affiliate located in Cuba may be obtained from
the Division of Securities and Investor Protection of the Florida Department of
Banking and Finance, The Capital, Tallahassee, Florida 32399-0350, telephone
number (904) 488-9805.
3
<PAGE>
THE CORPORATION
The Black & Decker Corporation (the "Corporation"), incorporated in Maryland
in 1910, is a global marketer and manufacturer of products used in and around
the home and for various commercial applications. The Corporation markets its
products in over 100 countries and enjoys worldwide brand name recognition.
The Corporation operates in three business segments: Consumer and Home
Improvement Products, including consumer and professional power tools and
accessories, household products, security hardware, lawn and garden and
recreational outdoor products, plumbing products, and product service;
Commercial and Industrial Products, including fastening systems and glass
container-making equipment; and Information Systems and Services, including
government and commercial information systems development, consulting, and
other related contract services.
The Corporation's principal executive offices are located at 701 East Joppa
Road, Towson, Maryland 21286. The telephone number of the Corporation is (410)
716-3900.
USE OF PROCEEDS
Except as otherwise stated in the Prospectus Supplement in respect of which
this Prospectus is being delivered, the net proceeds from the sale of the Debt
Securities offered by the Corporation will be added to the general funds of the
Corporation and will be available for general corporate purposes, which may
include but are not limited to refinancing of indebtedness, working capital and
capital expenditures.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for the
six months ended July 3, 1994 and July 4, 1993, each of the last five fiscal
years and for the three-month Transition Period ended December 31, 1989. The
Transition Period resulted from the Corporation's change in its fiscal year
from the last Sunday in September to December 31, effective for the 1990 fiscal
year.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31 YEAR ENDED
------------- ---------------------------- ------------
JULY 3 JULY 4 TRANSITION SEPTEMBER 24
1994 1993 1993 1992 1991 1990 PERIOD 1989
------ ------ ---- ----- ---- ---- ---------- ------------
(DOLLARS IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges.......... 1.51 1.49 1.75 -- 1.32 1.29 -- 1.25
Deficiency in the
coverage of fixed
charges by earnings
before fixed charges... -- -- -- $29.0 -- -- $2.0 --
</TABLE>
The ratio of earnings to fixed charges equals earnings before fixed charges
divided by fixed charges. For purposes of calculating the ratio of earnings to
fixed charges, earnings before fixed charges consist of earnings (loss) before
income taxes, extraordinary item, and cumulative effects of changes in
accounting principles, plus fixed charges. Fixed charges consist of interest
expense (including amortization of debt expense and discount or premium
relating to any indebtedness), capitalized interest and that portion of rental
expense representative of the interest factor.
4
<PAGE>
Exclusive of the accrual of $142.4 million before income taxes in connection
with a restructuring of certain of its operations, the ratio of earnings to
fixed charges for the year ended December 31, 1992, would have been 1.43.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
and Pricing Supplement (if applicable) may relate. The particular terms of the
Debt Securities offered by any Prospectus Supplement and Pricing Supplement (if
applicable) (the "Offered Debt Securities"), including the nature of any
variation from the following general provisions applicable to the Offered Debt
Securities, will be described in the Prospectus Supplement and Pricing
Supplement (if applicable) relating to the Offered Debt Securities.
The Offered Debt Securities are to be issued in one or more series under an
indenture (as it may be supplemented by a supplemental indenture described in
any Prospectus Supplement for any series of Debt Securities, the "Indenture")
between the Corporation and Marine Midland Bank, as Trustee (the "Trustee"), a
copy of which Indenture is filed as an exhibit to the Registration Statement.
The following summaries of certain provisions of the Indenture, while
accurately reflecting the material terms of the Indenture, do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all provisions of the Indenture, including definitions of certain terms.
Provisions of or defined terms in the Indenture that are used in this
Prospectus are incorporated by reference.
GENERAL
The Indenture does not limit the aggregate principal amount of debentures,
notes or other evidences of indebtedness that may be issued by the Corporation
or any of its Subsidiaries and provides that Debt Securities may be issued
thereunder in one or more series in an aggregate principal amount which may be
authorized from time to time by the Corporation. The Debt Securities will be
unsecured obligations of the Corporation and, except as otherwise provided in
the Prospectus Supplement in respect of which this Prospectus is being
delivered, will rank equally with all other unsecured and unsubordinated debt
of the Corporation. Any other unsecured and unsubordinated indebtedness may
contain covenants, events of default and other provisions which are different
from or which are not contained in the Debt Securities. See the discussion
below under the captions "Certain Covenants--Limitations on Liens, "
"Limitations on Sale-Leaseback Transactions" and "Exempted Debt" for a
discussion of certain limitations regarding the incurrence of indebtedness that
will rank senior to the Debt Securities.
Reference is made to the Prospectus Supplement for the following terms of the
Offered Debt Securities: (1) the title of the Offered Debt Securities; (2) the
price (expressed as a percentage of the aggregate principal amount thereof) at
which the Offered Debt Securities will be issued; (3) any limit on the
aggregate principal amount of the Offered Debt Securities or the series of
which the Offered Debt Securities are a part; (4) the date or dates (or manner
of determining the same) on which the Offered Debt Securities will mature; (5)
the rate or rates (which may be fixed or variable) per annum (or the manner of
determining the same) at which the Offered Debt Securities will bear interest,
if any, and the date or dates from which such interest will accrue; (6) the
date or dates on which such interest will be payable (or the manner of
determining the same) and the record dates for Interest Payment Dates for
Registered Securities; (7) the place or places where the principal of (and
premium, if any) and interest, if any, on the Offered Debt Securities will be
payable and each office or agency where the Offered Debt Securities may be
presented for transfer or exchange; (8) if the trustee in respect of the
Offered Debt Securities is other than the Trustee (or any successor thereto),
the identity of the trustee; (9) any mandatory or optional sinking fund or
purchase fund or analogous provision and the terms and conditions thereof; (10)
any provisions relating to the date after which, the circumstances under which,
and the price or prices at which the Offered Debt Securities may, pursuant to
any optional or mandatory redemption provisions, be redeemed at the option of
the Corporation or of the holder thereof and certain other terms and provisions
of such optional or mandatory redemption; (11) if the amount payable upon
acceleration of the Offered Debt Securities is other than the full principal
amount, the portion of the principal amount payable upon acceleration; (12) any
provisions relating to the conversion of Offered Debt
5
<PAGE>
Securities into Debt Securities of another series or any other securities; (13)
any provisions restricting defeasance of the Offered Debt Securities; (14) if
the right of payment with respect to the Offered Debt Securities is
subordinated to the right of payment with respect to any other indebtedness of
the Corporation, the terms and conditions of subordination; (15) if the Offered
Debt Securities will be issued, in whole or in part, in the form of one or more
temporary or permanent Global Securities, the identity of the depositary for
such Global Securities; (16) whether the Offered Debt Securities are to be
issued as Registered Securities, Bearer Securities or both and the terms upon
which any Bearer Securities of such series may be exchanged for Registered
Securities of such series; (17) if other than United States dollars, the
currency or currencies (including ECU) in which the Offered Debt Securities may
be purchased, and the currency or currencies (including ECU) in which the
principal of and premium, if any, and interest, if any, on such Offered Debt
Securities may be payable; (18) if the currency for which the Offered Debt
Securities may be purchased or in which the principal of (and premium, if any)
or interest, if any, on the Offered Debt Securities may be payable is at the
election of the Holder thereof, the manner of such election; (19) any index
used to determine the amount of payments of principal of (and premium, if any)
or interest, if any, on the Offered Debt Securities; (20) if the amounts of
payments of principal of (and premium, if any) or interest, if any, on the
Offered Debt Securities may be, at the election of the Corporation or a Holder
thereof, determined with reference to an index based on a currency or currency
unit other than that in which the Offered Debt Securities are stated to be
payable, the manner in which such amounts are to be determined; and (21) any
other terms of the Offered Debt Securities not inconsistent with the provisions
of the Indenture.
The Debt Securities may be issuable as Registered Securities, Bearer
Securities or both. Bearer Securities, subject to certain exceptions, will not
be offered or sold to persons who are within the United States or to United
States persons. See "Limitations on Issuance of Bearer Securities." Unless
otherwise indicated in the Prospectus Supplement relating thereto, Registered
Securities denominated in U.S. dollars will be issued only in denominations of
$1,000 or any integral multiple thereof, and Bearer Securities denominated in
U.S. dollars will be issued only in denominations of $5,000. The Pricing
Supplement or Prospectus Supplement relating to a series of Debt Securities
denominated in a foreign currency or currency unit will specify the
denominations thereof. In the case of Global Securities, one or more Global
Securities will be issued in a denomination or aggregate denominations equal to
the aggregate principal amount of Outstanding Debt Securities of the series to
be represented by such Global Securities. No service charge will be made for
any transfer or exchange of Debt Securities, but the Corporation may require
payment of a sum sufficient to cover any tax or other governmental charge (such
as a transfer tax or other similar charge) payable in connection therewith. For
certain information about Debt Securities issued in global form, see
"Description of Debt Securities--Global Securities."
In connection with its sale during the "restricted period" as defined in
Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury regulations
(generally, the first 40 days after the closing date and, with respect to
unsold allotments, until sold), no Bearer Security shall be offered or sold to
persons who are within the United States or to United States persons or mailed
or otherwise delivered to any location in the United States (as defined below
under "Limitations on Issuance of Bearer Securities") and any such Bearer
Security (other than a temporary Global Security in bearer form) may be
delivered only if (i) the person entitled to receive such Bearer Security
furnishes written certification, in the form required by the Indenture, to the
effect that such Bearer Security is not being acquired by or on behalf of a
United States person (as defined below under "Limitations on Issuance of Bearer
Securities"), or (ii) if a beneficial interest in such Bearer Security is being
acquired by or on behalf of a United States person, that United States person
is a person described in Section 1.163-5(c)(2)(i)(D)(6) of the United States
Treasury regulations or is a financial institution who has purchased such
Bearer Security for resale during the restricted period and who certifies that
it has not acquired such Bearer Security for purposes of resale directly or
indirectly to a United States person or to a person within the United States or
its possessions. See "Description of Debt Securities--Global Securities" and
"Limitations on Issuance of Bearer Securities."
At the option of the Holder and subject to the terms of the Indenture, Bearer
Securities (with all unmatured coupons, except as provided below) of any series
will be exchangeable into an aggregate principal amount of Registered
Securities (if the Debt Securities of such series are issuable as Registered
Securities) or
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Bearer Securities of the same series (with the same interest rate and maturity
date) and Registered Securities of any series (other than a Global Security)
will be exchangeable into an equal aggregate principal amount of Registered
Securities of the same series (with the same interest rate and maturity date)
of different authorized denominations. If a Holder surrenders Bearer Securities
in exchange for Registered Securities between a Regular Record Date or in
certain circumstances a Special Record Date and the relevant Interest Payment
Date, the Holder will not be required to surrender the coupon related to such
interest payment date. Registered Securities may not be exchanged for Bearer
Securities.
Debt Securities may be presented for exchange and Registered Securities
(other than a Global Security) may be presented for transfer (with the form of
transfer endorsed thereon duly executed) at the office of the Trustee or at the
office of the Security Registrar, without service charge and upon payment of
any taxes and other governmental charges as described in the Indenture. Such
transfer or exchange will be effected by the Trustee or the Security Registrar,
as the case may be, being satisfied with the documents of title and identity of
the person making the request. Bearer Securities will be transferable by
delivery.
Debt Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate will be sold at a discount below
their stated principal amount. One or more series of Debt Securities may be
floating rate debt securities, exchangeable for fixed rate debt securities.
Special United States federal income tax considerations applicable to any such
discounted or floating rate Debt Securities or to certain Debt Securities
issued at par which are treated as having been issued at a discount for United
States federal income tax purposes will be described in the Prospectus
Supplement in respect of which this Prospectus is being delivered, if
applicable.
Debt Securities may be issued, from time to time, with the principal amount
(and premium, if any) payable on the applicable principal payment date, or the
amount of interest, if any, payable on the applicable interest payment date, to
be determined by reference to one or more currency exchange rates, commodity
prices, equity indices or other factors. In such cases, holders of such Debt
Securities may receive a principal amount (and premium, if any) on any
principal payment date, or a payment of interest, if any, on any interest
payment date, that is greater than or less than the amount of principal (and
premium, if any) or interest payable on such dates, depending upon the value on
such dates of the applicable currency, commodity, equity index or other factor.
Information as to the methods for determining the amount of principal (and
premium, if any) or interest, if any, payable on any date, the currencies,
commodities, equity indices or the factors to which the amount payable on such
date is linked and certain additional tax considerations applicable to the
Offered Debt Securities will be set forth in the Prospectus Supplement in
respect of which this Prospectus is being delivered, if applicable.
The Indenture does not limit the amount of additional unsecured indebtedness
that the Corporation or its Subsidiaries may incur. Unless otherwise specified
in the resolutions or any supplemental indenture establishing the terms of the
Offered Debt Securities, the terms of the Offered Debt Securities or the
covenants contained in the Indenture do not afford holders of the Offered Debt
Securities protection in the event of a highly leveraged or other similar
transaction involving the Corporation, or any other transaction resulting in a
decline in the ratings on or credit quality of the Debt Securities, that may
adversely affect Securityholders. See "Description of Debt Securities--Certain
Covenants." The operations of the Corporation are conducted through its
subsidiaries and, therefore, the Corporation is substantially dependent on the
earnings and cash flow of its subsidiaries to meet its debt obligations,
including its obligations in respect of the Debt Securities. Because the assets
of its subsidiaries constitute effectively all of the assets of the
Corporation, the claims of the holders of the Debt Securities effectively will
be subordinated to the claims of creditors of the Corporation's subsidiaries.
As of July 3, 1994, indebtedness (including capitalized lease obligations) of
Subsidiaries of the Corporation totalled approximately $759 million.
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and interest, if any, on Bearer
Securities will be payable in the currency designated in the applicable Pricing
Supplement or related Prospectus Supplement, subject to any applicable laws and
regulations, at such paying agencies outside the United States as the
Corporation may appoint from time to time. Such payment may be made, at the
option of the Holder, by a check in the
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designated currency or by transfer to an account in the designated currency
maintained by the payee with a bank located outside the United States. No
payment of interest on a Bearer Security will be made unless on the earlier of
the date of the first such payment by the Corporation or the date of delivery
by the Corporation of a definitive Bearer Security, including a permanent
Global Security, a written certificate, in the form required by the Indenture
is provided to the Corporation stating that on such date the Bearer Security is
not owned by or on behalf of a United States person or if a beneficial interest
in such Bearer Security is owned by or on behalf of a United States person,
that such United States person is a person described in Section 1.163-
5(c)(i)(2)(D)(6) of the United States Treasury regulations or is a financial
institution who has purchased such Bearer Security for resale during the
restricted period and who certifies that it has not acquired such Bearer
Security for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions. No payment
with respect to any Bearer Security will be made at the Corporate Trust Office
of the Trustee or any other paying agency maintained by the Corporation in the
United States nor will any such payment be made by transfer to an account or by
mail to an address in the United States. Notwithstanding the foregoing,
payments of principal of (and premium, if any) and interest, if any, on Bearer
Securities denominated and payable in U.S. dollars will be made at the offices
of the Paying Agent in the United States with respect thereto in the City of
New York if payment of the full amount thereof in U.S. dollars at all paying
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions.
Payment of principal of (and premium, if any) on Registered Securities will
be made in the designated currency against surrender of such Registered
Securities at the Corporate Trust Office of the Paying Agent with respect
thereto in the City of New York. Unless otherwise indicated in the related
Prospectus Supplement payment of any installment of interest on a Registered
Security will be made to the person in whose name such Debt Security is
registered at the close of business on the Regular Record Date for such
interest. Unless otherwise indicated in the related Prospectus Supplement,
payments of such interest will be made at the Corporate Trust Office of the
Trustee for such Security in the City of New York or at the Corporation's
option, by a check in the designated currency mailed to the Holder at such
Holder's registered address or by transfer to an account in the designated
currency maintained by the payee.
The Paying Agents outside the United States initially appointed by the
Corporation for a series of Debt Securities will be named in the related
Prospectus Supplement. The Corporation may terminate the appointment of any of
the Paying Agents from time to time, except that the Corporation will maintain
at least one Paying Agent in a city outside the United States so long as any
Bearer Securities are outstanding where Bearer Securities may be presented for
payment and may be surrendered for exchange, provided that so long as any
series of Debt Securities is listed on the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Corporation will maintain a Paying Agent in Luxembourg or
any other required city located outside the United States, as the case may be,
for such series of Debt Securities.
All moneys paid by the Corporation to a Paying Agent for the payment of
principal of (or premium, if any) or interest, if any, on any Debt Security
that remains unclaimed at the end of two years will be repaid to the
Corporation, unless otherwise prohibited by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, will be repaid to the
Corporation, and the Holder of such Debt Security or any coupon appertaining
thereto will thereafter look only to the Corporation for payment thereof.
GLOBAL SECURITIES
Debt Securities of any series may be issued, in whole or in part, in the form
of one or more Global Securities that will be deposited with a depositary (the
"Depositary") or with a nominee for a Depositary identified in the Prospectus
Supplement relating to such series. Global Securities may be issued in either
Registered or Bearer form and in temporary or permanent form. Unless and until
it is exchanged in whole or in part for Debt Securities in definitive
registered form, a Global Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any nominee to a successor Depositary or a nominee of any successor.
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The terms of the depositary arrangement with respect to any series of Debt
Securities to be represented by a Global Security will be described in the
Prospectus Supplement relating to such series. The Corporation anticipates that
the provisions set forth below will apply to such depositary arrangements.
Upon the issuance of a Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Debt Securities represented by such Global Security to the accounts of
persons that have accounts with such Depositary ("participants"). The accounts
to be credited shall be designated by any underwriters or agents participating
in the distribution of such Debt Securities or by the Corporation if the Debt
Securities are offered and sold directly by the Corporation. Ownership of
beneficial interest in a Global Security will be limited to participants or
persons that hold interests through participants, but the Corporation has no
obligations to any persons that hold interests through participants. Ownership
of beneficial interests in such Global Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depositary for such Global Security (with respect to interests of
participants) or by participants or persons that hold through participants
(with respect to interests of persons other than participants). The laws of
some states require that certain purchasers of securities take physical
delivery of the securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
As long as the Depositary or its nominee is the owner of such Global
Security, the Depositary or its nominee, as the case may be, will be considered
the sole owner or holder of the Debt Securities represented by the Global
Security for all purposes under the Indenture. Except as set forth below,
owners of beneficial interests in a Global Security will not be entitled to
have the Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
such Debt Securities in definitive form and will not be considered the owners
or holders thereof under the Indenture.
Subject to the restrictions discussed above under "Payment and Paying
Agents," payments of principal (and premium, if any) and interest, if any, on
Debt Securities represented by a Global Security registered in the name of or
held by a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner or the holder of such
Global Security. Neither the Corporation, the Trustee, any Paying Agent nor the
Security Registrar for such Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Corporation expects that the Depositary for any Debt Securities
represented by a Global Security, upon receipt of any payment of principal (and
premium, if any) or interest, if any, in respect of a permanent Global Security
will, except as provided below, immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security as shown on the records of the
Depositary. The Corporation also expects that payments by participants to
owners of beneficial interests in such Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with the securities held for the accounts of customers in
bearer form or registered in "street names" and will be the responsibility of
such participants. Receipt by owners of beneficial interests in a temporary
Global Security of payments in respect of such temporary Global Security will
be subject, in the case of a Global Security representing Bearer Securities, to
the furnishing of the certificate described above under "Payment and Paying
Agents."
If the Depositary for any Debt Securities represented by a Global Security is
at any time unwilling or unable to continue as depositary and a successor
depositary is not appointed by the Corporation within 90 days, the Corporation
will issue Debt Securities in definitive form in exchange for such Global
Security. In addition, the Corporation may at any time and in its sole
discretion determine not to have any of the Debt Securities of a series
represented by one or more Global Securities and, in such event, will issue in
exchange therefor Debt Securities of such series in definitive form. Further,
if the Corporation so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing
Debt
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Securities of that series may, on terms acceptable to the Corporation and the
Depositary for such Global Security, receive Debt Securities of such series in
definitive form. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery in definitive form of
Debt Securities of the series represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities of such series are issuable as
Registered Securities). Debt Securities of such series so issued in definitive
form will be issued (a) as Registered Securities in denominations, unless
otherwise specified by the Corporation, of $1,000 and integral multiples
thereof if the Debt Securities of such series are issuable as Registered
Securities and are denominated in United States dollars, (b) as Bearer
Securities in denominations, unless otherwise specified by the Corporation, of
$5,000 if the Debt Securities of such series are issuable as Bearer Securities
and are denominated in United States dollars or (c) as either Registered or
Bearer Securities, if the Debt Securities of such series are issuable in either
form. See, however, "Limitations on Issuance of Bearer Securities" below for
description of certain restrictions on the issuance of a Bearer Security in
definitive form in exchange for an interest in a temporary Global Security.
AMENDMENT, SUPPLEMENT AND WAIVER
Modifications and amendments of the Indenture, the Debt Securities and any
related coupon may be made by the Corporation and the Trustee with the consent
of the Holders of a majority in principal amount of the Outstanding Debt
Securities of each series issued under the Indenture affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (a) change the Stated Maturity of the principal of,
or any installment of principal of or interest, if any, on any Debt Security or
any related coupon, (b) reduce the principal amount of or rate of interest, if
any, on any Debt Security or any related coupon or any premium payable upon the
redemption thereof, (c) reduce the amount of principal of a Discounted Security
payable upon acceleration of the Maturity thereof, (d) change the Place of
Payment, (e) change the currency or currency unit of payment of principal of
(or premium, if any) or interest, if any, on any Debt Security or any related
coupon, (f) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security, or any related coupon on or
after the Stated Maturity thereof (or in the case of redemption on or after the
Redemption Date) or (g) reduce the percentage in principal amount of
Outstanding Securities of any series, the consent of the Holders of which is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of that series waive, insofar as the series is concerned,
compliance by the Corporation with certain restrictive provisions of the
Indenture. The Holders of not less than a majority of principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all Debt
Securities of that series and any coupons appertaining thereto waive any past
default under the Indenture with respect to that series, except a default in
the payment of the principal of (or premium, if any) and interest, if any, on
any Debt Security of that series or in respect of a provision which under the
Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding Debt Security of that series affected. The Indenture and the
Debt Securities may be amended or supplemented, without the consent of any
Holder of Debt Securities, to cure any ambiguity or inconsistency or to make
any change that does not have a materially adverse effect on the rights of any
Holder of Debt Securities.
In the event that the consent of Holders is required for any amendment,
supplement or waiver, either the Trustee, the Company or the Holders of a
majority in principal amount of the Outstanding Securities may call a meeting
of the Holders for such purpose, or, the consent of the Holders may be sought
in writing from the required number of Holders. No remedies are provided to
minority Holders that do not consent to any amendment, supplement or waiver.
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CERTAIN COVENANTS
Unless otherwise specified in the Board Resolution or Resolutions or any
supplemental indenture establishing the terms of the Debt Securities of any
series, the terms of the Debt Securities of any series or the covenants
contained in the Indenture do not afford holders of Debt Securities protection
in the event of a highly leveraged or other similar transaction involving the
Corporation, or any other transaction resulting in a decline in the ratings on
or credit quality of the Debt Securities, that may adversely affect
Securityholders. If the Offered Debt Securities contain, or a future
supplemental indenture contains, covenants to afford Securityholders protection
in the event of a highly leveraged or similar transaction, the Prospectus
Supplement or Pricing Supplement relating to the Offered Debt Securities will
provide a brief description of such protective covenants. The Indenture does
not limit the amount of additional unsecured indebtedness that the Corporation
or its Subsidiaries may incur.
The following description sets forth all material covenants imposed on the
Corporation by the Indenture. In the event the covenants are varied or
supplemented in the Board Resolution or Resolutions or any supplemental
indenture establishing the terms of the Debt Securities of any series, the
Prospectus Supplement or Pricing Supplement (if applicable) will include a
description of such provisions.
General. The Indenture requires the Corporation to covenant to the following
with respect to each series of Debt Securities: (i) to promptly pay the
principal of (and premium, if any) and interest, if any, on such series of Debt
Securities and any related coupons; (ii) to maintain an office or agency in
each place where Debt Securities and any related coupons may be presented,
surrendered for payment, transferred or exchanged and where notice upon the
Corporation may be served; (iii) if the Corporation acts as its own Paying
Agent for any series of Securities, to segregate and hold in trust for the
benefit of the persons entitled thereto a sum sufficient to pay the principal
of (and premium, if any) or interest, if any, as the same becomes due; (iv) to
deliver to the Trustee, within 120 days after the end of each fiscal year, a
written statement to the effect that the Corporation has complied with its
obligations under the Indenture; and (v) to deliver to the Trustee copies of
annual and other reports that the Corporation files with the Commission within
15 days after filing such reports with the Commission.
Limitations on Liens. Unless otherwise specified in the Prospectus
Supplement in respect of which this Prospectus is being delivered, and subject
to the following sentence as well as to the exceptions set forth below under
the caption "Exempted Debt," the Corporation will not, and will not permit any
Subsidiary (as hereinafter defined) to, directly or indirectly, as security for
any Debt (as hereinafter defined), mortgage, pledge or create or permit to
exist any lien on any shares of stock, indebtedness or other obligations of a
Subsidiary or Principal Property (as hereinafter defined), whether such shares
of stock, indebtedness or other obligations of a Subsidiary or Principal
Property are owned at the date of the Indenture or thereafter acquired, unless
the Corporation secures or causes to be secured any outstanding Securities
equally and ratably with all Debt secured by such mortgage, pledge or lien, so
long as that Debt shall be so secured. This restriction will not apply to,
among other things, certain mortgages, pledges or other liens on any shares of
stock, indebtedness or other obligations of a Subsidiary or a Principal
Property (i) existing at the time of the acquisition thereof (or within 120
days thereafter) or incurred to secure or provide for the payment or financing
of any part of the purchase price thereof; (ii) as to any particular series of
Debt Securities, existing on the date that Debt Securities of such series are
first issued; (iii) in favor of the Corporation or any Subsidiary; (iv)
securing Debt incurred to finance construction of or improvements to a
Principal Property; (v) incurred in connection with the issuance by a state or
political subdivision thereof of certain tax exempt securities; and (vi)
certain other mortgages, pledges and liens.
"Consolidated Net Tangible Assets" means total assets less (1) total current
liabilities (excluding any Debt which, at the option of the borrower, is
renewable or extendable to a term exceeding 12 months and which is included in
current liabilities and further excluding any deferred income taxes which are
included in current liabilities) and (2) goodwill, patents, trademarks and
other like intangibles, all as stated on the Corporation's most recent quarter-
end consolidated balance sheet preceding the date of determination.
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"Debt" means any debt for borrowed money, capitalized lease obligations and
purchase money obligations, or any guarantee of such debt, in any such case
which would appear on the consolidated balance sheet of the Corporation as a
liability.
"Principal Property" means land, land improvements, buildings and associated
factory and laboratory equipment owned or leased pursuant to a capital lease
and used by the Corporation or any Subsidiary primarily for manufacturing,
assembling, processing, producing, packaging or storing its products, raw
materials, inventories or other materials and supplies and located in the
United States and having an acquisition cost plus capitalized improvements in
excess of 2% of Consolidated Net Tangible Assets as of the date of
determination but shall not include any such property financed through the
issuance of tax exempt governmental obligations, or any such property that has
been determined by Board Resolution of the Corporation not to be of material
importance to the respective businesses conducted by the Corporation and its
Subsidiaries taken as a whole, effective as of the date such resolution is
adopted.
"Subsidiary" means a corporation a majority of the voting stock of which is
owned by the Corporation, the Corporation and one or more Subsidiaries, or one
or more Subsidiaries.
Limitations on Sale-Leaseback Transactions. Unless otherwise specified in
the Prospectus Supplement in respect of which this Prospectus is being
delivered, and subject to the following sentence as well as to the exceptions
set forth below under the caption "Exempted Debt," the Corporation will not,
and will not permit any Subsidiary to, sell or transfer, directly or
indirectly, except to the Corporation or a Subsidiary, a Principal Property as
an entirety, or any substantial portion thereof, with the intention of taking
back a lease of all or part of such property, except a lease for a period of
three years or less at the end of which it is intended that the use of such
property by the lessee will be discontinued. Notwithstanding the foregoing, the
Corporation or any Subsidiary may sell a Principal Property and lease it back
for a longer period (i) if the Corporation or such Subsidiary would be
entitled, pursuant to the provisions set forth above under the caption
"Limitations on Liens," to create a mortgage on the property to be leased
securing Debt in an amount equal to the Attributable Debt (as hereinafter
defined) in respect of the sale-leaseback transaction without equally and
ratably securing the outstanding Debt Securities or (ii) if the Corporation
promptly informs the Trustee of such transaction, the net proceeds of such
transaction are at least equal to the fair value (as determined by a Board
Resolution) of such property, and the Corporation causes an amount equal to the
net proceeds of the sale to be applied to the retirement of Funded Debt
(including the Debt Securities) and having an outstanding principal amount
equal to the net proceeds.
"Funded Debt" means all Debt having a maturity of more than one year from the
date of its creation or having a maturity of less than one year but by its
terms being renewable or extendible, at the option of the obligor in respect
thereof, beyond one year from its creation.
Exempted Debt. Notwithstanding the restrictions set forth above under the
captions "Limitations on Liens" and "Limitations on Sale-Leaseback
Transactions," the Corporation or any Subsidiary may create or assume liens and
renew, extend or replace such liens and may enter into sale and leaseback
transactions, in each case in addition to those permitted under the captions
"Limitations on Liens" and "Limitations on Sale-Leaseback Transactions,"
provided that at the time of the creation, assumption, renewal, extension or
replacement of such liens or the entering into of such sale-leaseback
transactions, and after giving effect thereto, Exempted Debt does not exceed
10% of Consolidated Net Tangible Assets.
"Attributable Debt" for a lease means the carrying value of the capitalized
rental obligation determined under generally accepted accounting principles
whether or not such obligation is required to be shown on the balance sheet as
a long-term liability. The carrying value may be reduced by the capitalized
value of the rental obligations, calculated on the same basis, that any
sublessee has for all or part of the same property.
"Exempted Debt" means the sum, without duplication, of the following items
outstanding as of the date Exempted Debt is being determined: (i) Debt incurred
after the date of the Indenture and secured by liens
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created or assumed or permitted to exist pursuant to the exception to the
limitations set forth above under the caption "Exempted Debt," and (ii)
Attributable Debt of the Corporation and its Subsidiaries in respect of all
sale-leaseback transactions with regard to any Principal Property entered into
pursuant to the exception to the sale-leaseback limitations set forth above
under the caption "Exempted Debt."
Consolidation, Merger, Sale of Assets. The Corporation may not consolidate
with or merge into, or transfer, directly or indirectly, all or substantially
all of its assets to, another corporation or other entity unless (1) the
resulting, surviving or transferee corporation or other entity assumes by
supplemental indenture all of the obligations of the Corporation under the Debt
Securities and the Indenture, (2) immediately after giving effect to the
transaction no Event of Default, and no event that, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing, and (3) the Corporation shall have delivered an officers'
certificate and an opinion of counsel each stating that the consolidation,
merger or transfer and the supplemental indenture comply with the terms of the
Indenture. Unless otherwise specified in the Board Resolution or Resolutions or
any supplemental indenture establishing the terms of the Debt Securities of any
series, the terms of the Debt Securities of any series or the covenants
contained in the Indenture do not include any other provisions restricting the
Corporation's ability to consolidate with or merge into, or transfer, directly
or indirectly, all or substantially all of its assets to, another corporation
or other entity.
When a successor corporation or other entity, trustee, paying agent or
registrar assumes all of the obligations of its predecessor under the Debt
Securities and the Indenture, the predecessor will be released from those
obligations.
DEFAULT AND REMEDIES
An Event of Default under the Indenture in respect of any series of Debt
Securities includes: default for 30 days in payment of interest on the Debt
Securities or a related coupon, if any, of that series; default in payment of
principal on the Debt Securities of that series; failure by the Corporation for
30 days after notice to it to comply with any of its other agreements in the
Indenture for the benefit of holders of Debt Securities of that series; failure
by the Corporation or any Subsidiary to pay when due principal of or interest
on any Debt (other than the Debt Securities) having a then-outstanding
principal amount in excess of $20,000,000 or the maturity of any such Debt
shall have been accelerated; certain events of bankruptcy or insolvency; and
any other Event of Default specifically provided for by the terms of such
series, as described in the related Prospectus Supplement. If an Event of
Default occurs and is continuing, the Trustee or the holders of at least 25% in
principal amount of the outstanding Debt Securities of the affected series may
declare the Debt Securities of that series to be due and payable immediately;
provided, however, that such acceleration may be rescinded by the holders of a
majority in principal amount of the outstanding Debt Securities of the affected
series if (i) all existing Events of Default have been cured or waived, (ii)
the recision would not conflict with any judgment or decree and (iii) all
payments due to the Trustee have been made. Such a recision will apply to all
holders of that series; provided, however, that under no circumstances may a
holder use the Indenture to prejudice the rights of another holder or to obtain
a preference or priority over another holder.
Securityholders may not enforce the Indenture or the Debt Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Debt Securities unless it receives indemnity satisfactory to it. Subject
to certain limitations, holders of a majority in principal amount of the Debt
Securities of any series may direct the Trustee in its exercise of any trust or
power under the Indenture in respect of that series. The Indenture provides
that the Trustee will, within 90 days after the occurrence of any default with
respect to the Debt Securities of any particular series, give to the holders of
such Debt Securities notice of the default if known to it, unless the default
shall have been cured or waived. The Trustee may withhold from Securityholders
notice of any continuing default (except a default in payment of principal of
(or premium, if any) or interest, if any) if it determines that withholding
such notice does not adversely affect the interests of such Holders.
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If, for the purpose of obtaining a judgment in any court with respect to any
obligation of the Corporation under the Indenture, any Debt Security, or any
related coupon, as the case may be, it becomes necessary to convert into any
other currency or currency unit any amount in the currency or currency unit due
under the Indenture, such Debt Security or coupon, as the case may be, the
conversion will be made by the Currency Determination Agent appointed pursuant
to the Indenture with respect to such Debt Security at the Market Exchange Rate
in effect on the date of entry of the judgment (the "Judgment Date"). If
pursuant to any such judgment, conversion is made on a date (the "Substitute
Date") other than the Judgment Date and a change has occurred between the
Market Exchange Rate in effect on the Judgment Date and the Market Exchange
Rate in effect on the Substitute Date, the Indenture requires the Corporation
to pay such additional amounts (if any) as may be necessary to ensure that the
amount paid is equal to the amount in such other currency or currency unit
which, when converted at the Market Exchange Rate in effect on the Judgment
Date, is the amount then due under the Indenture, such Debt Security or coupon,
as the case may be. The Corporation will not, however, be required to pay more
in the currency or currency unit due under the Indenture, such Debt Security or
coupon, as the case may be, at the Market Exchange Rate in effect on the
Judgment Date than the amount of currency or currency unit stated to be due
under the Indenture, such Debt Security or coupon, as the case may be, and the
Corporation will be entitled to withhold (or be reimbursed for, as the case may
be), any excess of the amount actually realized upon any such conversion at the
Substitute Date over the amount due and payable on the Judgment Date.
No remedy under the Indenture or any series of Debt Securities may be pursued
by a holder unless (i) the holder gives written notice of the existence of an
Event of Default, (ii) the holders of at least 25% in principal amount of the
series of Debt Securities request in writing that the Trustee pursue the
remedy, (iii) the holders offer indemnity satisfactory to the Trustee, (iv) the
Trustee does not comply with the request within 60 days of the satisfaction of
the conditions set forth in (i), (ii) and (iii) and (v) the holders of a
majority in principal amount do not give the Trustee direction inconsistent
with such request during the 60-day period. Notwithstanding the foregoing, no
holder may use the Indenture to prejudice the rights of another holder or to
obtain a preference or priority over another holder.
IMMUNITY OF STOCKHOLDERS, OFFICERS AND DIRECTORS
A director, officer, employee or stockholder, as such, of the Corporation
shall not have any liability for any obligations of the Corporation under the
Debt Securities or the Indenture or for any claim based on, in respect of, or
by reason of such obligations or their creation. By accepting a Debt Security,
each Securityholder waives and releases all such claims and liability. This
waiver and release are part of the consideration for the issue of the Debt
Securities.
DEFEASANCE
The Indenture provides, unless such provision is made inapplicable to the
Debt Securities of any series issued pursuant to the Indenture, that the
Corporation may, subject to certain conditions described below, discharge its
indebtedness and its obligations or certain of its obligations under the
Indenture in respect of Debt Securities of a series by depositing funds or
Government Obligations with the Trustee. The Indenture provides that (1) the
Corporation will be discharged from any obligation to comply with certain
restrictive covenants of the Indenture and certain other obligations under the
Indenture and any noncompliance with such obligations shall not be an Event of
Default in respect of the series of Debt Securities or (2) provided that 91
days have passed from the date of the deposit referred to below and certain
specified Events of Default have not occurred, the Corporation will be
discharged from any and all obligations in respect of the series of Debt
Securities (except for certain obligations, including obligations to register
the transfer and exchange of the Debt Securities of such series, to replace
mutilated, lost or stolen Debt Securities of such series, to maintain paying
agencies and to cause money to be held in trust), in either case upon the
deposit with the Trustee, in trust, of money and/or Government Obligations
that, through the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient to pay the principal of (and
premium, if any) and each installment of interest, if any, on the series of
Debt Securities on the date
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<PAGE>
when such payments become due in accordance with the terms of the Indenture and
the series of Debt Securities. Such a trust may (except to the extent the terms
of the Debt Securities of such series provide otherwise) only be established,
if among other things, (a) the deposit of money and/or Government Obligations
will not result in a breach or violation of, or constitute a default under, the
Indenture or any other agreement or instrument to which the Corporation is a
party or by which it is bound, (b) the Corporation shall have delivered to the
Trustee an opinion of counsel to the effect that the holders of Debt Securities
of such series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit, defeasance or discharge and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit, defeasance or
discharge had not occurred and (c) if the Debt Securities are then listed on
any securities exchange, the Corporation shall have delivered to the Trustee an
opinion of counsel to the effect that such deposit, defeasance or discharge
will not cause the Debt Securities to be delisted. In the event of any such
defeasance under clause (1) above, the obligations of the Corporation under the
Indenture and the Debt Securities of the affected series, other than with
respect to the covenants relating to limitations on liens and sale-leaseback
transactions and the delivery of compliance certificates, shall remain in full
force and effect. In the event of defeasance and discharge under clause (2)
above, the holders of Debt Securities of the affected series are entitled to
look only to the trust fund created by such deposit for payment.
Pursuant to the escrow or trust agreements that the Corporation may execute
in connection with the defeasance of all or certain of its obligations under
the Indenture as provided above, the Corporation from time to time may elect to
substitute Government Obligations for any or all of the Government Obligations
deposited with the Trustee; provided that the money and/or Government
Obligations in trust following such substitution or substitutions will be
sufficient, through the payment of interest, if any, and principal in
accordance with their terms, to pay the principal of (and premium, if any) and
each installment of interest on the series of Debt Securities on the date when
such payments become due in accordance with the terms of the Indenture and the
series of Debt Securities. The escrow or trust agreements also may enable the
Corporation (1) to direct the Trustee to invest any money received by the
Trustee on the Government Obligations comprising the trust in additional
Government Obligations, and (2) to withdraw monies or Government Obligations
from the trust from time to time; provided that the money and/or Government
Obligations in trust following such withdrawal will be sufficient, through the
payment of interest, if any, and principal in accordance with their terms, to
pay the principal of (and premium, if any) and each installment of interest on
the series of Debt Securities on the date when such payments become due in
accordance with the terms of the Indenture and the series of Debt Securities.
NOTICES
Except as may otherwise be set forth in the Prospectus Supplement relating to
a series of Debt Securities, notices to Holders of Bearer Securities will be
given by publication in a daily newspaper in the English language of general
circulation in the City of New York and in London, and so long as such Bearer
Securities are listed on the Luxembourg Stock Exchange and the Luxembourg Stock
Exchange shall so require in a daily newspaper of general circulation in
Luxembourg or, if not practical, elsewhere in Western Europe. Such publication
is expected to be made in The Wall Street Journal, the Financial Times and the
Luxemburger Wort. Notices to Holders of Registered Securities will be given by
mail to the addresses of such Holders as they appear in the Security Register.
TITLE
Title to any temporary Global Security, any permanent Global Security, and
Bearer Securities and any coupons appertaining thereto will pass by delivery.
The Corporation, the Trustee and any agent of the Corporation or the Trustee
may treat the bearer of any Bearer Security and the bearer of any coupon and
the registered owner of any Registered Security as the absolute owner thereof
(whether or not such Debt Security or coupon shall be overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all other purposes.
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GOVERNING LAW
The Debt Securities and the Indenture will be governed by the laws of the
State of New York.
TRUSTEE
An affiliate of Marine Midland Bank participates in the Corporation's
revolving credit facility and from time to time performs other services for the
Corporation in the normal course of business.
ADDITIONAL INFORMATION
The Indenture is an exhibit to the Registration Statement of which this
Prospectus is a part. Any person who receives this Prospectus may obtain a copy
of the Indenture without charge by writing to the Corporation at the address
listed under the caption "Incorporation of Certain Information by Reference."
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered or sold during the restricted period provided for
in Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury regulations (as
explained below) or delivered in connection with their sale during the
restricted period to a person who is within the United States or its
possessions or to United States persons (each as defined below) except to the
extent permitted under Section 1.163-5(c)(2)(i)(D) of the United States
Treasury regulations (the "D Rules"). The "restricted period" begins on the
earlier of the closing date or the first date on which Bearer Securities are
offered to persons other than an agent or underwriter and will end on the
expiration of the 40-day period following such date. Notwithstanding the
preceding sentence, any offer to sell or sale of the Debt Securities by the
Company or an agent or underwriter shall be deemed to be during the restricted
period if the Company or the agent or underwriter holds the Debt Security as
part of an unsold allotment or subscription. Any underwriters, agents and
dealers participating in the offering of Debt Securities must agree that they
will not offer for sale or resale, or sell, Bearer Securities in the United
States or its possessions or to United States persons, except to the extent
permitted under the D Rules, nor deliver Bearer Securities within the United
States.
Bearer Securities and any coupons appertaining thereto will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code." Under Sections 165(j) and 1287(a) of the Code and the
regulations thereunder, Holders of Bearer Securities that are United States
persons, with certain exceptions, will not be allowed to deduct any loss
sustained on the sale, exchange, redemption or other disposition of Bearer
Securities and will be taxed at ordinary income rates on any gain (which might
otherwise be characterized as capital gain) recognized on such sale, exchange
or disposition. In addition, interest on Bearer Securities will be payable only
outside the United States.
As used herein, "United States" means the United States of America (including
the States and the District of Columbia), and its "possessions," including
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands, and "United States person" means an individual who is
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
political subdivision thereof, or any estate or trust the income of which is
subject to United States Federal income taxation regardless of its source.
PLAN OF DISTRIBUTION
The Corporation may sell Debt Securities to or through underwriters or to
dealers, acting as principals for their own account and also may sell Debt
Securities directly to other purchasers or through agents. The Prospectus
Supplement in respect of which this Prospectus is being delivered sets forth
the terms of the
16
<PAGE>
offering of the Offered Debt Securities and includes, without limitation, (i)
the name or names of any underwriters, dealers or agents with which the
Corporation has entered into arrangements with respect to the sale of the
Offered Debt Securities, (ii) the initial public offering or purchase price of
the Offered Debt Securities, (iii) the principal amounts of the Offered Debt
Securities to be purchased by any such underwriters, dealers or agents, (iv)
any underwriting discounts, commissions and other items constituting
underwriters' compensation and any other discounts, concessions or commissions
allowed or reallowed or paid by any underwriters or other dealers, (v) any
commissions paid to any agents, (vi) the net proceeds to the Corporation and
(vii) the securities exchanges, if any, on which the Offered Debt Securities
will be listed.
If underwriters are used in the offering of Debt Securities, the Debt
Securities being sold will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of such resale. Unless otherwise set
forth in an applicable Prospectus Supplement, the obligations of the
underwriters to purchase such Debt Securities will be subject to certain
conditions precedent and each of the underwriters with respect to such Debt
Securities will be obligated to purchase all of the Debt Securities allocated
to it if any such Debt Securities are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
If dealers are utilized in the sale of the Debt Securities in respect of
which this Prospectus is being delivered, the Corporation will sell such Debt
Securities to such dealers as principals. The dealers may then resell such Debt
Securities to the public at varying prices to be determined by such dealers at
the time of resale.
Offers to purchase Debt Securities may be solicited by agents designated by
the Corporation from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the
offer or sale of the Debt Securities in respect of which this Prospectus is
being delivered will be named, and any commissions payable by the Corporation
to such agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement in respect of which this Prospectus is
being delivered, any such agent will be acting on a reasonable or best efforts
basis for the period of its appointment.
Offers to purchase Debt Securities may be solicited, and sales thereof may be
made directly by the Corporation to institutional investors or otherwise, who
may be deemed to be underwriters within the meaning of the Securities Act with
respect to any resales thereof.
Underwriters, dealers and agents participating in the distribution of Debt
Securities may be deemed to be "underwriters," as that term is defined under
the Securities Act, and any discounts and commissions received by them and any
profit realized by them on the resale thereof may be deemed to be underwriting
discounts and commissions, under the Securities Act.
Under agreements that may be entered into by the Corporation, underwriters,
dealers and agents who participate in the distribution of Debt Securities may
be entitled to indemnification by the Corporation against certain liabilities,
including certain liabilities under the Securities Act.
If indicated in the Prospectus Supplement, the Corporation may authorize
underwriters or other persons acting as the Corporation's agents to solicit
offers by certain institutions to purchase Offered Debt Securities from the
Corporation pursuant to contracts providing for payment and delivery on a
future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all cases
such institutions must be approved by the Corporation. The obligations of any
purchaser under any such contract will be subject to the condition that the
purchase of the Offered Debt Securities shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject. The underwriters and any such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
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<PAGE>
VALIDITY
The validity of the Debt Securities offered hereby will be passed on for the
Corporation by Miles & Stockbridge, a Professional Corporation, Baltimore,
Maryland. If this Prospectus is being delivered in an underwritten offering of
Debt Securities, certain matters will be passed on for any underwriters by
Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York. Simpson Thacher & Bartlett may rely, as to
matters of Maryland law, upon the opinion of Miles & Stockbridge, a
Professional Corporation.
EXPERTS
The consolidated financial statements of the Corporation appearing in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1993,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCOR-
PORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE CORPORATION, THE AGENTS OR ANY OTHER PERSON. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY
NOT LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION
SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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PROSPECTUS SUPPLEMENT
<S> <C>
Description of Notes....................................................... S-3
Important Currency Information............................................. S-24
Currency Risks............................................................. S-24
Certain United States Tax Consequences..................................... S-26
Plan of Distribution....................................................... S-32
ERISA Matters.............................................................. S-32
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Information by Reference........................... 2
The Corporation............................................................. 4
Use of Proceeds............................................................. 4
Ratio of Earnings to Fixed Charges.......................................... 4
Description of Debt Securities.............................................. 5
Limitations on Issuance of Bearer Securities................................ 16
Plan of Distribution........................................................ 16
Validity.................................................................... 18
Experts..................................................................... 18
</TABLE>
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$500,000,000
[LOGO OF BLACK & DECKER APPEARS HERE]
MEDIUM-TERM NOTES, SERIES A
--------------------------
PROSPECTUS SUPPLEMENT
September 9, 1994
--------------------------
LEHMAN BROTHERS
CITICORP SECURITIES, INC.
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC CAPITAL
MARKETS, INC.
SALOMON BROTHERS INC
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