Filed with the Securities and
Exchange Commission pursuant
to Rule 424(b)(5) relating to
Registration Statement
No. 33-50513 and 33-56553
PROSPECTUS SUPPLEMENT
(To Prospectus Dated December 13, 1994)
$1,350,000,000
COMMERCIAL CREDIT COMPANY
Medium-Term Notes, Fifth Series
Due Nine Months or More from Date of Issue
_______________________
Commercial Credit Company (the "Company") may offer from time to time its
Medium-Term Notes, Fifth Series (the "Notes"), in an aggregate principal face
amount of up to $1,350,000,000 (or (i) the equivalent thereof in other curren-
cies or currency units or (ii) such greater amount if Notes are issued at an
original issue discount, as shall result in aggregate proceeds of
$1,350,000,000), subject to reduction under certain circumstances as a result of
the sale of other Securities (as defined in the accompanying Prospectus). The
Notes will be offered at varying maturities of nine months or more from the date
of issue as selected by the purchaser and agreed to by the Company, and may be
subject to redemption at the option of the Company or repayment at the option of
the holder thereof prior to the Stated Maturity thereof (as defined below). The
Notes offered by this Prospectus Supplement will constitute unsecured
unsubordinated indebtedness of the Company and will rank pari passu with all
other unsecured unsubordinated indebtedness of the Company. Each Note will be
denominated in U.S. dollars or in other currencies or currency units (the
"Specified Currency"), including European Currency Units ("ECU"), as set forth
in a pricing supplement (the "Pricing Supplement") to this Prospectus
Supplement. See "Important Currency Exchange Information" and "Foreign Currency
Risks."
Each Note will bear interest (i) at a fixed rate (a "Fixed Rate Note"),
which may be zero in the case of certain Notes issued at a price representing a
substantial discount from the principal amount payable at Stated Maturity, (ii)
at a floating rate (a "Floating Rate Note") or (iii) at a combination of fixed
and floating rates. A Fixed Rate Note may pay both interest and principal
amortized over the life of the Note (an "Amortizing Note"). See "Description of
Notes--Fixed Rate Notes," "Description of Notes--Floating Rate Notes" and
"Description of Notes--Floating Rate/Fixed Rate Notes." The principal amount
payable at Maturity (as defined below) and/or the interest (or premium, if any)
on each Note may be determined by reference to the relationship between two or
more currencies, to the price of one or more specified securities or commodities
or to one or more securities or commodities exchange indices or other indices or
by other similar methods (an "Indexed Note"), as described in the applicable
Pricing Supplement. An Indexed Note whose principal amount payable at Maturity
and/or the interest rate of which is determined by reference to the relationship
between two currencies, two composite currencies or a currency and a composite
currency is referred to herein as a "Currency Indexed Note." See "Description
of Notes--Currency Indexed Notes" and "Description of Notes--Other Indexed Notes
and Certain Terms Applicable to All Indexed Notes."
Unless otherwise specified in the applicable Pricing Supplement, the
dates, if any, on which interest will be payable for each Fixed Rate Note (other
than an Amortizing Note) will be March 15 and September 15 of each year and at
Maturity. The dates on which interest will be payable for each Floating Rate
Note will be established on the date of issue of such Note and will be set forth
in the applicable Pricing Supplement. Amortizing Notes will pay principal and
interest semi-annually each March 15 and September 15, or quarterly each March
15, June 15, September 15 and December 15, and at Maturity, or otherwise, as
specified in the applicable Pricing Supplement. See "Description of Notes--
Payment of Principal and Interest." Interest rates and interest rate formulae
are subject to change by the Company, but no change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
Each Note will be issued in fully registered form and will be represented
by a global security (a "Global Security") registered in the name of a nominee
of The Depository Trust Company ("DTC") or other depositary (DTC or such other
depositary as is specified in the applicable Pricing Supplement is herein
referred to as the
<PAGE>
"Depositary"). An interest in a Global Security will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary or
its participants. Except as described under "Description of Notes--Book-Entry
Notes", owners of Notes will not be entitled to receive physical delivery of
Notes in definitive form, and the Depositary, and not the owners of beneficial
interests in the Notes, will be considered the holder thereof. Unless otherwise
specified in the applicable Pricing Supplement, Notes will be issued only in
registered form in minimum denominations of $1,000 and any amount in excess
thereof that is an integral multiple of $1,000 or, in the case of Notes denomi-
nated in a Specified Currency other than U.S. dollars, the authorized
denominations set forth in the applicable Pricing Supplement. See "Description
of Notes--General."
The Specified Currency, any applicable interest rate or formula, the
Issue Price (as defined below), the Stated Maturity, any Interest Payment Dates
(as defined below), any principal payment dates, any redemption or repayment
provisions, the extent to which such Note is a Fixed Rate Note, a Floating Rate
Note, an Amortizing Note or an Indexed Note and any other terms applicable to
each Note and established at the time of offering will be set forth in the
applicable Pricing Supplement.
________________________
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, ANY PRICING SUPPLEMENT
HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE><CAPTION>
Price to Agents' Proceeds to
Public(1)(2) Commissions Company(1)(4)
or Discounts
(2) (3)
<S> <C> <C> <C>
Per Note 100% .125% - .750% 99.875% - 99.250%
Total $1,350,000,000 $1,687,500 - $10,125,000 $1,348,312,500 - $1,339,875,000
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes
will be issued at 100% of the principal amount thereof.
(2) Or the equivalent thereof in the Specified Currency.
(3) The Company will pay commissions to the Agents in the form of discounts,
ranging from 0.125% to 0.750% (or, with respect to Notes for which the
Stated Maturity is in excess of 30 years, such commission as shall be
agreed upon by the Company and the related Agent at the time of sale).
The Company may also sell Notes to an Agent for resale to investors or
other purchasers at varying prices related to prevailing market prices at
the time of resale to be determined by such Agent or, if so agreed, at a
fixed public offering price. Unless otherwise specified in the
applicable Pricing Supplement, any Note sold to an Agent as principal
will be purchased by such Agent at a price equal to 100% of the principal
amount thereof less a percentage equal to the commission applicable to an
agency sale of a Note of identical maturity, and may be resold by such
Agent. The Company may also sell Notes directly to investors on its own
behalf, in which case no commission will be payable. The Company has
agreed to indemnify the Agents against certain civil liabilities, in-
cluding liabilities under the Securities Act of 1933, as amended.
(4) Before deducting expenses payable by the Company estimated at $175,000,
including fees and disbursements of counsel for the Agents.
________________________
The Notes are being offered on a continuing basis by the Company through
the Agents, all of which have agreed to use their reasonable best efforts to
solicit offers to purchase the Notes. The Company has reserved the right to
sell Notes directly on its own behalf or to the Agents acting as principals for
resale to investors and other purchasers or through other agents (provided that
any other agent will execute an agreement with the Company which contains
substantially the same terms and conditions as its agreement with the Agents).
Unless otherwise
S-2
<PAGE>
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 offered by
this Prospectus Supplement will be sold or that there will be a secondary market
for the Notes. The Company reserves the right to withdraw, cancel or modify the
offer made hereby without notice. The Company or any applicable Agent may
reject any order in whole or in part. See "Plan of Distribution."
This Prospectus Supplement and the accompanying Prospectus, together with
an appropriate Pricing Supplement, may be used by Smith Barney Inc., an Agent
and an affiliate of the Company ("SBI"), in connection with offers and sales
of the Notes in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. SBI may act as principal or
agent in such transactions.
_______________________________________________________________________________
Smith Barney Inc.
Lehman Brothers
Merrill Lynch & Co.
J.P. Morgan Securities Inc.
Morgan Stanley & Co.
Incorporated
_____________________________________________________________________________
The date of this Prospectus Supplement is January 18, 1995.
S-3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31,
--------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Ratio of earnings to fixed charges . 1.83 2.09 2.12(1) 1.67 1.54
The ratio of earnings to fixed charges has been computed
by dividing earnings before income taxes and fixed charges by the
fixed charges. For purposes of this ratio, fixed charges consist
of interest expense and that portion of rentals deemed
representative of the appropriate interest factor.
-----------------------
(1) Included in earnings from continuing operations before
income taxes for 1992 (used in this computation) are net gains of
$47.0 million resulting from the sale of stock of Inter-Regional
Financial Group, Inc., the sale of the Company's investment in
the common stock of Musicland Stores Corporation and the sale of
50% of Commercial Insurance Resources, Inc. Without giving
effect to these net gains, the ratio of earnings to fixed charges
for 1992 would have been 1.99.
DESCRIPTION OF NOTES
The following description of the terms of the Notes
offered hereby (referred to in the accompanying Prospectus as the
"Offered Securities") supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and
provisions of Securities set forth under the heading "Description
of Securities" in the accompanying Prospectus, to which descrip-
tion reference is hereby made. The following summary of the Notes
is qualified in its entirety by reference thereto and to the
Indenture referred to therein. Capitalized terms not otherwise
defined in this Prospectus Supplement or the accompanying Pro-
spectus shall have the meanings given to them in the Indenture.
The provisions of the Notes summarized herein apply to the Notes
unless otherwise specified in the applicable Pricing Supplement
and the applicable Note.
General
The Notes offered by this Prospectus Supplement are
limited to $1,350,000,000 aggregate principal face amount (or (i)
the equivalent thereof in one or more currencies or (ii) such
greater amount if Notes are issued at an original issue discount,
as shall result in aggregate proceeds of $1,350,000,000), subject
to reduction under certain circumstances as a result of the sale
of other Securities covered by the Registration Statement of
which the Prospectus accompanying this Prospectus Supplement is a
part. The Notes will be issued under an Indenture, dated as of
December 1, 1986, between the Company and Citibank,
N.A.("Citibank"), as Trustee (the "Trustee"), as supplemented by
the First Supplemental Indenture, dated as of June 13, 1990,
between the Company and the Trustee (the indenture as so
supplemented is hereinafter referred to as the "Indenture"). The
Indenture is further described under the heading "Description of
Securities" in the accompanying Prospectus. The provisions of
the Indenture and the designation of the Notes provide the
Company with the ability to reopen the series that is the Notes
and to issue additional securities of that series. The U.S.
dollar equivalent of Notes denominated in a currency or currency
unit other than U.S. dollars will be determined upon issuance by
the Exchange Rate Agent (as defined below), on the basis of the
Market Exchange Rate (as defined below) for such
S-4
<PAGE>
other currency on the applicable trade dates. The Notes will be
subject to defeasance and covenant defeasance as described in the
accompanying Prospectus under the heading "Description of Securi-
ties--Defeasance." The statements herein concerning the Notes
and the Indenture do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, the
Indenture, including the definitions therein of certain terms.
Whenever particular defined terms not otherwise defined herein
are referred to, such defined terms are incorporated herein by
reference.
The Notes constitute one series of Securities (as defined
in the Indenture), unlimited as to principal amount, established
by the Company pursuant to the Indenture.
Notes will be offered on a continuing basis and will
mature from nine months or more from the date of issue, as
selected by the purchaser and agreed to by the Company, and may
be subject to redemption at the option of the Company or repay-
ment at the option of the holder prior to Stated Maturity as set
forth below under "Redemption and Repayment." Each Note will
bear interest from the Original Issue Date (as defined below) or
from such other date as may be specified in the applicable
Pricing Supplement at (i) a fixed rate, which may be zero in the
case of a Note issued at an Issue Price representing a substan-
tial discount from the principal amount payable at Stated
Maturity (a "Zero-Coupon Note"), (ii) a floating rate or rates
determined by reference to a Base Rate, which may be adjusted by
a Spread and/or a Spread Multiplier (each as defined below), or
(iii) a combination of fixed and floating rates.
Each Note will be issued in fully registered form without
coupons and will be represented by a Global Security registered
in the name of a nominee of the Depositary. All Notes issued on
the same day and having the same terms, including, but not
limited to, the same designation, Specified Currency, Interest
Payment Dates, rate of interest, Stated Maturity and redemption
or repayment provisions may be represented by a single Global
Security. An interest in a Global Security will be shown on, and
transfers thereof will be effected only through, records main-
tained by the Depositary or its participants. Payments of
principal and interest on Notes represented by a Global Security
will be made by the Company or its paying agent to the Depositary
or its nominee. See "Description of Notes--Book-Entry Notes."
Unless otherwise specified in the applicable Pricing
Supplement, the authorized denominations of Notes (other than
Global Securities) denominated in U.S. dollars will be $1,000 and
any amount in excess thereof that is an integral multiple of
$1,000. The authorized denominations of Notes denominated in a
Specified Currency other than U.S. dollars will be as set forth
in the applicable Pricing Supplement.
The Notes will constitute unsecured unsubordinated
indebtedness of the Company and will rank pari passu with all
other unsecured unsubordinated indebtedness of the Company. The
Pricing Supplement will indicate whether the Notes will be re-
deemable at the option of the Company, or repayable at the option
of the holder, or both, on or after a specified date prior to
their Stated Maturity. Unless otherwise specified in the appli-
cable Pricing Supplement, the Notes, other than Amortizing Notes,
will not be subject to any sinking fund. See "Description of
Notes--Redemption and Repayment."
The amount of any Discount Note (as defined below) payable
in the event of redemption by the Company, repayment at the
option of the holder or acceleration of its Stated Maturity, in
lieu of the stated principal amount due at the Stated Maturity,
shall be the Amortized Face Amount (as defined below) of such
Discount Note as of the date of such redemption, repayment or
acceleration. For the purpose of determining whether holders of
the requisite amount of Securities outstanding under the
Indenture have made a demand or given a notice or waiver or taken
any other action, the outstanding principal amount
S-5
<PAGE>
will be deemed to be the Amortized Face Amount. A "Discount
Note" means a Note, including any Zero-Coupon Note, issued with
more than a de minimis amount of original issue discount (as
determined under United States federal income tax rules appli-
cable to original issue discount instruments). The "Amortized
Face Amount" of a Discount Note shall be the amount equal to (i)
the Issue Price of such Discount Note set forth in the applicable
Pricing Supplement plus (ii) the portion of the difference be-
tween the Issue Price and the principal amount of such Discount
Note that has accrued at the yield to maturity set forth in the
Pricing Supplement (computed in accordance with generally accept-
ed United States bond yield computation principles) at the date
as of which the Amortized Face Amount is calculated, but in no
event shall the Amortized Face Amount of such Discount Note
exceed its stated principal amount. See "Certain Federal Income
Tax Considerations--U.S. Holders--Discount Notes."
The Pricing Supplement relating to each Note will describe
the following terms, as applicable: (1) the Specified Currency
with respect to such Note (and, if such Specified Currency is
other than U.S. dollars, certain other terms relating to such
Note); (2) the extent to which such Note is a Fixed Rate Note, an
Amortizing Note, a Floating Rate Note, a Discount Note or a Zero-
Coupon Note; (3) whether such Note is a Currency Indexed Note or
other Indexed Note, and if so, the specific terms thereof; (4)
the price (expressed as a percentage of the aggregate principal
amount thereof) at which such Note will be issued (the "Issue
Price"); (5) the date on which such Note will be issued (the
"Original Issue Date") and the date from which interest shall
accrue (if different from the Original Issue Date); (6) the date
on which such Note will mature (the "Stated Maturity") and wheth-
er the Stated Maturity may be extended by the Company and if so,
the Extension Periods and the Final Maturity Date (each as
defined below); (7) if such Note is a Fixed Rate Note, the rate
per annum at which such Note will bear interest, if any (the "In-
terest Rate"), the Interest Payment Date or Dates and, if so
specified in the applicable Pricing Supplement, that such rate
may be changed by the Company prior to the Stated Maturity and,
if so, the basis or formula for such change, if any; (8) if such
Note is a Floating Rate Note, the Base Rate, the Initial Interest
Rate or formula for determining such, the Interest Reset Period,
the Interest Reset Date or Dates, the Interest Payment Date or
Dates, the Index Maturity, the Maximum Interest Rate and/or the
Minimum Interest Rate, if any, and the Spread and/or Spread
Multiplier, if any (all as defined below), and any other terms
relating to the particular method of calculating the Interest
Rate for such Note and, if so specified in the applicable Pricing
Supplement, that any such Spread and/or Spread Multiplier may be
changed by the Company prior to the Stated Maturity and, if so,
the basis or formula for such change, if any; (9) if such Note is
an Amortizing Note, whether payments of principal thereof and
interest thereon will be made quarterly or semi-annually, and the
repayment information in respect thereof; (10) whether the
interest rate on such Note may be reset upon the occurrence of
certain events or at the option of the Company; (11) whether such
Note may be redeemed at the option of the Company, or repaid at
the option of the holder, prior to the Stated Maturity, and if
so, the provisions relating to such redemption or repayment; (12)
certain special federal income tax consequences of the purchase,
ownership and disposition of certain Notes, if any; (13) whether
such Note is a Renewable Note (as defined below), and, if so, the
specific terms thereof; (14) the use of proceeds, if such use
materially differs from that disclosed in the accompanying
Prospectus; and (15) any other terms of such Note not incon-
sistent with the provisions of the Indenture.
Payment Currency
Unless otherwise specified in the applicable Pricing
Supplement, and except as otherwise described herein with respect
to Currency Indexed Notes, principal (and premium, if any) and
interest, if any, on each Note will be paid by the Company in
U.S. dollars in the manner described in the following paragraphs,
even if such Note is denominated in a Specified Currency other
than U.S. dollars;
S-6
<PAGE>
provided that, if the applicable Pricing Supplement and the Note
so indicate, the holder of a Note denominated in a Specified
Currency other than U.S. dollars may elect to receive all such
payments in respect of such Note in such Specified Currency,
subject to certain conditions described in the following para-
graphs, by delivery of a written election to the Company's paying
agent (the "Paying Agent") in The City of New York. Except as
otherwise provided herein with respect to Global Securities, any
such election must be received by the Paying Agent on or prior to
the applicable Regular Record Date (as defined below) or at least
15 calendar days prior to Maturity, as the case may be, and no
such change of election may be made with respect to payments on
any Note with respect to which (i) an Event of Default has
occurred, (ii) the Company has exercised any of its defeasance or
covenant defeasance options, or (iii) the Company has given
notice of redemption. Such election shall remain in effect
unless and until changed by written notice to the Paying Agent,
received on or prior to the applicable Regular Record Date or at
least 15 calendar days prior to Maturity, as the case may be.
Until the Notes are paid or payment thereof is provided for, the
Company will, at all times, maintain a Paying Agent in The City
of New York capable of performing the duties described herein to
be performed by the Paying Agent and, to the extent permitted by
the Indenture, the Company may be the Paying Agent. The Company
has initially appointed Citibank, New York, New York as Paying
Agent under the Indenture. The Company will notify the holders
of the Notes in accordance with the Indenture of any change in
the Paying Agent or its address. Except as may otherwise be pro-
vided in a Pricing Supplement with respect to Currency Indexed
Notes, all currency exchange costs related to a Note, if any,
will be borne by the holder of such Note by deductions from
payments otherwise due such holder.
Unless otherwise specified in the applicable Pricing
Supplement, in the case of a Note denominated in a Specified
Currency other than U.S. dollars, the amount of U.S. dollar
payments in respect of such Note will be determined by an agent
for the Company specified in the applicable Pricing Supplement
(the "Exchange Rate Agent"), based on the indicative quotation in
The City of New York selected by such Exchange Rate Agent at
approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date, that yields
the largest number of U.S. dollars upon conversion of the
Specified Currency. Except with respect to LIBOR Notes and LIBID
Notes (each as defined below), "Business Day" means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in New York City are authorized or
obligated by law or executive order to close and, with respect to
Notes denominated in or indexed to a Specified Currency other
than U.S. dollars or ECU, each Monday, Tuesday, Wednesday,
Thursday or Friday which is not a day on which banking
institutions in the principal financial center of the country
issuing the Specified Currency are authorized or required by law
or regulation to close and a day on which banking institutions in
such principal financial center are carrying out transactions in
such Specified Currency and, with respect to Notes denominated in
or indexed to ECU, each day which is not a day that banking
institutions in Luxembourg are authorized or required by law or
regulation to close and which is an ECU clearing day, as deter-
mined by the ECU Banking Association in Paris. If the Notes are
LIBOR Notes or LIBID Notes, "Business Day" shall mean each day as
determined pursuant to the preceding sentence which is also a
"London Business Day." "London Business Day" means any day on
which dealings in deposits in the Designated Deposit Currency (as
defined below) are transacted in the London interbank market.
Unless otherwise specified in the applicable Pricing Supplement,
such selection shall be made from among the quotations of at
least three banks agreed to by the Company and the Exchange Rate
Agent appearing on the bank composite or multi-contributor pages
of the Reuters Monitor Foreign Exchange Service, or if not
available, the Telerate Monitor Foreign Exchange Service (the
"Exchange Rate"). If such quotations are unavailable from either
such foreign exchange service, such selection shall be made as
specified in the applicable Pricing Supplement. If a payment is
to be made in a Specified Currency and such Specified Currency is
unavailable due to the imposition of exchange controls or to
other circumstances
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<PAGE>
beyond the Company's control, or is no longer used by the
government of the country issuing such Specified Currency or for
the settlement of transactions by public institutions of or
within the international banking community, the Company will be
entitled to make payments in U.S. dollars on the basis of the
noon buying rate in The City of New York for cable transfers in
the Specified Currency as certified for customs purposes by the
Federal Reserve Bank of New York (the "Market Exchange Rate") for
such Specified Currency on the second Business Day prior to such
payment date, or on such other basis as shall be specified in the
applicable Pricing Supplement. In the event such Market Exchange
Rate is not then available, the Company will be entitled to make
payments in U.S. dollars (i) if such Specified Currency is not a
composite currency, on the basis of the most recently available
Market Exchange Rate for such Specified Currency or (ii) if such
Specified Currency is a composite currency, including, without
limitation, ECU, in an amount determined by the Exchange Rate
Agent to be the sum of the results obtained by multiplying the
number of units of each component currency of such composite
currency, as of the most recent date on which such composite
currency was used, by the Market Exchange Rate for such component
currency on the second Business Day prior to such payment date
(or if such Market Exchange Rate is not then available, by the
most recently available Market Exchange Rate for such component
currency, or as otherwise specified in the applicable Pricing
Supplement). Unless otherwise provided in the applicable Pricing
Supplement, Citibank will be the Exchange Rate Agent with respect
to the Notes.
Unless otherwise specified in the applicable Pricing
Supplement, if a holder of a Note denominated in a Specified
Currency other than U.S. dollars or ECU shall have elected to
receive payments of principal (and premium, if any) and interest,
if any, on such Note in such Specified Currency as described
above, or if the Denominated Currency (as defined herein) of a
Currency Indexed Note is a foreign currency (other than ECU), and
such Specified Currency or Denominated Currency is unavailable as
of the due date for any payment thereon because of the imposition
of exchange controls or other circumstances beyond the Company's
control, or is no longer used by the government of the country
issuing such Specified Currency or Denominated Currency or for
the settlement of transactions by public institutions of or
within the international banking community, then all payments due
on such due date with respect to such Note shall be made in U.S.
dollars. The amount so payable on any date in such Specified
Currency or Denominated Currency shall be converted into U.S.
dollars at a rate determined by the Exchange Rate Agent on the
basis of the most recently available Market Exchange Rate, or as
otherwise specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, if a holder of a Note denominated in ECU shall have
elected to receive payments of principal (and premium, if any)
and interest, if any, on such Note in ECU as described above, or
if the Denominated Currency of a Currency Indexed Note is ECU,
and ECU are unavailable as of the due date for any payment
thereon because of the imposition of exchange controls or other
circumstances beyond the Company's control, or are no longer used
in the European Monetary System, all payments due on that due
date with respect to such Note shall be made in U.S. dollars. The
amount so payable on any date in ECU shall be converted into U.S.
dollars at a rate determined by the Exchange Rate Agent as of the
second Business Day prior to the date on which such payment is
due on the following basis: The component currencies of ECU for
this purpose shall be the currency amounts that were components
of the ECU as of the last date on which ECU were used in the
European Monetary System. The equivalent of ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of
such component currencies. The U.S. dollar equivalent of each of
such component currencies shall be determined by the Exchange
Rate Agent on the basis of the most recently available Market
Exchange Rate, or as otherwise specified in the applicable
Pricing Supplement.
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If the official unit of any component currency of a
composite 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 that currency as a compo-
nent shall be replaced by 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.
All determinations referred to above made by the Exchange
Rate Agent shall be at its sole discretion and, in the absence of
manifest error, shall be conclusive for all purposes and binding
on holders of the Notes, and the Exchange Rate Agent shall have
no liability therefor.
Each Note will provide that, in the event of an official
redenomination of the Specified Currency thereof (including,
without limitation, an official redenomination of any such
Specified Currency that is a composite currency), the obligations
of the Company with respect to payments on Notes denominated in
such Specified Currency shall, in all cases, be deemed immediate-
ly following such redenomination to provide for the payment of
that amount of redenominated currency representing the amount of
such obligations immediately before such redenomination. Except
to the extent Currency Indexed Notes provide for the adjustment
of the principal amount payable at Maturity thereof pursuant to
application of the formulae described under "Description of
Notes--Currency Indexed Notes--Payment of Principal and Inter-
est," or any other formulae provided for in the applicable
Pricing Supplement, Notes will not provide for any adjustment to
any amount payable under such Notes as a result of (i) any change
in the value of the Specified Currency thereof relative to any
other currency due solely to fluctuations in exchange rates or
(ii) any redenomination of any component currency of any
composite currency (unless such composite currency is itself
officially redenominated).
Currently, there are limited facilities in the United
States for conversion of U.S. dollars into foreign currencies,
and vice versa. In addition, banks do not generally offer non-
U.S. dollar-denominated checking or savings account facilities in
the United States. Accordingly, payments on Notes made in a
currency other than U.S. dollars will be made from an account at
a bank located outside the United States unless otherwise speci-
fied in the applicable Pricing Supplement.
Payment of Principal and Interest
Principal and interest on the Notes will be paid in accor-
dance with the Depositary's and the participant's procedures in
effect from time to time as described under "Description of
Notes--Book-Entry Notes." Simultaneously with the election of
any holder of a Note to receive payments in a Specified Currency
other than U.S. dollars (as provided above), such holder may, if
so entitled as described above, elect to receive such payments in
immediately available funds by providing complete and appropriate
instructions to the Paying Agent, and all payments in respect of
principal or premium, if any, of, or interest, if any, on, such
Note will be made in immediately available funds to an account
maintained by the payee with a bank located outside the United
States or as otherwise provided in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing
Supplement, principal, premium, if any, and interest, if any,
payable at Maturity will be paid by the Paying Agent by wire
transfer in immediately available funds (unless otherwise
specified in the applicable Pricing Supplement, payable to an
account
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maintained by the payee with a bank located outside the United
States if payable in a Specified Currency other than U.S.
dollars) to an account specified by the Depositary. See
"Important Currency Exchange Information." Unless otherwise
specified in the applicable Pricing Supplement, payments of
interest, and principal of Amortizing Notes (in each case, other
than at Maturity), will be made in same-day funds in accordance
with existing arrangements between the Paying Agent and the
Depositary. The Company will pay any administrative costs
imposed by banks in connection with making payments in
immediately available funds, but any tax, assessment or
governmental charge imposed upon payments, including, without
limitation, any withholding tax, will be borne by the holders of
the Notes in respect of which such payments are made.
Interest and Interest Rates
Each Note other than a Zero-Coupon Note will bear interest
from its Original Issue Date (or such other date on which such
Note otherwise begins to accrue interest if different from the
Original Issue Date) or from the most recent Interest Payment
Date to which interest on such Note has been paid or duly provid-
ed 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 and/or Spread Multiplier, until the principal thereof is
paid or made available for payment. Interest 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 prin-
cipal 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 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 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 Holder on such next Regular Record Date.
Interest rates and interest rate formulae are subject to
change by the Company, but, unless set forth in the applicable
Pricing Supplement and agreed to by the purchaser of such Notes,
no such change will affect any Note already issued or as to which
an offer to purchase has been accepted by the Company. 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 described below under "Floating Rate Notes" and 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
Issue Date or such other date on which such Note otherwise begins
to accrue interest (if different from the Original Issue Date) at
the rate per annum set forth thereon and in the applicable
Pricing Supplement until the principal amount thereof is paid, or
made available for payment, in full, except as described below
under "Description of Notes--Subsequent Interest Periods" and
"Description of Notes--Extension of Maturity." Unless otherwise
specified in the applicable Pricing Supplement, interest on each
Fixed Rate Note (other than a Zero-Coupon Note or an Amortizing
Note) will be payable semi-annually each March 15 and September
15 and the Regular Record Dates will be each March 1 and
September 1. Unless otherwise specified in the applicable
Pricing Supplement, principal of and interest on each Amortizing
Note will be payable either quarterly
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on each March 15, June 15, September 15 and December 15, or semi-
annually on each March 15 and September 15 as set forth in the
applicable Pricing Supplement, and at Maturity. Unless otherwise
specified in the applicable Pricing Supplement, the Regular
Record Dates will be each March 1, June 1, September 1 and
December 1 for each Amortizing Note that is payable quarterly and
each March 1 and September 1 for each Amortizing Note that is
payable semi-annually. 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. 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 Notes. Each payment of interest
on a Fixed Rate Note shall include interest accrued through the
day before the Interest Payment Date or date of Maturity, as the
case may be. Any payment of principal (and premium, if any) or
interest required to be made on a Fixed Rate Note on a day that
is not a Business Day need not be made on such day, but may be
made on the next succeeding Business Day with the same force and
effect as if made on such day, and no additional interest shall
accrue as a result of such delayed payment. Unless otherwise
specified in the applicable Pricing Supplement, interest on Fixed
Rate Notes, if any, will be computed on the basis of a 360-day
year of twelve 30-day months.
Floating Rate Notes
Except for the period from the Original Issue Date (or the
date on which such Note otherwise begins to accrue interest (if
different from the Original Issue Date)) to the first Interest
Reset Date set forth in the applicable Pricing Supplement, each
Floating Rate Note will bear interest at a rate determined by
reference to an interest rate base (the "Base Rate"), which may
be adjusted by a Spread and/or a Spread Multiplier. The applica-
ble Pricing Supplement will designate one or more of the
following Base Rates as applicable to a Floating Rate Note: (a)
the CD Rate (a "CD Rate Note"), (b) the Commercial Paper Rate (a
"Commercial Paper Rate Note"), (c) LIBID (a "LIBID Note"), (d)
LIBOR (a "LIBOR Note"), (e) the Treasury Rate (a "Treasury Rate
Note"), (f) the Federal Funds Rate (a "Federal Funds Rate Note"),
(g) the Prime Rate (a "Prime Rate Note"), (h) the J.J. Kenny Rate
(a "J.J. Kenny Rate Note"), (i) the Eleventh District Cost of
Funds Rate (an "Eleventh District Cost of Funds Rate Note"), (j)
the CMT Rate (a "CMT Rate Note") or (k) such other Base Rate or
formula as is set forth in such Pricing Supplement and in such
Floating Rate Note. The "Index Maturity" for any Floating Rate
Note is the period to maturity (as specified in the applicable
Pricing Supplement) of the instrument or obligation from which
the Base Rate is calculated.
As specified in the applicable Pricing Supplement, a
Floating Rate Note may also have either or both of the following:
(i) a maximum limitation, or ceiling, on the rate at which
interest may accrue during any interest period ("Maximum Interest
Rate"); and/or (ii) a minimum limitation, or floor, on the rate
at which interest may accrue during any interest period ("Minimum
Interest Rate"). In addition to any Maximum Interest Rate that
may be applicable to any Floating Rate Note pursuant to the above
provisions, the interest rate on a Floating Rate Note will in no
event be higher than the maximum rate permitted by applicable law
(including, without limitation, New York law, which is stated to
govern the Notes and the Indenture), as the same may be modified
by United States law of general application. Under present New
York law, the maximum rate of interest, with certain exceptions,
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 in such aggregate principal
amount or more for resale to investors.
Unless otherwise specified herein or in the applicable
Pricing Supplement, all percentages resulting from any calcula-
tion of the rate of interest on a Floating Rate Note will be
rounded upward,
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<PAGE>
if necessary, to the nearest one hundred-thousandth of a percent
(.0000001), with five one-millionths of a percentage point being
rounded upward, and all currency amounts used in or resulting
from such calculation on Floating Rate Notes will be rounded to
the nearest one-hundredth of a unit (with five one-thousandths of
a unit being rounded upwards).
The rate of interest on each Floating Rate Note will be
reset daily, weekly, monthly, quarterly, semi-annually or annual-
ly (the "Interest Reset Period"), as or unless otherwise speci-
fied in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, the date or dates
on which interest will be reset (each an "Interest Reset Date")
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, the Wednesday of each
week; in the case of Treasury Rate Notes that reset weekly, the
Tuesday of each week (except as provided below); in the case of
Floating Rate Notes that reset monthly, the third Wednesday of
each month (with the exception of monthly reset Eleventh District
Cost of Funds Rate Notes, which reset on the first calendar day
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 semi-
annually, the third Wednesday of the two months of each year
specified in the applicable Pricing Supplement; and in the case
of Floating Rate Notes that reset annually, the third Wednesday
of the month of each year specified in the applicable Pricing
Supplement; provided that the interest rate in effect from the
Original Issue Date (or the date on which such Notes otherwise
begin to accrue interest (if different from the Original Issue
Date)) to the first Interest Reset Date will be the Initial
Interest Rate (as defined below). If any Interest Reset Date for
any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be the succeeding
Business Day, except that, in the case of a LIBID Note or a LIBOR
Note, if such Business Day is in the succeeding calendar month,
such Interest Reset Date shall be the next preceding Business
Day. If an auction of direct obligations of the United States
Treasury Bills ("Treasury bills") falls on a day that is an
Interest Reset Date for Treasury Rate Notes, the Interest Reset
Date shall be the succeeding Business Day. The interest rate or
the formula for establishing the interest rate in effect with
respect to a Floating Rate Note from the Original Issue Date (or
the date on which such Note otherwise begins to accrue interest
(if different from the Original Issue Date)) to the first Inter-
est Reset Date (the "Initial Interest Rate") will be specified in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, the interest rate on each Floating Rate Note will be
calculated by reference to the specified Base Rate (i) plus or
minus the Spread, if any, and/or (ii) multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points
(one basis point equals one-hundredth of a percentage point) to
be added to or subtracted from the related Base Rate applicable
to such Floating Rate Note, and the "Spread Multiplier" is the
percentage of the related Base Rate applicable to such Floating
Rate Note by which said Base Rate is to be multiplied to deter-
mine the applicable interest rate on such Floating Rate Note.
Each Floating Rate Note and the applicable Pricing Supplement
will specify the Spread and/or Spread Multiplier, if any, appli-
cable to each such Floating Rate Note.
Unless otherwise specified in the applicable Pricing
Supplement, the interest payable on each Interest Payment Date or
at Maturity for Floating Rate Notes will be the amount of
interest accrued from and including the Original Issue Date (or
the date on which such Notes otherwise begin to accrue interest
(if different from the Original Issue Date)) or from and includ-
ing the last Interest Payment Date to which interest has been
paid to, but excluding, such Interest Payment Date or date of
Maturity, as the case may be (an "Interest Period").
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<PAGE>
With respect to a Floating Rate Note, unless otherwise
specified in the applicable Pricing Supplement, accrued interest
will be calculated by multiplying the principal amount of such
Floating Rate Note by an accrued interest factor. Unless other-
wise specified in the applicable Pricing Supplement, such accrued
interest factor will be computed by adding the interest factors
calculated for each day in the Interest Period for which accrued
interest is being calculated. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such
day is computed by dividing the interest rate applicable on such
day by 360, in the cases of CD Rate Notes, Commercial Paper Rate
Notes, LIBID Notes, LIBOR Notes, Federal Funds Rate Notes, Prime
Rate Notes, J.J. Kenny Rate Notes or Eleventh District Cost of
Funds Rate Notes, or by the actual number of days in the year, in
the case of Treasury Rate Notes and CMT Rate Notes. The inter-
est rate applicable to any day that is an Interest Reset Date is
the interest rate as determined, in accordance with the proce-
dures hereinafter set forth, with respect to the Interest
Determination Date (as defined below) pertaining to such Interest
Reset Date. The interest rate applicable to any other day is the
interest rate for the immediately preceding Interest Reset Date
(or, if none, the Initial Interest Rate).
Unless otherwise specified in the applicable Pricing
Supplement, interest will be payable, in the case of Floating
Rate Notes that reset daily or weekly or monthly (other than
Eleventh District Cost of Funds Rate Notes), on the third Wednes-
day of each month or on the third Wednesday of March, June,
September and December of each year, as specified in the applica-
ble Pricing Supplement, or, in the case of Eleventh District Cost
of Funds Rate Notes, on the first calendar day of each month or
the first calendar day of each March, June, September and Decem-
ber, as specified 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 semi-annually, on the
third Wednesday of the two months of each year specified in the
applicable Pricing Supplement; and in the case of Floating Rate
Notes that reset annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement, and in
each case at Maturity (each such day being an "Interest Payment
Date"). Unless otherwise specified in the applicable Pricing
Supplement, if an Interest Payment Date (other than at Maturity)
with respect to any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Payment Date shall be
the succeeding Business Day, except, in the case of a LIBID Note
or a LIBOR Note, if such day would fall in the succeeding
calendar month, such Interest Payment Date will be the preceding
Business Day. Any payment of principal (and premium, if any) and
interest required to be made on a Floating Rate Note on a date of
Maturity that is not a Business Day will be made on the suc-
ceeding Business Day (in each case with the same force and effect
as if made on such date of Maturity and no additional interest
shall accrue as a result of any such delayed payment).
Unless otherwise specified in the applicable Pricing
Supplement, the "Interest Determination Date" pertaining to an
Interest Reset Date for CD Rate Notes (the "CD Interest
Determination Date"), Commercial Paper Rate Notes (the
"Commercial Paper Interest Determination Date"), Federal Funds
Rate Notes (the "Federal Funds Interest Determination Date"),
Prime Rate Notes (the "Prime Interest Determination Date"), J.J.
Kenny Rate Notes (the "J.J. Kenny Interest Determination Date")
and CMT Rate Notes (the "CMT Interest Determination Date") will
be the second Business Day preceding such Interest Reset Date.
Unless otherwise specified in the applicable Pricing Supplement,
the Interest Determination Date pertaining to an Interest Reset
Date for LIBID Notes (the "LIBID Interest Determination Date")
and LIBOR Notes (the "LIBOR Interest Determination Date") will be
the second London Business Day preceding such Interest Reset
Date. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date pertaining to an
Interest Reset Date for a Treasury Rate Note (the "Treasury
Interest Determination Date") will be the day of the week in
which such Interest Reset Date
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<PAGE>
falls on which Treasury bills of the applicable Index Maturity
are auctioned. Treasury bills are normally sold at auction on
Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday.
If, as the 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 Interest Reset Date
occurring in the succeeding week. 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 Cost of
Funds Interest Determination Date") will be the last working day
of the month immediately preceding such Interest Reset Date on
which the Federal Home Loan Bank of San Francisco (the "FHLB of
San Francisco") publishes the monthly Eleventh District Cost of
Funds Index (as defined below).
Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," where applicable, pertaining
to an Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date, or, if
any such day is not a Business Day, the next succeeding Business
Day or (ii) the Business Day preceding the applicable Interest
Payment Date or date of Maturity, as the case may be.
The Company will appoint, and enter into an agreement
with, an agent (the "Calculation Agent") to calculate interest on
the Floating Rate Notes. Unless otherwise specified in the
applicable Pricing Supplement, Citibank will be the calculation
agent with respect to Floating Rate Notes. Upon the request of
the holder of any Floating Rate Note, the Calculation Agent will
advise such holder of the interest rate then in effect and, if
determined, the interest rate that will become effective on the
next Interest Reset Date with respect to such Floating Rate Note.
All determinations to be made by the Calculation Agent shall be
at its sole discretion and, in the absence of manifest error,
shall be conclusive for all purposes and binding on holders of
the Notes, and the Calculation Agent shall have no liability
therefor.
CD Rate Notes
CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread and/or
Spread Multiplier, if any) specified in the CD Rate Notes 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 certifi-
cates of deposit having the Index Maturity designated in the
applicable Pricing Supplement as made available and subsequently
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 of the
Federal Reserve System ("H.15(519)") under the heading "CDs
(Secondary Market)." In the event that such rate is not made
available prior to 3:00 P.M., New York City time, on the Calcu-
lation Date pertaining to such CD Interest Determination Date,
then the CD Rate will be the rate on such CD Interest Deter-
mination Date for negotiable certificates of deposit having the
specified Index Maturity as made available and subsequently
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" or any successor publication ("Composite
Quotations") under the heading "Certificates of Deposit." If by
3:00 P.M., New York City time, on the Calculation Date pertaining
to such CD Interest Determination Date the rate for such CD
Interest
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<PAGE>
Determination Date has not yet been made available in either
H.15(519) or Composite Quotations, then the CD Rate for such CD
Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD
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 certifi-
cates of deposit of major United States money center banks of the
highest credit standing (in the market for negotiable certifi-
cates of deposit) having a remaining maturity closest to the
specified Index Maturity in a denomination of $5,000,000; provid-
ed, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting 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.
CD Rate Notes, like other Notes, are not deposit obli-
gations of a bank and are not insured by the Federal Deposit
Insurance Corporation.
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the
interest rates (calculated with reference to the Commercial Paper
Rate and the Spread and/or Spread Multiplier, if any) specified
in the Commercial Paper Rate Notes 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) on such date of the rate
for commercial paper having the Index Maturity designated in the
applicable Pricing Supplement as made available and subsequently
published in H.15(519) under the heading "Commercial Paper." In
the event that such rate is not made available by 3:00 P.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 that
Commercial Paper Interest Determination Date for commercial paper
having the Index Maturity designated in the applicable Pricing
Supplement as made available and subsequently published in Com-
posite Quotations under the heading "Commercial Paper." If by
3:00 P.M., New York City time, on such Calculation Date such rate
has not yet been made available in either H.15(519) or Composite
Quotations, the Commercial Paper Rate for such Commercial Paper
Interest Determination Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the
arithmetic mean of the offered rates as of 11:00 A.M., New York
City time, on such Commercial Paper Interest Determination Date
of three leading dealers of commercial paper in The City of New
York selected by the Calculation Agent for commercial paper
having the Index Maturity designated in the applicable Pricing
Supplement placed for an industrial issuer whose senior unsecured
bond rating is "AA," or the 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 Commer-
cial Paper Interest Determination Date.
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<PAGE>
"Money Market Yield" shall be a yield (expressed as a
percentage) calculated in accordance with the following formula:
D x 360
Money Market Yield = ------------------------- x 100
360 - (D x M)
where "D" refers to the 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 in the interest period
for which interest is being calculated.
LIBID Notes
LIBID Notes will bear interest at the interest rates
(calculated by reference to LIBID and the Spread and/or Spread
Multiplier, if any) specified in the LIBID Notes and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, LIBID will be determined by the Calculation Agent in
accordance with the following provisions:
(i) With respect to a LIBID Interest Determination
Date, LIBID will be as specified in the applicable
Pricing Supplement, either LIBID Reuters (as defined
below) or LIBID Telerate (as defined below), subject to
the last sentence of this paragraph. "LIBID Reuters"
means the arithmetic mean of the bid rates (unless the
specified Designated LIBO Page (as defined below) by
its terms provides for only a single rate, in which
case such single rate shall be used) for deposits in
the Designated Deposit Currency having the Index
Maturity designated in the applicable Pricing Supple-
ment, commencing on the second London Business Day
immediately following such LIBID Interest Determination
Date, that appear on the Designated LIBO Page specified
in the applicable Pricing Supplement as of 11:00 A.M.,
London time, on such LIBID Interest Determination Date,
if at least two such bid rates appear on the Reuters
Screen LIBO Page (unless, as aforesaid, only a single
rate is required). "LIBID Telerate" means the rate for
deposits in the Designated Deposit Currency having the
Index Maturity designated in the applicable Pricing
Supplement, commencing on the second London Business
Day immediately following that LIBID Interest Determi-
nation Date, that appears on the Designated Telerate
Page (as defined below) specified in the applicable
Pricing Supplement as of 11:00 A.M., London time, on
such LIBID Interest Determination Date. If neither
LIBID Reuters nor LIBID Telerate is specified in the
applicable Pricing Supplement, LIBID will be determined
as if LIBID Telerate had been specified. If fewer than
two bid rates appear (unless the specified Designated
LIBO Page with respect to LIBOR Reuters by its terms
provides for only a single rate, in which case such
single rate shall be used), or if no rate appears, as
applicable, LIBID in respect of such LIBID Interest De-
termination Date will be determined as if the parties
had specified the rate described in (ii) below.
(ii) With respect to a LIBID Interest Determination
Date on which fewer than two bid rates appear (unless
the specified Designated LIBO Page with respect to
LIBOR Reuters by its terms provides for only a single
rate, in which case such single rate shall be used),
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<PAGE>
or on which no rate appears, as applicable, LIBID will be
determined on the basis of the bid rates at which deposits
in the Designated Deposit Currency, having the Index
Maturity designated in the applicable Pricing Supplement,
are quoted at approximately 11:00 A.M., London time, on
such LIBID Interest Determination Date to prime banks in
the London interbank market by four major banks in the
London interbank market selected by the Calculation Agent
(the "LIBID Reference Banks") commencing on the second
London Business Day immediately following such LIBID Inter
est Determination Date and in a principal amount equal to
an amount of not less than U.S. $1,000,000 (or the
equivalent in the Designated Deposit Currency) 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 such LIBID Reference Banks to pro
vide a quotation of its rate. If at least two such quota
tions are provided, LIBID in respect of such LIBID Interest
Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided,
LIBID in respect of such LIBID Interest Determination Date
will be the arithmetic mean of the rates quoted in the
applicable Principal Financial Center (as defined below),
on such LIBID Interest Determination Date by three major
banks in such Principal Financial Center selected by the
Calculation Agent for loans in the Designated Deposit
Currency to leading banks, having the Index Maturity desig
nated in the applicable Pricing Supplement, commencing on
the second London Business Day immediately following the
LIBID Interest Determination Date and in a principal amount
equal to an amount of not less than U.S. $1,000,000 (or the
equivalent in the Designated Deposit Currency) 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, LIBID with respect to such
LIBID Interest Determination Date will be LIBID in effect
on such LIBID Interest Determination Date.
LIBOR Notes
LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread and/or Spread
Multiplier, if any) specified in the LIBOR Notes and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, LIBOR will be determined by the Calculation Agent in
accordance with the following provisions:
(i) With respect to a LIBOR Interest Determination
Date, LIBOR will be as specified in the applicable
Pricing Supplement, either LIBOR Reuters (as defined
below) or LIBOR Telerate (as defined below), subject to
the last sentence of this paragraph. "LIBOR Reuters"
means the arithmetic mean of the offered rates (unless
the specified Designated LIBO Page by its terms
provides for only a single rate, in which case such
single rate shall be used) for deposits in the
Designated Deposit Currency having the Index Maturity
designated in the applicable Pricing Supplement, com-
mencing on the second London Business Day immediately
following such LIBOR Interest Determination Date, that
appear on the Designated LIBO Page specified in the
applicable Pricing Supplement as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date, if at
least two such offered rates appear on the Designated
LIBO Page (unless, as aforesaid, only a single rate is
required). "LIBOR Telerate" means the rate for depos-
its in the Designated Deposit Currency having the Index
Maturity designated in the applicable Pricing
Supplement,
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commencing on the second London Business Day immediately
following that LIBOR Interest Determination Date, that ap
pears on the Designated Telerate Page specified in the
applicable Pricing Supplement as of 11:00 A.M., London time,
on such LIBOR Interest Determination Date. 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 fewer than two offered rates
appear (unless the specified Designated LIBO Page with
respect to LIBOR Reuters by its terms provides for only a
single rate, in which case such single rate shall be used),
or if no rate appears, 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
(unless the specified Designated LIBO Page with respect
to LIBOR Reuters by its terms provides for only a
single rate, in which case such single rate shall be
used), or on which no rate appears, 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 "LIBOR Reference
Banks") to prime banks in the London interbank market
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 U.S. $1,000,000 (or the equivalent in the
Designated Deposit Currency) 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 such LIBOR 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 of such LIBOR Interest
Determination Date will be the arithmetic mean of the
rates quoted in the applicable Principal Financial
Center, on such LIBOR Interest Determination Date by
three major banks in such Principal Financial Center
selected by the Calculation Agent for loans in the
Designated Deposit Currency to leading banks, having
the Index Maturity designated in the applicable Pricing
Supplement, commencing on the second London Business
Day immediately following the LIBOR Interest Determina-
tion Date and in a principal amount equal to an amount
of not less than U.S. $1,000,000 (or the equivalent in
the Designated Deposit Currency) that is representative
for a single transaction in such market at such time;
provided, however, that if the banks selected as afore-
said by the Calculation Agent are not quoting as men-
tioned in this sentence, LIBOR with respect to such
LIBOR Interest Determination Date will be LIBOR in
effect on such LIBOR Interest Determination Date.
"Designated Deposit Currency" means, with respect to any
LIBID Note or LIBOR Note, the currency (including a composite
currency), if any, designated in the applicable LIBID Note or
LIBOR Note as the Designated Deposit Currency. If no such
currency is designated in the applicable LIBID Note or LIBOR
Note, the Designated Deposit Currency shall be U.S. dollars.
"Designated LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such
other page as may replace the LIBO page on that service for the
purpose
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of displaying London interbank bid and offered rates of major
banks) for the Designated Deposit Currency.
"Designated Telerate Page" means the display designated as
page "3750" on the Telerate Service where the Designated Deposit
Currency is U.S. Dollars or such other applicable Telerate Page
where the Designated Deposit Currency is other than U.S. Dollars
(or such other page as may replace the 3750 page or such other
applicable 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 bid and offered rates for
deposits in the Designated Deposit Currency).
"Principal Financial Center" means, with respect to any
LIBID Note or LIBOR Note, unless otherwise specified in the
applicable Pricing Supplement, the capital city of the country
that issues as its legal tender the Designated Deposit Currency
of such LIBID Note or LIBOR Note, except that with respect to
U.S. dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss
Francs and ECUs, the Principal Financial Center shall be The City
of New York, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg,
respectively.
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the
Spread and/or Spread Multiplier, if any) specified in the
Treasury Rate Notes 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 Treasury bills having the Index Maturity designated in the
applicable Pricing Supplement as made available and subsequently
published in H.15(519) under the heading "U.S. Government Securi-
ties--Treasury bills-auction average (investment)" or, if not so
made available by 3:00 P.M., New York City time, on the Calcula-
tion Date pertaining to such Treasury Interest Determination
Date, the auction average rate (expressed as a bond equivalent,
rounded to the nearest one hundredth of a percent, with five one
thousandths of a percent rounded upward, on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis)
for such auction or 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 otherwise made
available or 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 to the
nearest one-hundredth of a percent, with five one-thousandths of
a percent rounded upward, 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 approx-
imately 3:30 P.M., New York City time, on such Treasury Interest
Determination Date of three leading primary United States govern-
ment securities dealers selected 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 bid rates as mentioned in
this sentence, the Treasury Rate with respect to such Treasury
Interest Determination Date will be the Treasury Rate in effect
on such Treasury Interest Determination Date.
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<PAGE>
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Federal Funds
Rate and the Spread and/or Spread Multiplier, if any) specified
in the Federal Funds Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any
Federal Funds Interest Determination Date, the rate on such date
for Federal Funds as made available and subsequently published in
H.15(519) under the heading "Federal Funds (Effective)." In the
event that such rate has not been made available by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such
Federal Funds Interest Determination Date, the Federal Funds Rate
will be the rate on such Federal Funds Interest Determination
Date as made available and subsequently published in Composite
Quotations under the heading "Federal Funds/Effective Rate." If
such rate is not made available in H.15(519) or in Composite
Quotations by 3:00 P.M., New York City time, on such Calculation
Date, then the Federal Funds Rate for such Federal Funds Interest
Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates as of 9:00 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 New York
City 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 Rate
with respect to such Federal Funds Interest Determination Date
will be the Federal Funds Rate in effect on such Federal Funds
Interest Determination Date.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread
and/or Spread Multiplier, if any) specified in the Prime Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Prime
Interest Determination Date, the rate made available and
subsequently published on such date in H.15(519) under the head-
ing "Bank Prime Loan." In the event that such rate has not been
made available prior to 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Prime Interest Determination
Date, the Prime Rate will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen NYMF
Page (as defined below) as such bank's prime rate or base lending
rate as in effect for such Prime Interest Determination Date. If
fewer than four such rates but more than one such rate appear on
the Reuters Screen NYMF Page for the Prime 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 of the close of business on such Prime Interest
Determination Date by four major money center banks in The City
of New York selected by the Calculation Agent. If fewer than two
such rates appear on the Reuters Screen NYMF Page, the Prime Rate
will be calculated by the Calculation Agent and will be the
arithmetic mean of the prime rates quoted in The City of New York
on such Prime Interest Determination Date by at least three
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. $500,000,000 and being
subject to supervision or examination by Federal or State author-
ity, selected by the Calculation Agent to provide such rate or
rates; provided, however, that if the banks or trust companies
selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence,
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<PAGE>
the Prime Rate with respect to such Prime Interest Determination
Date will be the Prime Rate in effect on such Prime Interest
Determination Date. "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).
J.J. Kenny Rate Notes
J.J. Kenny Rate Notes will bear interest at the interest
rates (calculated by reference to the J.J. Kenny Rate and the
Spread and/or Spread Multiplier, if any) specified in the J.J.
Kenny Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing
Supplement, "J.J. Kenny Rate" means, with respect to any J.J.
Kenny Interest Determination Date, the per annum rate on such
date equal to the index made available and subsequently published
by Kenny Information Systems or its successor, based upon 30-day
yield evaluations at par of bonds, the interest on which is
excludable from gross income for federal income tax purposes
under the Internal Revenue Code of 1986, as amended (the "Code"),
of not less than five "high grade" component issuers selected
from time to time by Kenny Information Systems, including without
limitation, issuers of general obligation bonds; provided,
however, that the bonds on which the index is based shall not
include any bonds the interest on which is subject to an "alter-
nate minimum tax" or similar tax under the Code, unless all tax-
exempt bonds are subject to such tax. If such rate is not made
available by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such J.J. Kenny Interest Determination Date,
the J.J. Kenny Rate shall be the rate quoted by a successor
indexing agent selected by the Company equalling the prevailing
rate for bonds rated in the highest short-term rating category by
Moody's Investors Service, Inc. and Standard & Poor's Corporation
in respect of issuers selected by such successor indexing agent
most closely resembling the "high grade" component issuers
selected by Kenny Information Systems that are subject to tender
by the holders thereof for purchase on not more than seven days
notice and the interest on which is (A) variable on a weekly
basis, (B) excludable from gross income for federal income tax
purposes under the Code, and (C) not subject to an "alternate
minimum tax" or similar tax under the Code, unless all tax-exempt
bonds are subject to such tax; provided, however, that if a
successor indexing agent is not available, the J.J. Kenny Rate
with respect to such J.J. Kenny Interest Determination Date will
be the J.J. Kenny Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
Eleventh District Cost of Funds Rate Notes
Eleventh District Cost of Funds Rate Notes will bear
interest at the interest rates (calculated by reference to the
Eleventh District Cost of Funds Rate and the Spread and/or Spread
Multiplier, if any) specified in the Eleventh District Cost of
Funds Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing
Supplement, "Eleventh District Cost of Funds Rate" means, with
respect to any Eleventh District Cost of Funds Interest
Determination Date, the rate equal to the monthly weighted
average cost of funds for the calendar month preceding such
Eleventh District Cost of Funds Interest Determination Date as
set forth under the caption "11th District" on Telerate Page 7058
as of 11:00 A.M., San Francisco time, on such Eleventh District
Cost of Funds Interest Determination Date. If such rate does not
appear on Telerate Page 7058 on any related Eleventh District
Cost of Funds Interest Determination Date, the Eleventh District
Cost of Funds Rate for such Eleventh District Cost of Funds
Interest Determination Date shall be the monthly weighted average
cost
S-21
<PAGE>
of funds paid by member institutions of the Eleventh Federal Home
Loan Bank District that was most recently announced (the
"Eleventh District Cost of Funds Rate 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 Interest Determination Date,
then the Eleventh District Cost of Funds Rate for such Eleventh
District Cost of Funds Interest Determination Date will be the
Eleventh District Cost of Funds Rate in effect on such Eleventh
District Cost of Funds Interest Determination Date.
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rates
(calculated by reference to the CMT Rate and the Spread and/or
Spread Multiplier, if any) specified in the CMT Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing
Supplement, "CMT Rate" means, with respect to any CMT Interest
Determination Date, the CMT Rate for Treasury bills on such date
having the Index Maturity designated in the applicable Pricing
Supplement as made available and subsequently published in
H.15(519) under the heading "Treasury constant maturities" or, if
not so made available by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CMT Interest Determination
Date, as displayed on Telerate Page 7052 under the heading
"Treasury Constant Maturities." If by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such CMT Interest
Determination Date the rate has not yet been made available in
H.15(519) or displayed on Telerate Page 7052, then the CMT Rate
shall be calculated by the Calculation Agent and shall be a yield
to maturity (expressed as a bond equivalent, rounded to the
nearest one-hundredth of a percent, with five one-thousandths of
a percent rounded upward, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on such CMT Interest
Determination Date of three leading primary United States govern-
ment securities dealers selected 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 bid rates as mentioned in
this sentence, the CMT Rate with respect to such CMT Interest
Determination Date will be the CMT Rate in effect immediately
prior to such CMT Interest Determination Date.
Inverse Floating Rate Notes
Any Floating Rate Note may be designated in the applicable
Pricing Supplement as an "Inverse Floating Rate Note," in which
event, unless otherwise specified in the applicable Pricing
Supplement, the interest rate on such Floating Rate Note will be
equal to (i) in the case of the period, if any, commencing on the
Original Issue Date (or the date on which such Note otherwise
begins to accrue interest (if different from the Original Issue
Date)) up to the first Interest Reset Date, a fixed rate of
interest established by the Company as described in the appli-
cable Pricing Supplement and (ii) in the case of each period
commencing on an Interest Reset Date, a fixed rate of interest
specified in the Pricing Supplement minus the interest rate
determined by reference to the Base Rate as adjusted by the
Spread and/or Spread Multiplier, if any; provided, however, that
(x) the interest rate thereon will not be less than zero and (y)
the interest rate in effect for the ten days immediately prior to
the date of Maturity of such Inverse Floating Rate Note will be
that in effect on the tenth day preceding such date.
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<PAGE>
Floating Rate/Fixed Rate Notes
The applicable Pricing Supplement may provide that a Note
will be a Floating Rate Note for a specified portion of its term
and a Fixed Rate Note for the remainder of its term, in which
event the interest rate on such Note will be determined as herein
provided as if it were a Floating Rate Note and a Fixed Rate Note
hereunder for each such respective period, all as specified in
such applicable Pricing Supplement.
Currency Indexed Notes
General
The Company may from time to time offer Notes, the
principal amount payable at Maturity and/or the interest rate of
which is determined by reference to the rate of exchange between
the currency or composite currency in which such Notes are denom-
inated (the "Denominated Currency") and the other currency or
composite currency specified as the Indexed Currency (the
"Indexed Currency") in the applicable Pricing Supplement, or as
determined in such other manner as may be specified in the
applicable Pricing Supplement ("Currency Indexed Notes"). Unless
otherwise specified in the applicable Pricing Supplement, holders
of Currency Indexed Notes will be entitled to receive (i) an
amount in respect of such Currency Indexed Notes exceeding the
amount designated as the face amount of the principal (the "Face
Amount") of, and/or interest calculated at the designated rate of
interest on, such Currency Indexed Notes in the applicable
Pricing Supplement if, on the date of Maturity or upon the
relevant Interest Payment Date, as the case may be, 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, expressed in units of the Indexed
Currency per one unit of the Denominated Currency, in the
applicable Pricing Supplement (the "Base Exchange Rate"), or (ii)
an amount in respect of such Currency Indexed Notes less than the
Face Amount and/or interest calculated at such designated
interest rate of such Currency Indexed Notes if, at Maturity or
upon the relevant Interest Payment Date, as the case may be, the
rate at which the Denominated Currency can be exchanged for the
Indexed Currency is less than such Base Exchange Rate, in each
case determined as described below under "Payment of Principal
and Interest." 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 U.S.
federal income tax consequences of the purchase, ownership and
disposition of Currency Indexed Notes will be set forth in the
applicable Pricing Supplement. See "Foreign Currency Risks."
Unless otherwise specified in the applicable Pricing
Supplement, the term "Exchange Rate Day" shall mean any day which
is a Business Day in The City of New York, and if the Denominated
Currency or Indexed Currency is any currency or composite
currency other than the U.S. dollar, in the principal financial
center of the country of such Denominated Currency or Indexed
Currency.
Payment of Principal and Interest
Unless otherwise specified in the applicable Pricing
Supplement, the payment of principal at Maturity and interest on
Currency Indexed Notes on each Interest Payment Date (until
principal thereof is paid or made available for payment) will be
payable in the Denominated Currency (except in the
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<PAGE>
circumstances of the unavailability of such currency, as other-
wise described under "Payment Currency" above) in amounts
calculated in the manner described below.
Unless otherwise specified in the applicable Pricing
Supplement, principal at Maturity, if indexed, will be payable in
an amount equal to the Face Amount of the Currency Indexed Note,
plus or minus an amount of the Denominated Currency determined by
the determination agent specified in the applicable Pricing
Supplement (the "Determination Agent") by reference to the
difference between the Base Exchange Rate and the rate at which
the Denominated Currency can be exchanged for the Indexed
Currency on the second Exchange Rate Day (the "Determination
Date") prior to the date of Maturity of such Currency Indexed
Note. Such rate of exchange shall be the highest bid of the open
market spot offer quotations for the Indexed Currency (spot bid
quotations for the Denominated Currency) obtained by the
Determination Agent from the Reference Dealers (as defined below)
in The City of New York at 11:00 A.M., New York City time, on the
Determination Date, for an amount of Indexed Currency equal to
the Face Amount of such Currency Indexed Note multiplied by the
Base Exchange Rate, with settlement on the date of Maturity to be
in the Denominated Currency (such rate of exchange, as so deter-
mined and expressed in units of the Indexed Currency per one unit
of the Denominated Currency, is hereafter referred to as the
"Spot Rate"). If such quotations from the Reference Dealers are
not available on the Determination Date due to circumstances
beyond the control of the Company or the Determination Agent, the
Spot Rate will be determined on the basis of the most recently
available quotations from the Reference Dealers. As used herein,
the term "Reference Dealers" shall mean the three banks or firms
specified as such in the applicable Pricing Supplement, or if any
of them shall be unwilling or unable to provide the requested
quotations, such other major money center bank or banks in The
City of New York selected by the Determination Agent to act as
Reference Dealer or Dealers in replacement therefor. In the
absence of manifest error, the determination by the Determination
Agent of the Spot Rate and the principal amount of and interest
on the Currency Indexed Notes payable at Maturity thereof shall
be final and binding on the Company and the holders of such Cur-
rency Indexed Notes.
Unless otherwise specified in the applicable Pricing
Supplement, on the basis of the aforesaid determination by the
Determination Agent and the formulae and limitations set forth
below, (i) if the Base Exchange Rate equals the Spot Rate for any
Currency Indexed Note, then the principal amount of such Currency
Indexed Note payable at Maturity would be equal to the Face
Amount of such Currency 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 Currency Indexed Note), then the principal amount so payable
would be greater than the Face Amount of such Currency Indexed
Note up to an amount equal to twice the Face Amount of such
Currency Indexed Note; (iii) if the Spot Rate is less than the
Base Exchange Rate (i.e., the Denominated Currency has depreci-
ated against the Indexed Currency during the term of the Currency
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 Currency 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 Currency Indexed
Note would be payable at Maturity.
With respect to the payment of interest on each Interest
Payment Date, if indexed, the amount will be the Face Amount
multiplied by the relevant interest rate, indexed as specified in
the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing
Supplement, the formula to be used by the Determination Agent to
determine the principal amount of a Currency Indexed Note payable
at Maturity will be as follows:
As to principal, if the Spot Rate exceeds or equals the
Base Exchange Rate, the principal amount of a Currency Indexed
Note payable at Maturity shall equal:
Face Amount + (Face Amount X Spot Rate - Base Exchange Rate)
------------------------------
Spot Rate
and if the Base Exchange Rate exceeds the Spot Rate, the
principal amount of a Currency 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
Unless otherwise specified in the applicable Pricing
Supplement, if the formulae set forth above are applicable to a
Currency Indexed Note, the maximum principal amount payable at
Maturity in respect of such a Currency Indexed Note would be an
amount equal to twice the Face Amount and the minimum principal
amount payable would be zero.
Other Indexed Notes And Certain Terms Applicable To All Indexed
Notes
The Notes may be issued as Indexed Notes, other than
Currency Indexed Notes, the principal amount of which payable at
Maturity or the interest (or premium, if any) thereon, or both,
may be determined by reference to the relationship between two or
more currencies, to the price of one or more specified securities
or commodities, to one or more securities or commodities exchange
indices or other indices or by other similar methods or formulae.
The Pricing Supplement relating to such an Indexed Note will
describe, as applicable, the method by which the amount of
interest payable on any Interest Payment Date and the amount of
principal payable at Maturity in respect of such Indexed Note
will be determined, the U.S. federal income tax consequences of
the purchase, ownership and disposition of such Notes, certain
risks associated with an investment in such Notes and other
information relating to such Notes. See "Foreign Currency
Risks."
Unless otherwise specified in the applicable Pricing
Supplement, the maximum principal amount payable at Maturity in
respect of any Indexed Note will be an amount equal to twice the
Face Amount of such Note and the minimum principal amount so
payable will be zero.
Unless otherwise specified in the applicable Pricing
Supplement, (i) for the purpose of determining whether holders of
the requisite principal amount of Securities outstanding under
the Indenture have made a demand or given a notice or waiver or
taken any other action, the outstanding principal amount of
Indexed Notes will be deemed to be the Face Amount thereof, and
(ii) in the event of an acceleration of the Stated Maturity of an
Indexed Note, the principal amount payable to the holder of such
Note upon acceleration will be the principal amount determined by
reference to the formula by which the principal amount of such
Note would be determined on the Stated Maturity thereof, as if
the date of acceleration were the Stated Maturity.
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<PAGE>
An investment in Indexed Notes entails significant risks,
including wide fluctuations in market value as well as in the
amounts of payments due thereunder, that are not associated with
a similar investment in a conventional debt security. If the
interest rate of a Note is indexed it may result in an interest
rate that is less than that payable on a conventional fixed rate
debt security issued at the same time, including the possibility
that no interest will be paid, and, if the principal amount of a
Note is indexed, the principal amount payable at Maturity may be
less than the original purchase price of such Note, including the
possibility that no principal will be paid. The risks entailed
by an investment in Indexed Notes depend on a number of factors
including supply and demand for the particular commodity and
economic and political events over which the Company has no
control. To the extent the formula used to determine the
principal amount of, or interest payable with respect to, any
Indexed Notes contains a multiple or leverage factor, the effect
of any change in the applicable currency, commodity, security or
index will be increased. Fluctuations in the price of any
particular security or commodity, in the rates of exchange
between particular currencies or in particular indices that have
occurred in the past are not necessarily indicative of fluctua-
tions in the price or rates of exchange that may occur during the
term of any Indexed Notes. The credit ratings assigned to the
Company's medium-term note program are a reflection of the
Company's credit status and in no way are a reflection of the
potential impact of the factors discussed above, or any other
factors, on the market value of the Notes. Accordingly,
prospective investors should consult their own financial and
legal advisors as to the risks entailed by an investment in
Indexed Notes. Indexed Notes are not an appropriate investment
for investors who are unsophisticated with respect to securities,
commodities and/or foreign currency transactions.
Dual Currency Notes
The Company may from time to time offer Notes (the "Dual
Currency Notes") as to which the Company 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 (which payments would otherwise be made in the Specified
Currency of such Notes) in the optional currency specified in the
applicable Pricing Supplement (the "Optional Payment Currency").
Information as to the relative value of the Specified Currency
compared to the Optional 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 Optional Payment Currency of such issuance and the Designated
Exchange Rate for 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 Maturity Date, as set
forth in the applicable Pricing Supplement, and will be the date
on which the Company may select whether to make all scheduled
payments due thereafter in the Optional Payment Currency rather
than in the Specified Currency.
If the Company 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 and/or the Maturity Date, on which
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scheduled payments in the Optional Payment Currency will be made
and (ii) the Designated Exchange Rate. Any such notice by the
Company, once given, may not be withdrawn. The equivalent value
in the Specified Currency of payments made after such an election
may be less, at the then current exchange rate, than if the
Company had made such payment in the Specified Currency.
The U.S. federal income tax consequences of the purchase,
ownership and disposition of Dual Currency Notes will be set
forth in the applicable Pricing Supplement.
Subsequent Interest Periods
The Pricing Supplement relating to each Note will indicate
whether the Company has the option with respect to such Note to
reset the interest rate, in the case of a Fixed Rate Note, or to
reset the Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, and, if so, the date or dates on which such
interest rate or such Spread and/or Spread Multiplier, as the
case may be, may be reset (each an "Optional Reset Date"). If
the Company has such option with respect to any Note, the
following procedures shall apply, unless modified as set forth in
the applicable Pricing Supplement.
The Company may exercise such option with respect to a
Note by notifying the Trustee 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 Trustee will mail to the holder of such Note a notice (the
"Reset Notice") setting forth (i) the election of the Company to
reset the interest rate, in the case of a Fixed Rate Note, or the
Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, (ii) such new interest rate or such new Spread and/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. Upon the transmittal by the Trustee
of a Reset Notice to the holder of a Note, such new interest rate
or such new Spread and/or Spread Multiplier, as the case may be,
shall take effect automatically, and, except as modified by the
Reset Notice and as described in the next paragraph, such Note
will have the same terms as prior to the transmittal of such
Reset Notice.
Notwithstanding the foregoing, not later than 20 days
prior to an Optional Reset Date for a Note, the Company may, at
its option, revoke the interest rate, in the case of a Fixed Rate
Note, or the Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, provided for in the Reset Notice and
establish an interest rate, in the case of a Fixed Rate Note, or
a Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, that is higher than the interest rate or Spread and/or
Spread Multiplier, as the case may be, provided for in the Reset
Notice, for the Subsequent Interest Period commencing on such
Optional Reset Date by causing the Trustee to transmit notice of
such higher interest rate or higher Spread and/or Spread
Multiplier, as the case may be, to the holder of such Note. Such
notice shall be irrevocable. All Notes with respect to which the
interest rate or Spread and/or Spread Multiplier is reset on an
Optional Reset Date and with respect to which the holders of such
Notes have not tendered such Notes for repayment (or have validly
revoked any such tender) pursuant to the next succeeding
paragraph will bear such higher interest rate, in the case of a
Fixed Rate Note, or higher Spread and/or Spread Multiplier, in
the case of a Floating Rate Note, for the Subsequent Interest
Period.
If the Company elects to reset the interest rate or the
Spread and/or Spread Multiplier of a Note as described above, the
holder of such Note will have the option to elect repayment of
such Note by the
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Company on any Optional Reset Date at a price equal to the aggre-
gate principal amount thereof outstanding on, plus any interest
accrued 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 Trustee 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 repay-
ment pursuant to a Reset Notice may, by written notice to the
Trustee, revoke any such tender for repayment until the close of
business on the tenth day prior to such Optional Reset Date.
Extension Of Maturity
The Pricing Supplement relating to each Note (other than
an Amortizing Note) will indicate whether the Company has the
option to extend the Stated Maturity of such Note for one or more
periods (each an "Extension Period") up to but not beyond the
date (the "Final Maturity Date") set forth in such Pricing
Supplement. If the Company has such option with respect to any
Note (other than an Amortizing Note), the following procedures
shall apply, unless modified as set forth in the applicable
Pricing Supplement.
The Company may exercise such option with respect to a
Note (other than an Amortizing Note) by notifying the Trustee of
such exercise at least 50 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"). Not later than 40
days prior to the Original Stated Maturity, the Trustee will mail
to the holder of such Note a notice (the "Extension Notice")
relating to such Extension Period, setting forth (i) the election
of the Company to extend the Original Stated Maturity, (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 and/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 transmittal by the Trustee of an
Extension Notice to the holder of a Note, the Original Stated
Maturity shall be extended automatically, 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 transmittal of
such Extension Notice.
Notwithstanding the foregoing, not later than 20 days
prior to the Original Stated Maturity for a Note, the Company
may, at its option, revoke the interest rate, in the case of a
Fixed Rate Note, or the Spread and/or Spread Multiplier, in the
case of a Floating Rate Note, provided for in the Extension
Notice and establish an interest rate, in the case of a Fixed
Rate Note, or a Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, that is higher than the interest rate or
Spread and/or Spread Multiplier, as the case may be, provided for
in the Extension Notice, for the Extension Period by causing the
Trustee to transmit notice of such higher interest rate or higher
Spread and/or Spread Multiplier, as the case may be, to the
holder of such Note. Such notice shall be irrevocable. All
Notes with respect to which the Stated Maturity is extended and
with respect to which the holders of such Notes have not tendered
such Notes for repayment (or have validly revoked any such
tender) pursuant to the next succeeding paragraph will bear such
higher interest rate, in the case of a Fixed Rate Note, or higher
Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period.
If the Company 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 Company on the Original Stated
Maturity at a price
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equal to the aggregate principal amount thereof outstanding 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 set forth below under "Redemption and
Repayment" for optional repayment, except that the period for
delivery of such Note or notification to the Trustee 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 Trustee, revoke any such tender for repayment until the
close of business on the tenth day prior to the Original Stated
Maturity.
Renewable Notes
The Company may from time to time offer Notes which 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 (the "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").
A holder of a Renewable Note may elect to renew the term
of such Renewable Note, or if so 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 such Renewal Date (unless another period is
specified in the applicable Pricing Supplement as the "Special
Election Period"). 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 principal amount, or any integral
multiple in excess thereof, as is specified in the applicable
Pricing Supplement. Notwithstanding the foregoing, the term of
the Renewable Notes may not be extended beyond the Stated Matu-
rity 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).
Combination of Provisions
If so specified in the applicable Pricing Supplement, any
Note may be subject to all of the provisions, or any combination
of the provisions, described above under "Subsequent Interest
Periods," "Extension of Maturity" and "Renewable Notes."
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Redemption and Repayment
The Pricing Supplement relating to each Note will indicate
either that such Note cannot be redeemed prior to its Stated
Maturity or that such Note will be redeemable, in whole or in
part, at the option of the Company on a date or dates specified
prior to such Stated Maturity at a price or prices, set forth in
the applicable Pricing Supplement, together with accrued interest
to the date of redemption. Unless otherwise specified in the
applicable Pricing Supplement, the Notes, other than Amortizing
Notes, will not be subject to any sinking fund. The Company 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. Unless otherwise
specified in the applicable Pricing Supplement, if less than all
of the Notes with like tenor and terms are to be redeemed, the
Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate.
The Pricing Supplement relating to each Note will indicate
either that such Note cannot be repaid at the option of the
holder prior to its Stated Maturity or that such Note will be
repayable at the option of the holder thereof on a date or dates
specified prior to its Stated Maturity at a price or prices set
forth in the applicable Pricing Supplement, together with accrued
interest to the date of repayment.
Unless otherwise specified in the applicable Pricing
Supplement, in order for a Note to be repaid at the option of the
holder thereof, the Company must receive at least 30 days but not
more than 45 days prior to the repayment date the Note with the
form entitled "Option to Elect Repayment" on the reverse of or
otherwise accompanying the Note duly completed. Exercise of the
repayment option by the holder of a Note shall be irrevocable,
except as otherwise described above under "Description of Notes--
Subsequent Interest Periods" and "Description of Notes--Extension
of Maturity." The repayment option may be exercised by the
holder of a Note for less than the aggregate principal amount of
the Note then outstanding provided that the principal amount of
the Note remaining outstanding after repayment is an authorized
denomination.
The Depositary's nominee will be the holder of a Global
Security and therefore will be the only entity that can exercise
a right to repayment. See "Description of Notes--Book-Entry
Notes" below. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a
particular beneficial interest in a Global Security, the
beneficial owner of such interest must instruct the broker or
other direct or indirect participant through which it holds a
beneficial interest in such Global Security 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 benefi-
cial owner should consult the broker or other direct or indirect
participant through which it holds an interest in a Global
Security 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.
Repurchase
The Company may at any time purchase Notes at any price or
prices in the open market or otherwise. Notes so purchased by
the Company may, at the discretion of the Company, be held or
resold or cancelled by the Trustee.
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Other Provisions
Any provisions with respect to the determination of an
interest rate basis, the specification of an interest rate basis,
calculation of the interest rate applicable to, or the principal
payable at Maturity on, any Note, its Interest Payment Dates or
any other matter relating thereto may be modified by the terms as
specified under "Other Provisions" in the applicable Pricing
Supplement.
Book-Entry Notes
Global Securities will be deposited with, or on behalf of,
the Depositary and registered in the name of the Depositary's
nominee. Except as set forth below, 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 such nominee to a successor of the Depositary
or a nominee of such successor. Unless otherwise specified in
the applicable Pricing Supplement, DTC will be the Depositary.
DTC has advised the Company and the Agent that it is a
limited-purpose trust company organized under the laws of the
State of New York, 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. DTC was created to hold securities for its
participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include
securities brokers and dealers (including the Agent), banks
(including the initial Paying Agent), trust companies, clearing
corporations and certain other organizations, some of whom (or
their representatives, or both) own DTC. Access to DTC's book-
entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or
indirectly. Persons who are not participants may beneficially
own securities held by DTC only through participants.
Principal and interest payments on the Notes represented
by one or more Global Securities will be made by the Company to
the Depositary or its nominee, as the case may be, as the
registered owner of the related Global Security or Securities.
The Company expects that the Depositary or its nominee, upon
receipt of any payment of principal or interest in respect of
Global Securities, will credit immediately the accounts of the
related participants with payment in amounts proportionate to
their respective holdings in principal amount of beneficial
interests in such Global Securities as shown on the records of
the Depositary. Neither the Company nor the Trustee or any
Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests of Global Securities, or for main-
taining, supervising or reviewing any records relating to such
beneficial interests. The Company also expects that payments by
participants to owners of beneficial interests in Global
Securities held through such participants will be governed by
standing customer instructions and customary practices, as is the
case with securities registered in "street name." Such
instructions will be the responsibility of such participants.
If an issue of Notes is denominated in a currency other
than the U.S. dollar, the Company will make payments of principal
and any interest in the currency in which the Notes are
denominated (the "foreign currency") or in U.S. dollars. DTC has
elected to have all such payments of principal and inter-
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est in U.S. dollars unless notified by any of its participants
through which an interest in the Notes is held that it elects, in
accordance with and to the extent permitted by the applicable
Pricing Supplement and the Note, to receive such payment of prin-
cipal or interest in the foreign currency. On or prior to the
third Business Day after the record date for payment of interest
and twelve days prior to the date for payment of principal, such
participant shall notify DTC of (i) its election to receive all,
or the specified portion, of such payment in the foreign currency
and (ii) its instructions for wire transfer of such payment to a
foreign currency account.
DTC will notify the Paying Agent on or prior to the fifth
Business Day after the record date for payment of interest and
ten days prior to the date for payment of principal of the
portion of such payment to be received in the foreign currency
and the applicable wire transfer instructions, and the Paying
Agent shall use such instructions to pay the participants
directly. If DTC does not so notify the Paying Agent, it is
understood that only U.S. dollar payments are to be made. The
Paying Agent shall notify DTC on or prior to the second Business
Day prior to the payment date of the conversion rate to be used
and the resulting U.S. dollar amount to be paid per $1,000 face
amount. In the event that the Paying Agent's quotation to
convert the foreign currency into U.S. dollars is not available,
the Paying Agent shall notify DTC's Dividend Department that the
entire payment is to be made in the foreign currency. In such
event, DTC will ask its participants for payment instructions and
forward such instructions to the Paying Agent and the Paying
Agent shall use such instructions to pay the participants
directly.
If the Depositary is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary
is not appointed by the Company within 90 days, the Company will
issue Notes in certificated form in exchange for beneficial
interests in the Global Securities. In addition, the Company may
at any time determine not to have its Notes represented by one or
more Global Securities, and, in such event, will issue Notes in
certificated form in exchange for beneficial interests in Global
Securities. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical
delivery in certificated form of Notes equal in principal amount
to such beneficial interest and to have such Notes registered in
its name. Notes so issued in certificated form will be issued in
denominations of $1,000 or any amount in excess thereof that is
an integral multiple of $1,000 and will be issued in registered
form only, without coupons. Certain provisions described in this
Prospectus Supplement pertaining to Global Securities, including
without limitation, provisions regarding the payment of principal
and interest thereon, may not be applicable to Notes in
certificated form. In the event Notes in certificated form are
issued, the Company will provide supplemental information setting
forth the terms applicable to such Notes to each holder thereof.
A further description of the Depositary's procedures with
respect to Global Securities is set forth in the accompanying
Prospectus under "Description of Securities--Global Securities."
IMPORTANT CURRENCY EXCHANGE INFORMATION
Each purchaser of a Note is required to pay for such Note
in the Specified Currency thereof. Currently, there are limited
facilities in the United States for conversion of U.S. dollars
into foreign currencies and vice versa, and banks do not
generally 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 applicable Agent will
arrange for the conversion of U.S. dollars into such Specified
Currency to enable the purchaser to pay for such Notes. Such
request must be made on or before the fifth Business Day
preceding the date of delivery of the Notes, or by such other
date as is determined by such Agent. Each such conversion will
be made by the applicable Agent
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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 any such exchange will be borne by the purchasers of the Notes
requesting such conversion.
FOREIGN CURRENCY RISKS
Governing Law And Judgments
The Notes will state that they will be governed by and
construed in accordance with the laws of the State of New York.
Courts in the United States have not customarily rendered
judgments for money damages denominated in any currency other
than the U.S. dollar. The Judiciary Law of the State of New York
provides, however, that judgment rendered in an action based upon
an obligation denominated in a currency other than U.S. dollars
will be rendered in the foreign currency of the underlying obli-
gation and converted into U.S. dollars at a rate of exchange pre-
vailing on the date of the entry of the judgment or decree.
Exchange Rates And Exchange Controls
An investment in Notes that are denominated in a Specified
Currency other than U.S. dollars ("Foreign Currency Notes")
entails significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. Similarly,
an investment in a Currency Indexed Note entails significant
risks that are not associated with a similar investment in non-
Indexed Notes. Such risks include, without limitation, the
possibility of significant market changes in rates of exchange
between U.S. dollars and such Specified Currency (or, in the case
of each Currency Indexed Note, the rate of exchange between the
Denominated Currency and the Indexed Currency for such Currency
Indexed Note), the possibility of significant changes in rates of
exchange between U.S. dollars and such Specified Currency (or, in
the case of each Currency Indexed Note, changes in rates of
exchange between the Denominated Currency and the Indexed
Currency for such Currency Indexed Note) resulting from official
redenomination with respect to such Specified Currency (or, in
the case of each Currency Indexed Note, with respect to the
Denominated Currency or the Indexed Currency therefor) and the
possibility of the imposition or modification of foreign exchange
controls by either the United States or foreign governments.
Such risks generally depend on factors over which the Company has
no control, such as economic and political events, and on the
supply of and demand for the relevant currencies. In recent
years, rates of exchange between the U.S. dollar and certain
foreign currencies, and between certain foreign currencies and
other foreign currencies, have been volatile, and such volatility
may be expected in the future. Fluctuations that have occurred
in any particular exchange rate in the past are not necessarily
indicative, however, of fluctuations that may occur in the rate
during the term of any Foreign Currency Note or any Currency
Indexed Note. Depreciation of the Specified Currency of a
Foreign Currency Note against U.S. dollars would result in a
decrease in the effective yield of such Foreign Currency 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 a
Currency Indexed Note against the applicable Indexed Currency
would result in the principal amount payable with respect to such
Currency Indexed Note at the date of Maturity being less than the
Face Amount of such Currency Indexed Note which, in turn, would
decrease the effective yield of such Currency Indexed Note below
its stated interest rate and could also result in a loss to the
investor. See "Description of Notes--Currency Indexed Notes."
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Governments have imposed from time to time, and may in the
future impose, exchange controls that could affect exchange rates
as well as the availability of a Specified Currency (other than
U.S. dollars) at the time of payment of principal of, or premium,
if any, or interest on, a Foreign Currency Note. There can be no
assurance that exchange controls will not restrict or prohibit
payments of principal (and premium, if any) or interest in any
such Specified Currency. Even if there are no actual exchange
controls, it is possible that such Specified Currency would not
be available to the Company when payments on such Note are due
because of circumstances beyond the control of the Company. In
any such event, the Company will make required payments in U.S.
dollars on the basis described herein. See "Description of
Notes--Payment Currency" and "Description of Notes--Currency
Indexed Notes--Payment of Principal and Interest."
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
DO NOT, AND ANY PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL THE
RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF
WHICH IS RELATED TO THE VALUE OF, A CURRENCY OR COMPOSITE
CURRENCY OTHER THAN U.S. DOLLARS, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE INVESTORS OF SUCH RISKS AS
THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH
RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE INVESTORS SHOULD
CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS
ENTAILED BY AN INVESTMENT IN SUCH NOTES. SUCH NOTES ARE NOT AN
APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH
RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise specified in the applicable Pricing
Supplement, no Foreign Currency Note will be sold in or to
residents of the country issuing the Specified Currency of such
Foreign Currency Note. The information set forth in this
Prospectus Supplement is directed to prospective purchasers who
are United States residents, and the Company disclaims any
responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any
matters that may affect the purchase, holding or receipt of
payments of principal (and premium, if any) or interest on such
Foreign Currency Notes. Such persons should consult their own
counsel with regard to such matters.
Pricing Supplements relating to Foreign Currency Notes or
Currency Indexed Notes will contain information concerning
historical exchange rates for the applicable Specified Currency
or Denominated Currency against the U.S. dollar or other relevant
currency (including, in the case of Currency 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 of or trends in fluctuations
in currency exchange rates that may occur in the future.
CERTAIN FEDERAL TAX CONSEQUENCES
The following is a summary of certain United States
federal income tax consequences of the purchase, ownership and
disposition of the Notes as of the date hereof. It deals only
with Notes held as capital assets and does not deal with persons
in special tax situations, such as financial institutions,
insurance companies, tax-exempt organizations, dealers in
securities or currencies, persons holding Notes as a hedge
against currency risks or as a position in a "straddle" for tax
purposes, or persons whose functional currency is not the U.S.
dollar. It also does not deal with state, local or foreign tax
consequences or with holders other than original purchasers.
This summary is based upon the provisions
S-34
<PAGE>
of the Code and regulations, rulings and judicial decisions
thereunder as of the date hereof, which authorities may be
repealed, revoked or modified, possibly with retroactive effect,
so as to result in federal income tax consequences different from
those discussed below.
Persons considering the purchase of the Notes should
consult their tax advisors concerning the application of United
States federal income tax laws to their particular situations as
well as any consequences arising under the laws of any state,
local or foreign taxing jurisdiction. The material federal
income tax consequences of Indexed Notes, Currency Indexed Notes,
Dual Currency Notes, or Notes containing terms that result in
consequences other than those described below will be addressed
in the applicable pricing supplement.
As used herein, the term "U.S. Holder" means a beneficial
owner of a Note that is for United States federal income tax
purposes (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political
subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regard-
less of its source. As used herein, the term "non-U.S. Holder"
means a holder of a Note that is not a U.S. Holder.
U.S. Holders
Payments of Interest on the Notes
Interest paid on a Note (whether in U.S. dollars or in
other than U.S. dollars) that is not a Discount Note (as defined
below) will generally be taxable to a U.S. Holder as ordinary
interest income at the time it accrues or is received, in
accordance with the U.S. Holder's method of accounting for
federal income tax purposes.
Discount Notes
The following discussion is a summary of the principal
United States federal income tax consequences of the ownership
and disposition of Discount Notes (as defined below) by U.S.
Holders, which is based upon certain Treasury regulations issued
on January 27, 1994 (the "OID Regulations"). Additional rules
applicable to Discount Notes that are denominated in a Specified
Currency (as defined below) other than the U.S. dollar, or have
payments of interest or principal determined by reference to the
value of one or more currencies or currency units other than the
U.S. dollar, are described under "Foreign Currency Notes" below.
Under the OID Regulations, a Note with an "issue price"
that is less than its "stated redemption price at maturity"
generally will carry original issue discount ("OID") for United
States federal income tax purposes (a "Discount Note"), unless
such difference is less than a specified de minimis amount. In
general, the stated redemption price at maturity of a Discount
Note is the total of all payments required to be made under the
Discount Note other than "qualified stated interest" payments.
"Qualified stated interest" is stated interest that is uncondi-
tionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate of inter-
est. In addition, qualified stated interest includes stated
interest with respect to a variable rate debt instrument that is
unconditionally payable at least annually at a single qualified
floating rate or a rate that is determined using a single fixed
formula based on one or more qualified floating rates.
S-35
<PAGE>
A U.S. Holder of Discount Notes is required to include
qualified stated interest in income at the time it is received or
accrued, in accordance with such holder's method of accounting.
In addition, U.S. Holders of Discount Notes that mature more than
one year from the date of issuance will be required to include
OID in income for United States federal income tax purposes as it
accrues, in accordance with a constant yield method, before the
receipt of cash payments attributable to such income, but such
holders will not be required to include separately in income cash
payments received on such Notes, even if denominated as interest,
to the extent they do not constitute qualified stated interest.
All stated interest on a Note that matures one year or
less from its date of issuance (a "short-term Discount Note") is
included in its stated redemption price at maturity. In general,
a U.S. Holder who uses the cash method of tax accounting is not
required to accrue OID on a short-term Discount Note unless such
holder elects to do so. U.S. Holders who report income on the
accrual method, cash method U.S. Holders who elect to include OID
on short-term Discount Notes in income, and certain other
holders, including banks and dealers in securities, are required
to include OID (or, alternatively, acquisition discount) on such
short-term Discount Notes on a straight-line basis, unless an
election is made to accrue the OID according to a constant yield
method. In the case of a U.S. Holder who is not required, and
does not elect, to include OID in income currently, (i) any gain
realized on the sale, exchange or retirement of a short-term
Discount Note will be ordinary interest income to the extent of
the OID accrued on a straight-line basis (or, alternatively, upon
election, under the constant yield method) through the date of
sale, exchange or retirement and (ii) such U.S. Holder will be
required to defer the deduction of all or a portion of any
interest paid on indebtedness incurred to purchase or carry
short-term Discount Notes until a corresponding amount of OID is
included in such holder's income.
U.S. Holders are permitted to elect to include all
interest on a Note, 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, under a constant yield
method. U.S. Holders considering such an election should consult
their tax advisor.
Market Discount and Acquisition Premium
A Note (other than a Discount Note) purchased for an
amount that is less than its stated redemption price at maturity
or, in the case of a Discount Note, its revised issue price, will
have "market discount" equal to such difference, which generally
will be taxable as ordinary income upon disposition of such Note
(unless such difference is less than a specified de minimis
amount). A Discount Note purchased for an amount that is greater
than its revised issue price, but less than or equal to the sum
of all amounts payable on the Note after the purchase date (other
than qualified stated interest), will have "acquisition premium"
equal to such excess, which reduces the OID with respect to such
Note for any taxable year by a certain fraction.
Amortizable Bond Premium
A Note purchased for an amount greater than its stated
redemption price at maturity will have "amortizable bond premi-
um" equal to such excess, which a U.S. Holder may elect to amor-
tize, using a constant yield method.
S-36
<PAGE>
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a Note, a U.S.
Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized and such holder's adjusted
tax basis in the Note, except to the extent attributable to ac-
crued interest or market discount. A U.S. Holder's adjusted tax
basis in a Note generally will equal the cost of the Note to such
holder, increased by the amounts of any market discount, OID and
de minimis OID previously included in income by the holder with
respect to such Note and reduced by any amortized bond premium
and any principal payments received by the U.S. Holder and, in
the case of a Discount Note, by the amounts of any other payments
that do not constitute qualified stated interest.
Foreign Currency Notes
The following discussion summarizes the principal United
States federal income tax consequences to a U.S. Holder of the
ownership and disposition of certain Notes (other than Indexed
Notes, Currency Indexed Notes and Dual Currency Notes) that are
denominated in a Specified Currency other than the U.S. dollar or
the payments of interest or principal on which are payable in one
or more currencies or currency units other than the U.S. dollar
(a "Foreign Currency Note"). Such Foreign Currency Notes also
may be subject to the rules discussed above regarding original
issue discount, market discount, acquisition premium, etc. The
summary generally is based upon certain Treasury regulations
issued pursuant to Section 988 of the Code on March 16, 1992 (the
"Section 988 Regulations").
Payments of Interest on Foreign Currency Notes
Cash Method. A U.S. Holder who uses the cash method of
accounting for federal income tax purposes and who receives a
payment of qualified stated interest on a Foreign Currency Note
will be required to include in income the U.S. dollar value of
the foreign currency payment (determined at the spot rate on the
date such payment is received or paid) regardless of whether the
payment is in fact converted to U.S. dollars at that time, and
such U.S. dollar value will be the U.S. Holder's tax basis in
such foreign currency. No exchange gain or loss will be
recognized with respect to the receipt of such payment.
Accrual Method. A U.S. Holder who uses the accrual method
of accounting for federal income tax purposes, or who otherwise
is required to accrue interest prior to receipt (e.g., under the
OID rules), will be required to include in income the U.S. dollar
value of the amount of interest income (including OID (as
adjusted for acquisition premium, if any) or market discount and
reduced by amortizable bond premium to the extent applicable)
that has accrued and is otherwise required to be taken into ac-
count with respect to a Foreign Currency Note during an accrual
period. The U.S. dollar value of such accrued income will be
determined by translating such income at the average rate of
exchange for the accrual period or, with respect to an accrual
period that spans two taxable years, at the average rate for the
partial period within the taxable year. A U.S. Holder may elect,
however, to translate such accrued interest income using the rate
of exchange on the last day of the accrual period or, with
respect to an accrual period that spans two taxable years, using
the rate of exchange on the last day of the taxable year. A U.S.
Holder will recognize exchange gain or loss (which will be
treated as ordinary income or loss) with respect to accrued
interest income on the date such income is received.
Rules similar to those described above apply in the case
of OID, market discount and amortizable bond premium.
S-37
<PAGE>
Sale, Exchange or Retirement of Foreign Currency Notes
A U.S. Holder will have a tax basis in any foreign
currency received on the sale, exchange or retirement of a
Foreign Currency Note equal to the U.S. dollar value of such
foreign currency, determined at the time of such sale, exchange
or retirement. Any gain or loss realized by a U.S. Holder on a
sale or other disposition of foreign currency (including its
exchange for U.S. dollars or its use to purchase Foreign Currency
Notes) will be ordinary income or loss.
A U.S. Holder's tax basis in, and amount realized on the
sale of, a Foreign Currency Note, and the amount of any subse-
quent adjustment to the holder's tax basis, will be the U.S.
dollar value of the foreign currency amount paid for such Foreign
Currency Note, or of the foreign currency amount of the adjust-
ment, determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or
retirement of a Foreign Currency Note will be ordinary income or
loss to the extent it is attributable to fluctuations in currency
exchange rates.
Backup Withholding and Information Reporting
Under current federal income tax law, information
reporting and a 31% backup withholding tax are required with
respect to certain interest and principal payments made to, and
the proceeds of sales before maturity by, certain holders (other
than corporations) if such persons fail to supply taxpayer
identification numbers and other information. Amounts withheld
under the backup withholding rules would be allowed as a refund
or a credit against the U.S. Holder's federal income tax provided
that the required information is furnished to the Internal
Revenue Service (the "Service").
Non-U.S. Holders
A non-U.S. Holder will generally not be subject to U.S.
federal income taxes, including withholding taxes, on payments of
principal, premium, if any, or interest (including OID, if any)
on a Note or coupon, or any gain arising from the sale or
disposition of a Note or coupon, provided that (i) any such
income is not effectively connected with the conduct of a trade
or business within the U.S., (ii) such non-U.S. Holder is not a
person who owns (directly or by attribution) ten percent or more
of the total combined voting power of all classes of stock of the
Company, (iii) with respect to any gain, such non-U.S. Holder (if
an individual) is not present in the U.S. 183 days or more during
the taxable year of the disposition and does not have a "tax
home" (as defined in section 911(d)(3) of the Code) in the U.S.
and (iv) required certification of the non-U.S. status of the
beneficial owner is provided to the Company or its agents.
The 31% "backup" withholding and information reporting
requirements will generally not apply to payments by the Company
or its agents of principal, premium, if any, and interest on a
Note, and to proceeds of the sale or redemption of a Note before
maturity, with respect to a non-U.S. Holder that provides the
Company or its agent with the certification of non-U.S. status.
A Note held by an individual who at death is not a citizen
or resident of the United States, as defined for estate tax
purposes, will not be includible in the individual's gross estate
for purposes of the United States federal estate tax if the
individual did not own actually or constructively ten percent or
more of the total combined voting power of all classes of stock
of the Company and interest on the Note would
S-38
<PAGE>
not have been effectively connected with a United States trade or
business of the individual if such interest were received by the
decedent at the time of his or her death.
Non-U.S. Holders of Notes should consult their tax
advisors regarding the application of information reporting and
backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for
obtaining such an exemption, if available. Any amounts withheld
from a payment to a non-U.S. Holder under the backup withholding
rules will be allowed as a credit against such holder's U.S.
federal income tax liability and may entitle such holder to a
refund, provided that the required information is furnished to
the Service.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the
Company through Smith Barney Inc., Lehman Brothers Inc.
(including its affiliate Lehman Government Securities Inc.),
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Morgan Stanley & Co. Incorporated, as agents
(the "Agents"), all of which have agreed to use their reasonable
best efforts to solicit purchases of the Notes. The Company also
may sell Notes to an Agent, as principal. Unless otherwise
indicated in the applicable Pricing Supplement, a Note sold to an
Agent as principal will be purchased by such Agent at a price
equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to an agency sale of a note of
identical maturity. Such Notes may be resold to investors and
other purchasers from time to time at market prices prevailing at
the time of sale, at prices related to such prevailing prices, at
a fixed price or prices, which may be changed, or at negotiated
prices. The Agents may sell Notes that they have purchased as
principal to other dealers and such Notes may be sold at a
discount which, unless otherwise specified in the applicable
Pricing Supplement, will not exceed the discount to be received
by such Agents from the Company. After the initial public
offering of the Notes, the public offering price (in the case of
Notes to be resold at a fixed public offering price), the
concession and the discount may be changed. The Company reserves
the right to sell Notes directly on its own behalf, by itself or
through an affiliate, in those jurisdictions where authorized to
do so. Notes also may be offered through other agents, which
offerings will be on substantially the same terms and conditions
as those described above for offerings through the Agents. In
such case, the names of the other agents and any terms of such
agency which differ from those described herein will be set forth
in a Pricing Supplement. The Company will have the sole right to
accept offers to purchase Notes and may reject any proposed pur-
chase of Notes in whole or in part. Each Agent will have the
right, in its discretion reasonably exercised, to reject any
proposed purchase of Notes through it in whole or in part. The
Company will pay each Agent a commission in the form of a
discount ranging from 0.125% to 0.750% of the principal amount of
Notes sold through such Agent depending upon Note maturity.
Commissions with respect to Notes with Stated Maturities in
excess of 30 years that are sold through an Agent will be
negotiated between the Company and such Agent at the time of such
sale. No commission will be payable on any sales made directly
by the Company.
Payment of the purchase price of the Notes will be
required to be made in immediately available funds in New York
City on the date of settlement.
The Agents may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The Company has agreed to indemnify the Agents
against certain liabilities, including liabilities under the
Securities Act, or to contribute to the payments the Agents may
be required to make in respect thereof, and will reimburse those
firms for certain legal and other expenses incurred by them in
connection with the offer and sale of the Notes.
S-39
<PAGE>
The Agents have advised the Company that they may make a
market in the Notes as permitted by applicable laws and
regulations; however, the Agents are not obligated to do so.
There can be no assurance that there will be a secondary market
for the Notes.
Concurrently with the offering of Notes through the Agents
as described herein, the Company may issue other Securities
pursuant to the Indenture referred to in the Prospectus.
The Agents and certain of their affiliates engage in
transactions (which may include commercial banking transactions)
with and perform services for the Company or one or more of its
affiliates in the ordinary course of business.
SBI is a member of the NASD and an affiliate of the
Company. Accordingly, offers and sales by SBI of the Notes will
conform with the requirements set forth in any applicable
sections of Schedule E to the By-Laws of the NASD.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed
upon for the Company by Charles O. Prince, III, Esq., as counsel
for the Company, 65 East 55th Street, New York, New York 10022
and for the Agents by Dewey Ballantine, 1301 Avenue of the
Americas, New York, New York 10019. Mr. Prince, Senior Vice
President, General Counsel and Secretary of the Company, benefi-
cially owns, or has rights to acquire under The Travelers Inc.
employee benefit plans, an aggregate of less than 1% of the
common stock of The Travelers Inc. Dewey Ballantine has from time
to time acted as counsel for The Travelers Inc. and certain of
its subsidiaries and may do so in the future.
EXPERTS
The consolidated financial statements and schedules of the
Company as of December 31, 1993 and 1992, and for each of the
years in the three-year period ended December 31, 1993, included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, have been incorporated by reference herein, in
reliance upon the report (also incorporated by reference herein)
of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP
covering the December 31, 1993 consolidated financial statements
and schedules refers to changes in the Company's methods of
accounting for postretirement benefits other than pensions and
accounting for postemployment benefits in 1993, and a change in
the Company's method of accounting for income taxes in 1992.
S-40
<PAGE>
PROSPECTUS
COMMERCIAL CREDIT COMPANY
DEBT SECURITIES
-------------------
Commercial Credit Company (the "Company") has offered or may offer, from
time to time, its debt securities (the "Securities"), from which the Company
will receive proceeds of up to $1,350,000,000 (or the equivalent in foreign
denominated currencies or units of two or more currencies, based on the
applicable exchange rate at the time of sale, as shall be designated by the
Company at the time of sale). The Securities will be offered to the public on
terms determined by market conditions at the time of sale. When a particular
series of Securities is offered (the "Offered Securities"), a supplement to this
Prospectus (the "Prospectus Supplement") will be delivered with this Prospectus
setting forth with respect to such series: the specific designation, aggregate
principal amount, denominations, currency, purchase price, maturity, rate (which
may be fixed or variable) and time of payment of interest (if any), redemption
terms and any other variable terms.
-------------------
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.
-------------------
The Offered Securities sold by the Company will be sold directly or through
agents designated from time to time, or through underwriters or dealers, which
may be a group of underwriters represented by one or more firms. If any agents
of the Company or any underwriters are involved in the sale by the Company of
the Offered Securities, the names of such agents or underwriters and any
applicable fee, commission, purchase price or discount arrangements with them
will be set forth in the Prospectus Supplement. The net proceeds to the Company
from such sale will be set forth in the Prospectus Supplement. The Company may
also sell Offered Securities directly to investors on its own behalf. This
Prospectus, together with an appropriate Prospectus Supplement, may also be used
by Smith Barney Inc. ("Smith Barney"), an affiliate of the Company, in
connection with market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Smith Barney may act as principal
or agent in such transactions.
THE DATE OF THIS PROSPECTUS IS DECEMBER 13, 1994
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR SMITH BARNEY. THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THE PROSPECTUS SUPPLEMENT
RELATES, OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY
OR ITS SUBSIDIARIES SINCE THE DATE HEREOF.
-------------------
FOR NORTH CAROLINA PURCHASERS: These securities have not been approved or
disapproved by the Commissioner of Insurance for the State of North Carolina nor
has the Commission ruled upon the accuracy or adequacy of this Prospectus.
-------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can
be inspected and copied at the public reference facilities maintained by the
Commission at: Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549; Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Seven World Trade Center, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549, at prescribed rates. Such reports and other information can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005, where certain of the Company's debt securities are listed.
-------------------
The Company has filed with the Commission Registration Statements on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered hereby. For further information with respect
to the Company and the Securities offered hereby, reference is made to the
Registration Statements and exhibits thereto. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statements, each
such statement being qualified in all respects by such reference.
-------------------
IN CONNECTION WITH THE OFFERING OF CERTAIN SECURITIES, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES
OF SUCH SECURITIES OR OTHER SECURITIES OF THE COMPANY AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed with the Commission pursuant to the Exchange Act:
1. Annual Report on Form 10-K of the Company for the fiscal year ended
December 31, 1993;
2. Quarterly Reports on Form 10-Q of the Company for the fiscal quarters
ended March 31, 1994 and June 30, 1994 and September 30, 1994; and
3. Current Reports on Form 8-K of the Company, dated July 13, 1994,
October 31, 1994, November 3, 1994, and November 30, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
later of (i) the termination of the offering being made hereby and (ii) the date
on which Smith Barney ceases offering and selling securities pursuant to this
Prospectus shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing 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,
in an accompanying Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement or data so superseded or
modified shall not be deemed to constitute a part of this Prospectus except as
so superseded or modified.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference in the
Registration Statements of which this Prospectus forms a part, other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents. Requests should be directed to Patricia A.
Rouzer, Corporate Communications and Investor Relations, Commercial Credit
Company, 300 St. Paul Place, Baltimore, Maryland 21202; telephone (410) 332-
3888.
3
<PAGE>
THE COMPANY
The Company, which is a wholly owned subsidiary of The Travelers Inc.
("Travelers"), is a financial services holding company engaged, through
subsidiaries, principally in the business of consumer finance and insurance
services. This Prospectus relates only to the Securities of the Company and not
to the securities of any of its affiliates. As of September 30, 1994, the
Company's consumer finance business, which includes lending services,
credit-related insurance and credit card services, maintained 827 loan offices
in 43 states. The Company's insurance services business includes property and
casualty insurance and specialty lines of insurance.
The Company's lending services consist of loans to consumers, including
secured and unsecured personal loans, real estate-secured loans and consumer
goods financing. Through its bank subsidiaries, the Company provides credit card
services to individuals and to affinity groups nationwide. American Health and
Life Insurance Company, a subsidiary of the Company, underwrites or arranges for
credit-related insurance, which is offered to customers of the Company's
consumer finance business.
The Company owns 50% of the common stock of Commercial Insurance Resources,
Inc. ("CIRI"), the parent company of Gulf Insurance Company ("Gulf"). Gulf is
engaged in the property and casualty insurance business and offers automobile
liability and physical damage, workers' compensation, other liability, fire and
related homeowners' insurance and commercial multiple peril insurance, as well
as certain specialty lines of insurance. The Company has agreed to sell the
remaining interest in CIRI to another subsidiary of Travelers effective December
30, 1994.
The Company owns 2,105 shares of Cumulative Adjustable Rate Stock, Series Y,
of Travelers, with a liquidation value of $100,000 per share. Holders of these
shares are entitled to quarterly dividends at a rate of 4.85% of the liquidation
value per annum, subject to increase in certain circumstances after December 31,
1995, based on specified short term interest rates then prevailing. Subject to
certain conditions, these shares are redeemable by Travelers on or after
December 31, 1995, and at the option of the holder after March 31, 1999.
The principal offices of the Company are located at 300 St. Paul Place,
Baltimore, Maryland 21202; telephone (410) 332-3000. The Company was
incorporated in Delaware in 1968.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the
Company intends to apply the net proceeds from the sale of the Offered
Securities to fund its financial services business and for general corporate
purposes, which may include the reduction or refinancing of other borrowings, or
the making of investments or capital contributions to subsidiaries of the
Company. Also, in order to fund its financial services business, the Company
expects to incur additional indebtedness in the future.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED --------------------------------------
SEPTEMBER 30, 1994 1993 1992 1991 1990 1989
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges...... 1.85 2.09 2.12(1) 1.67 1.54 1.51
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
earnings from continuing operations before income taxes and fixed charges by the
fixed charges. For purposes of this ratio, fixed charges consist of interest
expense and that portion of rentals deemed representative of the appropriate
interest factor.
- ------------
(1) Included in earnings from continuing operations before income taxes (used in
the computation above) are net gains of $47.0 million resulting from the
sale of stock of Inter-Regional Financial Group, Inc., the sale of the
Company's investment in the common stock of Musicland Stores Corporation and
the sale of 50% of Commercial Insurance Resources, Inc. Without giving
effect to these net gains, the ratio of earnings to fixed charges for 1992
would have been 1.99.
4
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DESCRIPTION OF SECURITIES
The following description of the terms of the Securities sets forth certain
general terms and provisions of the Securities to which any Prospectus
Supplement may relate. The particular terms of the Securities offered by any
Prospectus Supplement (the "Offered Securities") and the extent, if any, to
which such general provisions may apply to the Securities so offered will be
described in the Prospectus Supplement relating to such Offered Securities.
The Securities are to be issued under an Indenture, dated as of December 1,
1986, as supplemented by the First Supplemental Indenture, dated as of June 13,
1990 (as supplemented, the "Indenture") between the Company and Citibank, N.A.
(the "Trustee"), a copy of which Indenture is incorporated by reference as an
exhibit to the Registration Statements.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Indenture, including the definitions
therein of certain terms. Wherever particular provisions or defined terms of the
Indenture are referred to, such provisions or defined terms are incorporated
herein by reference. Capitalized terms not otherwise defined herein shall have
the meaning given to them in the Indenture.
GENERAL
The Securities will be unsecured obligations of the Company and will not be
subordinated to other indebtedness of the Company.
Securities offered by this Prospectus will be limited to an aggregate
initial public offering price of approximately $1,350,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies.
The Indenture does not limit the aggregate principal amount of Securities
which may be issued thereunder and provides that Securities may be issued
thereunder from time to time in one or more series.
Reference is made to the Prospectus Supplement relating to the particular
series of Securities offered thereby for the following terms, when applicable,
of the Offered Securities: (a) the designation of the Offered Securities; (b)
any limit on the aggregate principal amount of the Offered Securities; (c) the
date or dates on which the Offered Securities will mature; (d) the rate or rates
(which may be fixed or variable) per annum at which the Offered Securities will
bear interest, if any, and the date from which such interest will accrue; (e)
the dates on which such interest, if any, will be payable and the Regular Record
Dates for such Interest Payment Dates; (f) any mandatory or optional sinking
fund or purchase fund or analogous provisions; (g) if applicable, the date after
which and the price or prices at which the Offered Securities may, pursuant to
any optional or mandatory redemption provisions, be redeemed at the option of
the Company or the Holder thereof and the other detailed terms and provisions of
such optional or mandatory redemption; (h) the place or places of payment of
principal of (and premium, if any) and interest on the Offered Securities; (i)
special provisions relating to the issuance of any Bearer Securities of any
series; (j) the currency in Dollars, Foreign Currency or any composite currency
of any series; (k) any deletions from, changes in or additions to Events of
Default or covenants of the Company in the Indenture; (l) the form of Securities
and Coupons, if any; and (m) any other terms of the Offered Securities. (Section
301)
The Securities will be issuable as Registered Securities, as Bearer
Securities or both. Securities of a series may be issuable in the form of one or
more Global Securities, as described below under "Global Securities." Unless the
Prospectus Supplement relating thereto specifies otherwise, 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 or any integral
multiple thereof. The Prospectus Supplement relating to a series of Securities
denominated in a foreign or composite currency will specify the denomination
thereof. (Section 302)
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<PAGE>
At the option of the Holder upon request confirmed in writing, 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 equal
aggregate principal amount of Registered Securities or Bearer Securities of the
same series (with the same interest rate and maturity date) and Registered
Securities of any series 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, such Holder will not be required to surrender the Coupon
relating to such interest payment date. Registered Securities may not be
exchanged for Bearer Securities. (Section 305)
Securities may be presented for exchange, and Registered Securities (other
than a Global Security) may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed), at the office of any transfer
agent or at the office of the Security Registrar, without service charge and
upon payment of any taxes and other govermental charges as described in the
Indenture. Such registration of transfer or exchange will be effected upon the
transfer agent's or the Security Registrar's, as the case may be, being
satisfied with the documents of title and identity of the person making the
request. (Section 305). Bearer Securities will be transferable by delivery.
The Company may, in addition to issuing Securities with terms different from
those of Securities previously issued, "reopen" a previous issue of a series of
Securities and issue additional Securities of such series.
Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount from the principal
amount thereof. If the Offered Securities are Original Issue Discount
Securities, the special Federal income tax, accounting and other considerations
applicable thereto will be described in the Prospectus Supplement relating
thereto. As defined in the Indenture, "Original Issue Discount Security" means
any security which provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration of the Maturity thereof
upon the occurrence of an Event of Default and the continuation thereof.
(Sections 101 and 502)
PAYMENT AND PAYING AGENTS
Payment of principal of and premium, if any, on Registered Securities (other
than a Global Security) will be made in the designated currency against
surrender of such Registered Securities at the Corporate Trust Office of the
Trustee in The City of New York. Unless otherwise indicated in the Prospectus
Supplement, payment of any installment of interest on Registered Securities will
be made to the person in whose name such Security is registered at the close of
business on the Regular Record Date for such interest. Unless otherwise
indicated in the Prospectus Supplement, payments of such interest will be made
at the Corporate Trust Office of the Trustee in The City of New York, or by a
check in the designated currency mailed to the Holder at such Holder's
registered address. (Sections 307 and 1001)
Payment of principal of and premium, if any, and interest on Bearer
Securities will be payable in the currency and in the manner designated in the
Prospectus Supplement, subject to any applicable laws and regulations, at such
paying agencies outside the United States as the Company may appoint from time
to time. The paying agents outside the United States initially appointed by the
Company for a series of Securities will be named in the Prospectus Supplement.
The Company may terminate the appointment of any of the paying agents from time
to time, except that the Company will maintain at least one paying agent in The
City of New York for payments with respect to Registered Securities and such
other paying agents as shall be required. (Section 1002)
All moneys paid by the Company to a paying agent for the payment of
principal of or premium, if any, or interest on any Security that remains
unclaimed at the end of three years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and the Holder
of such Security or any Coupon appertaining thereto will thereafter look only to
the Company for payment thereof. (Section 1003)
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GLOBAL SECURITIES
The Securities of a series may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
depository identified in the Prospectus Supplement relating to such series.
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form. (Section 311)
The specific terms of the depository arrangement with respect to a series of
Securities will be described in the Prospectus Supplement relating to such
series. Unless otherwise indicated in an accompanying Prospectus Supplement, the
following provisions will apply to any depository arrangements.
Global Securities will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") and registered in the name of DTC or its nominee. Except
as set forth below or in an accompanying Prospectus Supplement, Global
Securities may not be transferred except as a whole by DTC to a nominee of DTC
or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee
to a successor of DTC or a nominee of such successor.
DTC has advised the Company that it is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for persons that have accounts with DTC ("participants") and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of certificates. DTC's participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations,
some of which (and/or their representatives) own DTC. Access to DTC's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Persons who are not participants may
beneficially own interests in securities held by DTC only through participants.
Upon the issuance by the Company of a Global Security, DTC will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Securities represented by such Global Security to the accounts of
participants. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in Global Securities will be shown on, and the
transfer of such interests will be effected only through, records maintained by
DTC or its nominee (with respect to beneficial interests of participants) or by
participants or persons that may hold interests through participants (with
respect to beneficial interests of beneficial ownership). The laws of some
states may require that certain purchasers of securities take physical delivery
of such securities in certificated form. Such limits and such laws may impair
the ability to transfer beneficial interests in Global Securities.
So long as DTC or its nominee is the registered owner of the Global
Securities, DTC or its nominee, as the case may be, will be considered the sole
owner or holder of the Securities represented by such Global Securities for all
purposes under the Indenture. Except as provided in an accompanying Prospectus
Supplement, owners of beneficial interests in Global Securities will not be
entitled to have Securities represented by such Global Securities registered in
their names, will not receive or be entitled to receive physical delivery of
such Securities in certificated form and will not be considered the owners or
holders thereof under the Indenture.
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OPTIONAL REDEMPTION
Reference is made to the Prospectus Supplement relating to each series of
Offered Securities for any optional redemption provisions relating to such
Offered Securities.
SINKING FUND
Reference is made to the Prospectus Supplement relating to each series of
Offered Securities for any sinking fund provisions relating to such Offered
Securities.
LIMITATIONS ON LIENS
The Indenture provides that the Company will not create, assume or suffer to
exist any mortgage, pledge, encumbrance, lien or charge of any kind on any of
its properties or assets, with certain exceptions as to liens created otherwise
than in connection with the borrowing of money or the obtaining of credit (so
long as such lien does not materially impair the value or use of such
properties) and as to liens on properties at the time of their acquisition or
created on properties being constructed or acquired, or to secure a portion of
the cost or purchase price thereof (but only if such lien covers fixed assets or
other physical properties only and such property is not encumbered in excess of
two-thirds of the lesser of the cost or fair value thereof); provided, however,
that the limitations on liens shall apply only to liens which in the aggregate
exceed 5% of the Company's consolidated net worth as of the end of the Company's
most recent accounting period preceding the creation or assumption of any such
lien. (Section 1005)
RESTRICTIONS ON RELATED COMPANY TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any
Subsidiary, directly or indirectly, to: (1) make an acquisition from a Related
Company of any assets, excluding the acquisition of Affiliate-Related
Receivables or the making of Investments in Related Companies, if such
acquisition, in any one transaction or series of related transactions, is one in
which the aggregate consideration to be paid by the Company or Subsidiary shall
exceed $50 million, unless the Company shall have received a written opinion
from an investment banking firm of national reputation or an appraiser
commercially experienced in the type of assets to be acquired to the effect that
the purchase price to be paid by the Company or a Subsidiary for such assets
does not exceed the fair market value of such assets or to the effect that such
purchase price is fair to the Company and Subsidiary from a financial point of
view; or (2) make any Investment in any Related Company unless after the making
of such Investment the sum of the aggregate outstanding Investments in Related
Companies owned by the Company and any Subsidiary shall not exceed 10% of
Consolidated Tangible Net Worth; or (3) purchase any Affiliate-Related
Receivable unless after the purchase of such Affiliate-Related Receivable the
sum of the aggregate outstanding Affiliate-Related Receivables owned by the
Company and any Subsidiary shall not exceed 5% of Consolidated Total Assets;
unless both (x) the provisions of clauses (1), (2) or (3) above are met and (y)
the terms and conditions of such transaction are no more favorable to the
Related Company than the terms and conditions which the Related Company could
have obtained, taking into account all applicable factors including the credit
quality of the Related Company, from a Person which was not the Company or a
Subsidiary of the Company. (Section 1008). In the event the opinion of an
investment banking firm or appraiser shall be required, the investment banking
firm or appraiser which provides the opinion will be selected by the Company
from time to time, in its sole discretion, and may include a firm which is, at
the time of rendering such opinion, or was previously, or in the future may be,
a Related Company.
"Related Company" is defined in the Indenture as (i) any Person that
directly, or indirectly through one or more intermediaries, controls the Company
(a "Controlling Person") or (ii) any Person (other than the Company or a
Subsidiary of the Company) which is controlled by or is under common control
with a Controlling Person. As used herein, the term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
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RESTRICTIONS ON MERGER
The Company may not consolidate or merge with any other corporation or sell,
lease, transfer or otherwise dispose of all or substantially all of its assets
to another Person unless (i) the successor Person is organized and existing
under the laws of the United States of America or a State thereof or the
District of Columbia and assumes payment of the principal of and interest on the
Securities and the performance and the observance of the Indenture, and (ii)
such successor Person shall not, immediately after such merger or consolidation,
or such sale or conveyance, be in default in the performance of any covenant or
condition of the Indenture. (Section 801)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Securities of any series: (a) failure to pay principal of or premium, if any, on
any Security of that series at its Maturity; (b) failure to pay any interest on
any Security of that series when due, continued for 30 days; (c) failure to
deposit any sinking fund payment, when due, in respect of any Security of that
series; (d) any other defaults in the performance, or breach, of any covenant of
the Company in the Indenture, continued for 60 days after notice of such default
or breach from the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities of that series; (e) the occurrence of a default in
payment of any debt resulting from borrowing in excess of $10,000,000 or any
interest thereon for a period longer than the specified period of grace which
shall have resulted in acceleration of the maturity thereof without such
acceleration having been rescinded within 10 Business Days after due notice to
the Company of such default by the Trustee or by such notice to the Company and
the Trustee by Holders of at least 10% of the principal amount of the
outstanding Securities of that series; (f) certain events of bankruptcy,
insolvency or reorganization; and (g) any other Event of Default provided with
respect to Securities of that series. (Section 501)
If an Event of Default with respect to Outstanding Securities of any series
shall occur and be continuing, either the Trustee or the Holders of at least 25%
in principal amount of the Outstanding Securities of that series may declare the
principal amount (or, if the Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all Securities of that series to be due and payable
immediately. However, at any time after a declaration of acceleration with
respect to Securities of any series has been made, but before a judgment or
decree based on such acceleration has been obtained, the Holders of a majority
in principal amount of Outstanding Securities of that series may, under certain
circumstances, rescind and annul such acceleration. (Section 502). For
information as to waiver of defaults, see "Modification and Waiver." Reference
is made to the Prospectus Supplement relating to each series of Offered
Securities which are Original Issue Discount Securities for the particular
provisions relating to acceleration of the Maturity of a portion of the
principal amount of such Original Issue Discount Securities upon the occurrence
of an Event of Default and the continuation thereof.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 603). Subject to such
provisions for indemnification of the Trustee, the Holders of a majority in
principal amount of the Outstanding Securities of any series will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Securities of that series. (Section 512)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1006)
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DEFEASANCE
The Indenture provides that, if specified with respect to the Securities of
a particular series, the Company (a) shall be discharged from its obligations in
respect of the Securities of such series ("defeasance and discharge"), or (b)
may cease to comply with the restrictive covenants ("covenant defeasance") in
Article 8 (Consolidation, Merger or Sale), Section 1005 (Limitations on Liens)
and Section 1008 (Restrictions on Related Company Transactions), and any such
omission shall not be an Event of Default with respect to the Securities of such
series, in each case at any time prior to the Stated Maturity or redemption
thereof, when the Company has irrevocably deposited with the Trustee, in trust,
(i) sufficient funds in the currency or currency unit in which the Securities
are denominated to pay the principal of (and premium, if any), and interest to
Stated Maturity (or redemption) on, the Securities of such series, or (ii) such
amount of direct obligations of, or obligations the principal of and interest on
which are fully guaranteed by, the government which issued the currency in which
the Securities are denominated, and which are not subject to prepayment,
redemption or call, as will, together with the predetermined and certain income
to accrue thereon without consideration of any reinvestment thereof, be
sufficient to pay when due the principal of (and premium, if any), and interest
to Stated Maturity (or redemption) on, the Securities of such series. Such
defeasance and discharge and covenant defeasance are conditioned upon the
Company's delivery of an opinion of counsel that the Holders of the Securities
of such series will have no Federal income tax consequences as a result of such
deposit. Upon such defeasance and discharge, the Holders of the Securities of
such series shall no longer be entitled to the benefits of the Indenture, except
for the purposes of registration of transfer and exchange of the Securities of
such series and replacement of lost, stolen or mutilated Securities and shall
look only to such deposited funds or obligations for payment. The Indenture
contemplates that such defeasance and discharge or covenant defeasance may be
accomplished in a manner otherwise than that set forth above, if so specified in
the terms of the Securities of any series and as disclosed in a Prospectus
Supplement relating to the Securities of such series. (Section 403)
Under current Federal income tax law, the defeasance and discharge
contemplated in the preceding paragraph would be treated as a taxable exchange
of the Securities for an interest in the trust. As a consequence, each Holder of
Securities would recognize gain or loss equal to the difference between the
value of the Holder's interest in the trust and the Holder's tax basis for the
Securities deemed exchanged. Thereafter, each Holder would be required to
include in income his share of any income, gain and loss recognized by the
trust. Although a Holder could be subject to Federal income tax on the deemed
exchange of the defeased Securities for an interest in the trust, such Holder
would not receive any cash until the maturity (or an earlier redemption) of such
Securities (except for current interest payments, if any). Under current Federal
income tax law, covenant defeasances would not similarly be treated as a taxable
exchange of such Securities. Prospective investors are urged to consult their
own tax advisors as to the specific consequences of such defeasances and
discharges, including the applicability and effect of tax laws other than the
Federal income tax law.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of 66 2/3% in principal amount of
the Outstanding Securities of each series affected thereby; provided, however,
that no such modification or amendment may, without the consent of the Holder of
each Outstanding Security affected thereby, (a) change the stated maturity date
of the principal of, or any installment of principal of or interest on, any
Security, (b) reduce the principal amount of, or the premium, if any, or
interest, if any, on, any Security, (c) reduce the amount of principal of any
Original Issue Discount Security payable upon acceleration of the Maturity
thereof, or (d) 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. (Section
902)
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Modifications and amendments of the Indenture may be made by the Company and
the Trustee without the consent of any Holder to evidence a successor to the
Company, to add to the Company's covenants or Events of Default, to permit or
facilitate Securities to be issued by book entry or in bearer form or relating
to the place of payment thereof, to provide for a successor trustee, to
establish forms or terms of Securities, to change or eliminate any provision not
adversely affecting any interests of Holders of outstanding Securities in any
material respect or to cure any ambiguity or inconsistency. (Section 901)
The Holders of 66 2/3% in principal amount of the Outstanding Securities of
any series may on behalf of the Holders of all Securities of that series waive,
insofar as that series is concerned, compliance by the Company with certain
restrictive provisions of the Indenture. (Section 1007). The Holders of a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all Securities of that series waive any past default
under the Indenture with respect to Securities of that series, except a default
in the payment of the principal of, or premium, if any, or interest, if any, on,
any Security of that series or in respect of any provision which under the
Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding Security of that series affected. (Section 513)
THE TRUSTEE
The Trustee from time to time makes loans to, and acts as depository for
funds of, the Company and affiliates of the Company.
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PLAN OF DISTRIBUTION
The Company may sell the Securities in any of the following ways: (i)
through underwriters or dealers; (ii) directly; (iii) through agents; or (iv)
through a combination of any such methods of sale. The Prospectus Supplement
with respect to an offering of Offered Securities will set forth the terms of
such offering, including the name or names of any underwriters, the purchase
price of the Offered Securities and the proceeds to the Company from such sale,
any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchanges on which
the Offered Securities may be listed.
If underwriters are used in the sale, the Securities 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 sale. The Securities may be
either offered to the public through underwriting syndicates represented by one
or more managing underwriters or by underwriters without a syndicate. Unless
otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all the
Offered Securities if any 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.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Securities in respect of which this Prospectus is delivered
will be named, and the terms of such agency (including any commissions payable
by the Company to such agent) will be set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
As one of the means of direct issuance of the Securities, the Company may
utilize the services of an entity through which it may conduct an electronic
"dutch auction" or similar offering of the Offered Securities among potential
purchasers who are eligible to participate in the auction or offering of such
Offered Securities, if so described in the applicable Prospectus Supplement.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
This Prospectus together with an applicable Prospectus Supplement may also
be used by Smith Barney in connection with offers and sales of the Securities in
market-making transactions at negotiated prices related to prevailing market
prices at the time of sale. Smith Barney may act as principal or agent in such
transactions. Smith Barney has no obligation to make a market in any of the
Securities and may discontinue its market-making activities at any time without
notice, at its sole discretion. The Securities issued hereunder will be new
issues of securities with no established trading market and no assurance can be
made as to the existence or liquidity of a trading market for such Securities.
Smith Barney, a member of the National Association of Securities Dealers,
Inc. (the "NASD") and an affiliate of the Company, may participate in offers and
sales of the Securities. Accordingly, any such offers and sales will conform
with the requirements set forth in any applicable sections of Schedule E to the
By-Laws of the NASD.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the
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Securities Act, and may engage in transactions with, or perform services for,
the Company and affiliates of the Company.
ERISA MATTERS
By virtue of the Company's affiliation with certain subsidiaries of
Travelers, including Smith Barney, that are involved in investment advisory and
asset management activities, the Company, Travelers and any direct or indirect
subsidiary of either of them 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
Internal Revenue Code of 1986, as amended (the "Code"), with respect to many
employee benefit plans. "Prohibited transactions" within the meaning of ERISA
and the Code may result if the Securities are acquired by an employee benefit
plan with respect to which the Company, Travelers or any direct or indirect
subsidiary of either is a party in interest, unless the Securities 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
Securities should consult with its legal counsel.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1993 and 1992, and for each of the years in the three-year period
ended December 31, 1993, included in the Company's Annual Report on Form 10-K
for the year 1993, have been incorporated by reference herein, in reliance upon
the report (also incorporated by reference herein) of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick LLP covering
the December 31, 1993 consolidated financial statements and schedules refers to
changes in the Company's methods of accounting for postretirement benefits other
than pensions and accounting for postemployment benefits in 1993, and in its
method of accounting for income taxes in 1992.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Charles O. Prince, III, Esq., as counsel for the Company, 65 East
55th Street, New York, New York, or by counsel to be identified in the
Prospectus Supplement. Mr. Prince, Senior Vice President, General Counsel and
Secretary of the Company, beneficially owns, or has rights to acquire under
Travelers employee benefit plans, an aggregate of less than 1% of Travelers
Common Stock.
The validity of the Securities offered hereby will be passed upon for the
Underwriters or agents by counsel to be identified in the Prospectus Supplement.
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No dealer, salesperson or any
other person has been authorized to
give information, or to make any
representations, other than those $1,350,000,000
contained in this Prospectus
Supplement and the accompanying
Prospectus or the documents
incorporated by reference herein or
therein contained in this
Prospectus Supplement and the COMMERCIAL CREDIT
accompanying Prospectus, and, if COMPANY
given or made, such information or
representations must not be relied
upon as having been authorized by
the Company or any Agent. Neither
this Prospectus Supplement nor the Medium-Term Notes, Fifth Series
accompanying Prospectus constitutes
an offer to sell, or a solicitation
of an offer to buy, any securities
other than those to which it
relates or an offer to sell, or a
solicitation of an offer to buy,
those to which it relates in any
state to any person to whom it is
not lawful to make such offer or
solicitation in such state. The
delivery of this Prospectus
Supplement and the accompanying
Prospectus at any time does not
imply that the information
contained in either is correct as
of any time subsequent to its date.
---------------------- ----------------------
TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
January 18, 1995
Page
----
Prospectus Supplement (Including Prospectus
dated December 13, 1994)
Ratio of Earnings to Fixed
Charges . . . . . . . . . . S-4
Description of Notes . . . . S-4
Important Currency Exchange ------------------------
Information . . . . . . . . S-32
Foreign Currency Risks . . . S-33
Certain Federal Tax
Consequences . . . . . . .. S-34
Plan of Distribution . . . . S-39 Smith Barney Inc.
Legal Opinions . . . . . . . S-40 Lehman Brothers
Experts . . . . . . . . . . . S-40 Merrill Lynch & Co.
J.P. Morgan Securities Inc.
Prospectus Morgan Stanley & Co.
Incorporated
Available Information . . . . . 2
Incorporation of Certain
Documents by Reference . . . 3
The Company . . . . . . . . . . 4
Use of Proceeds . . . . . . . . 4
Ratio of Earnings to Fixed
Charges . . . . . . . . . . . 4
Description of Securities . . . 5
Plan of Distribution . . . . . 12
ERISA Matters . . . . . . . . . 13
Experts . . . . . . . . . . . . 13
Legal Matters . . . . . . . . . 13
