PROSPECTUS SUPPLEMENT
(To Prospectus Dated March 24, 1995)
U.S. $7,611,000,000
[LOGO] The CIT Group Holdings, Inc.
Medium-Term Notes
Due 9 Months or More From Date of Issue
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The CIT Group Holdings, Inc. (the "Corporation") may offer from time to
time its Medium-Term Notes (the "Senior Notes") and its Medium-Term Senior
Subordinated Notes (the "Senior Subordinated Notes") (the Senior Notes and the
Senior Subordinated Notes are referred to collectively herein as the "Notes"),
up to an aggregate initial offering price of U.S. $7,611,000,000 or the
equivalent thereof if any of the Notes are denominated in other currencies or
currency units (the "Specified Currency") as may be designated by the
Corporation at the time of offering (the "Foreign Currency Notes"). If specified
in the applicable Pricing Supplement, the maturity of certain of the Senior
Subordinated Notes may be subject to acceleration only in the event of certain
circumstances related to the insolvency of the Corporation. Each Note will
mature on a Business Day (as defined herein) nine months or more from the date
of issue, as selected by the initial purchaser and agreed to by the Corporation.
Unless otherwise specified in an accompanying pricing supplement to this
Prospectus Supplement (the "Pricing Supplement"), the Notes will be issued in
fully registered form in denominations of U.S. $1,000, and integral multiples
thereof or, in the case of Foreign Currency Notes, in the denominations
specified in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement and except for Foreign Currency Notes, the
Notes will be represented by one or more permanent global Notes registered in
the name of The Depository Trust Company or its nominee. Unless otherwise
specified in the applicable Pricing Supplement, the Notes will not be redeemable
prior to maturity.
The interest rate or interest rate formula, if any, issue price, priority,
stated maturity, Specified Currency, and redemption and repayment provisions, if
any, and other terms, if any, of each Note will be established by the
Corporation at the date of issuance of such Note and will be set forth in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, each Note will bear interest at a fixed rate (the "Fixed
Rate Notes"), or at a rate or rates determined by reference to LIBOR, the
Treasury Rate, the Commercial Paper Rate, the CD Rate, the Federal Funds Rate,
the Prime Rate, the 11th District Cost of Funds Rate, the CMT Rate, or other
rate basis, as specified in the applicable Pricing Supplement, as adjusted by
the Spread and/or Spread Multiplier, if any, applicable to such Note or by
reference to such other rate formula as specified in the applicable Pricing
Supplement (the "Floating Rate Notes"). The Notes may be issued as "Extendible
Notes" whose interest rate or interest rate formula may be adjusted on specified
dates and which may be subject to repayment at certain times at the option of
the holder or to redemption at certain times at the option of the Corporation.
Fixed Rate Notes may be issued as Original Issue Discount Notes (as defined
herein) at a discount from the principal amount payable at maturity thereof, and
may include provisions under which holders of Original Issue Discount Notes do
not receive periodic payments of interest on such Notes ("Zero-Coupon Notes").
Interest rates and interest rate bases or formulae are subject to change by the
Corporation but no such change will affect any Note already issued or as to
which an offer to purchase has been accepted by the Corporation.
Interest on each Fixed Rate Note, other than Zero-Coupon Notes, and
interest on each Floating Rate Note is payable on the dates established by the
Corporation on the date of issue and set forth in such Note and in the
applicable Pricing Supplement. See "Description of the Notes". Unless otherwise
specified in the applicable Pricing Supplement, a Foreign Currency Note will not
be sold in, or to a resident of, the country of the Specified Currency in which
such Note is denominated. See "Foreign Currency Risks".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT, OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
====================================================================================================================================
Price to Public(1) Agents' Commissions or Discounts(2) Proceeds to Corporation(2)(3)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Per Note................... 100% .125%--.750% 99.250%--99.875%
- ------------------------------------------------------------------------------------------------------------------------------------
Total(4)................... U.S.$7,611,000,000 U.S.$9,513,750--U.S.$57,082,500 U.S.$7,553,917,500--U.S.$7,601,486,250
====================================================================================================================================
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to public will be 100% of the principal amount.
(2) Unless otherwise specified in the applicable Pricing Supplement, the
Corporation will pay to Lehman Brothers, Lehman Brothers Inc. (including
its affiliate Lehman Government Securities Inc.), CS First Boston
Corporation, Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Salomon Brothers Inc, and UBS Securities Inc. (each an "Agent" and,
collectively, the "Agents"), a commission, in the form of a discount, on
the Notes (whether denominated in U.S. dollars or in a Specified Currency)
ranging from .125% to .750% of the principal amount of any Note sold
through any such Agent, depending upon the maturity of such Note, except
that the commission payable by the Corporation to the Agents with respect
to Notes with maturities of greater than thirty years will be negotiated at
the time the Corporation issues such Notes. The Corporation also may sell
Notes to any Agent, as principal, at a discount for resale to one or more
investors and other purchasers at varying prices related to prevailing
market prices at the time of resale, as determined by such Agent or, if so
agreed, on a fixed public offering price basis. 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 any agency sale of a Note of identical maturity. No
commission will be payable on Notes sold directly to purchasers by the
Corporation.
(3) Before deduction of estimated expenses payable by the Corporation of U.S.
$3,617,716.
(4) Or the equivalent thereof for Notes denominated in a Specified Currency.
------------------
The Notes are being offered hereby on a continuing basis for sale directly
by the Corporation in those jurisdictions where it is authorized to do so. In
addition, the Corporation may offer the Notes through the Agents who have
separately agreed to use their reasonable best efforts to solicit offers to
purchase the Notes. The Corporation may also sell Notes to any Agent, as
principal, at a discount for resale to one or more investors and other
purchasers at varying prices related to prevailing market prices at the time of
resale, as determined by such Agent or, if so agreed, on a fixed public offering
price basis. The Notes will not be listed on any securities exchange, and there
can be no assurance that there will be a secondary market for the Notes. There
is no assurance that the full amount of Notes offered hereby may be sold, and
the Corporation reserves the right to reduce the amount of Notes offered hereby
at any time. The Corporation reserves the right to withdraw, cancel, or modify
the offer made hereby without notice. The Corporation or any Agent may reject
any offer to purchase Notes in whole or in part. See "Plan of Distribution"
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Lehman Brothers
CS First Boston
Goldman, Sachs & Co.
Merrill Lynch & Co.
Morgan Stanley & Co.
Incorporated
Salomon Brothers Inc
UBS Securities Inc.
April 5, 1995
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and, to the extent inconsistent therewith, replaces, the
description of the general terms of the Debt Securities set forth under the
heading "Description of Debt Securities" in the accompanying Prospectus, to
which description reference is hereby made. The Notes and the applicable Pricing
Supplement will specify certain additional terms of the Notes, which terms shall
supplement, and, to the extent inconsistent herewith and therewith, replace, the
descriptions set forth herein and in the accompanying Prospectus.
General
The Senior Notes will be issued as part of one or more separate, unlimited
series of Debt Securities constituting superior indebtedness under one or more
separate indentures (each, as supplemented, a "Senior Indenture", and
collectively, the "Senior Indentures"), in each case between the Corporation and
a banking institution organized under the laws of the United States or one of
the states thereof (each, a "Senior Trustee", and collectively, the "Senior
Trustees"). The Senior Subordinated Notes will be issued as either (i) an
unlimited series of Debt Securities constituting senior subordinated
indebtedness under one or more separate indentures (each, as supplemented, a
"Senior Subordinated Indenture", and collectively, the "Senior Subordinated
Indentures"), in each case between the Corporation and a banking institution
organized under the laws of the United States or one of the states thereof
(each, a "Senior Subordinated Trustee", and collectively, the "Senior
Subordinated Trustees"), or (ii) a separate unlimited series of Debt Securities
constituting senior subordinated indebtedness under the Senior Subordinated
Indentures which is intended to qualify as "Tier II Capital" under the rules and
regulations of the Ministry of Finance of Japan and the risk-based capital
guidelines of the Board of Governors of the Federal Reserve System of the United
States, if such series have the limited rights of acceleration described under
"Description of Debt Securities--Senior Subordinated Securities" and "--Events
of Default" in the accompanying Prospectus. The Senior Indentures and the Senior
Subordinated Indentures are collectively referred to herein as the "Indentures".
Unless otherwise specified in the applicable Pricing Supplement, with respect to
each separate series of Notes issued under the Indentures, the applicable
Trustee will serve as registrar, paying agent and authenticating agent (in each
such capacity, the "Registrar", "Paying Agent" and "Authenticating Agent"), and
may act as exchange rate agent if so specified in the applicable Pricing
Supplement (in such capacity, the "Exchange Rate Agent").
The Notes may be denominated in U.S. dollars or may be denominated in such
other Specified Currencies as may be designated by the Corporation at the time
of the offering. The Notes offered hereby will be initially limited to an
aggregate initial offering price of U.S. $7,611,000,000 or the equivalent
thereof, at the Market Exchange Rate (as defined under "Special Provisions
Relating to Foreign Currency Notes--Payment Currency") on the applicable trade
date, in other Specified Currencies. The amount of Senior Notes and Senior
Subordinated Notes that may be issued (by virtue of offerings pursuant to other
prospectuses) under the Senior Indentures and the Senior Subordinated Indenture,
respectively, is unlimited. For a description of restrictions on the
Corporation's ability to issue Senior Subordinated Notes, see "Description of
Debt Securities--Certain Restrictive Provisions" in the accompanying Prospectus.
Each Note will mature nine months or more from the date of issue as
selected by the initial purchaser and agreed to by the Corporation. The specific
Maturity Date (as defined below) of each Note will be set forth on the face
thereof, and the specific Maturity Date, or the range of maturities, if any, for
the Notes will be set forth in the applicable Pricing Supplement. The Notes will
consist of one or more of (a) "Fixed Rate Notes", which may bear an interest
rate of zero in the case of Zero-Coupon Notes, (b) "Floating Rate Notes", on
which rates are determined, and adjusted periodically, by reference to an
interest rate basis or formula, adjusted by a "Spread" and/or "Spread
Multiplier", including but not limited to (i) "LIBOR Notes", (ii) "Treasury Rate
Notes", (iii) "Commercial Paper Rate Notes", (iv) "CD Rate Notes", (v) "Federal
Funds Rate Notes", (vi) "Prime Rate Notes", (vii) "11th District Cost of Funds
Rate Notes", (viii) "CMT Rate Notes", and (ix) Notes on which rates are
determined by reference to one or more other interest rate bases or formulae,
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(c) Notes bearing interest as otherwise specified in the applicable Pricing
Supplement, or (d) "Extendible Notes", on which interest rates or interest rate
bases or formulae may be adjusted on specified dates and may be subject to
repayment at certain times at the option of the holder or to redemption at
certain times at the option of the Corporation.
The Notes will be denominated in U.S. dollars and payments of principal of,
and premium and interest, if any, on the Notes will be made in U.S. dollars,
except for Foreign Currency Notes or as may otherwise be provided for in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, the Notes will be issued at 100% of their principal amount.
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
be issued in fully registered form only, without coupons. Notes denominated in
U.S. dollars will be issuable in denominations of $1,000 and integral multiples
thereof. Foreign Currency Notes will be issuable in the denominations specified
in the applicable Pricing Supplement. Unless otherwise specified in the
applicable Pricing Supplement and except for Foreign Currency Notes, the Notes
will be represented by one or more permanent global Notes registered in the name
of The Depository Trust Company, New York, New York (the "Depositary"), or its
nominee, as described below. Subject to the requirements imposed by the
Depositary, a single global Note will represent all Notes issued on the same day
and having the same terms, including, but not limited to, the same currency or
currency unit of denomination, Interest Payment Dates (as defined below),
interest rate or interest rate basis or formula, if any, priority, stated
maturity, and redemption and repayment provisions, if any. Payments of principal
of, and premium and interest, if any, on Notes represented by a global Note will
be made by the Paying Agent to the Depositary. See "Description of the
Notes--Book-Entry System".
Unless otherwise specified in the applicable Pricing Supplement, the
following terms have the meanings set forth below:
"Business Day" means any day, other than a Saturday or Sunday, that (a) is
neither a legal holiday nor a day on which banking institutions are generally
authorized or required by law or regulation to close (i) with respect to all
Notes, in The City of New York, and (ii) with respect to Foreign Currency Notes,
in the principal financial center of the country of the Specified Currency (or,
in the case of Foreign Currency Notes denominated in European Currency Units, in
Brussels, Belgium), and (b) with respect to LIBOR Notes, is also a London
Business Day (as defined below).
"Calculation Agent" means, unless otherwise specified in the applicable
Pricing Supplement, the Corporation acting in the capacity of calculation agent
with regard to the Floating Rate Notes and, where applicable, certain other
Notes.
"Calculation Date" means, with respect to any Floating Rate Note and, where
applicable, certain other Notes, unless otherwise specified in an applicable
Pricing Supplement, the earlier of (a) the Business Day immediately preceding
the applicable Interest Payment Date (as defined below), the date on which such
Note will mature (the "Maturity Date") or the date of redemption or repayment,
as the case may be, or (b) the fifth Business Day after an Interest
Determination Date (as defined below) relating to such Note.
"Index Maturity" means, with respect to any Floating Rate Note, the period
to maturity of the instrument or obligation on which the interest rate is based,
as specified in the applicable Pricing Supplement and in such Note.
"Interest Determination Date" means, for any Interest Reset Date (as
defined in "Description of the Notes --Interest Rates--Floating Rate Notes")
with respect to any Floating Rate Note, the date for determining the rate of
interest that will take effect on such Interest Reset Date, as specified therein
and in the applicable Pricing Supplement.
"Interest Payment Date" means a day on which interest is payable on the
applicable Note.
"Interest Rate" means, at any given time, the rate per annum at such time
at which the applicable Note bears interest.
"London Business Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
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Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on Floating
Rate Notes (including the calculation of the Interest Factor and the Money
Market Yield, each as described below) will be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point, with five one-millionths
of a percentage point rounded upward (e.g., 9.876545% (or .09876545) will be
rounded upward to 9.87655% (or .0987655)), and all U.S. dollar amounts used in
or resulting from such calculation on Floating Rate Notes will be rounded to the
nearest cent (with one-half cent being rounded upward), or in the case of
Floating Rate Notes denominated in a Specified Currency other than U.S. dollars,
to the smallest whole unit of the Specified Currency.
The Pricing Supplement relating to each Note will describe, among other
things, the following terms: (1) the Specified Currency in which such Note is
denominated; (2) whether such Note is a Fixed Rate Note or a Floating Rate Note;
(3) the price (expressed as a percentage of the aggregate principal amount
thereof) at which such Note will be issued (the "Issue Price"); (4) the Maturity
Date; (5) if such Note is a Fixed Rate Note, the Interest Rate, if any, for such
Note; (6) if such Note is a Floating Rate Note, the Initial Interest Rate, the
Interest Determination Date, the Interest Reset Dates, the Interest Payment
Dates, the Index Maturity, the Maximum Interest Rate and the Minimum Interest
Rate (as defined in "Description of the Notes--Interest Rates"), if any, and the
Spread and/or Spread Multiplier (as defined in "Description of the
Notes--Interest Rates"), if any, and any other terms relating to the particular
method of calculating the Interest Rate, for such Note; (7) if such Note may be
redeemed or repaid prior to maturity, the provisions relating to such redemption
or repayment; (8) whether such Note is a Senior Note or a Senior Subordinated
Note and, if a Senior Subordinated Note, whether the maturity of such Note may
be subject to acceleration by the holders or Trustee of such Note only in the
event of certain circumstances related to the insolvency of the Corporation; (9)
if such Note is an Extendible Note, the provisions relating to such extension;
(10) the date on which such Note will be issued (the "Issue Date"); (11) whether
such Note is a global Note or a certificated Note; (12) the Trustee, Registrar,
Paying Agent, and Authenticating Agent under the Indenture pursuant to which the
Note is to be issued; and (13) any other terms of such Note not inconsistent
with the provisions of the Indenture.
Payment and Paying Agents
Unless otherwise specified in the applicable Pricing Supplement, the
payment of the principal of, and premium and interest, if any, on each Note that
is to be made in U.S. dollars (including payments that are to be made in U.S.
dollars with regard to Foreign Currency Notes) will be made in the manner
described below. For a description of special provisions relating to the payment
of the principal of, and premium and interest, if any, on a Foreign Currency
Note to be made in a Specified Currency, see "Special Provisions Relating to
Foreign Currency Notes--Payment of Principal and Interest".
Unless otherwise specified in the applicable Pricing Supplement, interest
on Fixed Rate Notes will be payable semi-annually on each Interest Payment Date
and on the Maturity Date or upon earlier redemption or repayment. Unless
otherwise specified in the applicable Pricing Supplement, interest on the
Floating Rate Notes will be payable on the Interest Payment Dates set forth
below and on the Maturity Date or upon earlier redemption or repayment. Interest
payable on each Interest Payment Date will be paid to the person in whose name
the Note is registered on the registry books of the Registrar at the close of
business on the applicable record date (a "Record Date") next preceding each
Interest Payment Date; provided, however, that interest payable on the Maturity
Date or upon earlier redemption or repayment will be payable to the person to
whom principal shall be payable. Unless otherwise specified in an applicable
Pricing Supplement, the first payment of interest on any Note originally issued
between a Record Date and an Interest Payment Date will be made on the next
succeeding Interest Payment Date to the holder of record with respect to such
Interest Payment Date.
Interest on each Note (other than global Notes and Foreign Currency Notes
and other than interest payable to the holder thereof, if any, on the Maturity
Date or upon earlier redemption or repayment) will be paid by check mailed to
the person in whose name the Note is registered at the close of business on the
applicable Record Date. Except as provided below, the principal of, and premium,
if any, on each Note, and interest payable to the holder thereof, if any, when
the principal of such Note is payable, will be paid on the Maturity Date or upon
earlier redemption or repayment in immediately available funds upon surrender of
the Note at the corporate trust office of the Paying Agent in the Borough of
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Manhattan, The City of New York. If the Paying Agent receives a written request
from a holder of U.S. $1,000,000 or more (or its equivalent in the Specified
Currency, if other than U.S. dollars) in aggregate principal amount of the Notes
not later than the close of business on (a) a Record Date pertaining to an
Interest Payment Date or (b) the fifteenth day prior to the Maturity Date or the
date of redemption or repayment, if any, the Paying Agent will, subject to
applicable laws and regulations, until it receives notice to the contrary (but,
in the case of payments to be made on the Maturity Date or upon earlier
redemption or repayment, only after surrender of the Note or Notes in the
Borough of Manhattan, The City of New York, not later than one Business Day
prior to the Maturity Date or the date of redemption or repayment, as the case
may be), make all U.S. dollar payments to such holder by wire transfer to the
account designated in such written request. Payment of principal of, and premium
and interest, if any, on Notes represented by a permanent global Note registered
in the name of or held by the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner and
holder of the permanent global Note representing such Notes. The Corporation may
at any time designate additional Paying Agents or rescind the designation of any
Paying Agent or approve a change in the office through which any Paying Agent
acts.
Interest Rates
Each Note, except Zero-Coupon Notes, will bear interest from its Issue Date
at the fixed rate per annum, or at the floating rate per annum determined
pursuant to the interest rate formula, stated on the face thereof and in the
applicable Pricing Supplement. Interest Rates are subject to change by the
Corporation from time to time, but no such change will affect any Notes
theretofore issued or as to which an offer has been accepted by the Corporation.
Unless otherwise specified in the applicable Pricing Supplement, the
Interest Rate on each Note will be equal to (a) in the case of a Fixed Rate
Note, a fixed rate, or (b) in the case of a Floating Rate Note, either (i) an
interest rate determined by reference to the interest rate basis specified in
the applicable Pricing Supplement plus or minus the Spread, if any, and/or (ii)
an interest rate calculated by reference to the interest rate basis specified in
the applicable Pricing Supplement multiplied by the Spread Multiplier, if any.
The "Spread" is the number of basis points specified in the applicable Pricing
Supplement as being applicable to the Interest Rate for such Floating Rate Note,
and the "Spread Multiplier" is the percentage specified in the applicable
Pricing Supplement as being applicable to the Interest Rate for such Floating
Rate Note. Any Floating Rate Note may also have either or both of the following:
(i) a maximum numerical Interest Rate limitation, or ceiling, on the rate of
interest which may accrue during any interest period (the "Maximum Interest
Rate"); and (ii) a minimum numerical Interest Rate limitation, or floor, on the
rate of interest which may accrue during any interest period (the "Minimum
Interest Rate"). The applicable Pricing Supplement will specify the interest
rate basis and the Spread or Spread Multiplier, if any, or other interest rate
formula and the Maximum or Minimum Interest Rate, if any, applicable to each
Floating Rate Note. The Interest Rate on the Notes will in no event be higher
than the maximum rate permitted by New York law as the same may be modified by
United States law of general application. Under present New York law the maximum
rate of interest which may be charged to a corporation 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.
Fixed Rate Notes
Each Fixed Rate Note, except Zero-Coupon Notes, will bear interest from the
Issue Date at the annual interest rate stated therein and specified in the
applicable Pricing Supplement. Interest on the Fixed Rate Notes, except
Zero-Coupon Notes, will be payable on the Interest Payment Dates stated therein
and specified in the applicable Pricing Supplement. Unless otherwise specified
in the applicable Pricing Supplement, the Interest Payment Dates for the Fixed
Rate Notes will be January 15 and July 15 of each year and on the Maturity Date
or upon earlier redemption or repayment. Unless otherwise specified in the
applicable Pricing Supplement, the Record Dates for the Fixed Rate Notes will be
the fifteenth calendar day next preceding each Interest Payment Date. Unless
otherwise specified in the applicable Pricing Supplement, interest will be
computed on the basis of a 360-day year of twelve 30-day months. If an Interest
Payment Date or the Maturity Date (or the date of redemption or repayment) with
respect to a Fixed Rate Note falls on a day that is not a Business Day, the
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payment will be made on the next Business Day as if it were made on the date
such payment was due, and no interest will accrue on the amount so payable for
the period from and after such Interest Payment Date or the Maturity Date (or
the date of redemption or repayment), as the case may be. Interest payments on
each Fixed Rate Note will include the amount of interest accrued from and
including the last Interest Payment Date to which interest has been paid (or
from and including the Original Issue Date if no interest has been paid with
respect to such Note) to, but excluding, the applicable Interest Payment Date,
or Maturity Date, as the case may be.
Fixed Rate Notes may be issued as discounted securities (bearing no
interest in the case of Zero-Coupon Notes or bearing interest at a rate which at
the time of issuance is below market rates) at an issue price lower than the
principal amount thereof and which provide that upon redemption, repayment, or
acceleration of the maturity thereof an amount less than the principal amount
thereof shall become due and payable, or which for United States federal income
tax purposes would be considered original issue discount notes ("Original Issue
Discount Notes"). Certain information concerning United States federal income
tax aspects of Zero-Coupon Notes or Original Issue Discount Notes is set forth
elsewhere in this Prospectus Supplement and may be set forth in the applicable
Pricing Supplement.
Floating Rate Notes
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Each Floating Rate Note will bear
interest from the Issue Date at the floating rate per annum determined pursuant
to the interest rate formula stated therein and specified in the applicable
Pricing Supplement. Interest on the Floating Rate Notes will be payable on the
Interest Payment Dates stated therein and specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Payment Dates for Floating Rate Notes will be, in the case of Floating
Rate Notes which reset (a) daily, weekly, or monthly, either the third Wednesday
of each month or the third Wednesday of March, June, September, and December of
each year, as specified in the Note and in the applicable Pricing Supplement,
(b) quarterly, the third Wednesday of March, June, September, and December of
each year, (c) semi-annually, the third Wednesday of the two months of each year
specified in the Note and in the applicable Pricing Supplement, and (d)
annually, the third Wednesday of the month specified in the Note and in the
applicable Pricing Supplement and, in each case, on the Maturity Date or upon
earlier redemption or repayment. Interest payments on each Floating Rate Note
will include the amount of interest accrued from and including the last Interest
Payment Date to which interest has been paid (or from and including the Original
Issue Date if no interest has been paid with respect to such Note) to, but
excluding, the applicable Interest Payment Date, or Maturity Date, as the case
may be. The Record Dates for the Floating Rate Notes shall be the fifteenth
calendar day next preceding each Interest Payment Date and interest will be
computed in the manner set forth below.
If an Interest Payment Date, other than an Interest Payment Date occurring
on the Maturity Date (or the date of redemption or repayment), with respect to a
Floating Rate Note would otherwise fall on a day that is not a Business Day with
respect to such Note, such Interest Payment Date will be postponed to the next
succeeding day that is a Business Day with respect to such Note, except that in
the case of a LIBOR Note, if such day falls in the next calendar month, such
Interest Payment Date will be the preceding day that is a Business Day with
respect to such Note. If the Maturity Date (or the date of redemption or
repayment) with respect to a Floating Rate Note would otherwise fall on a day
that is not a Business Day with respect to such Note, the payment of principal
and premium and interest, if any, will be made on the next succeeding Business
Day, and no interest on such payment will accrue for the period from and after
the Maturity Date (or the date of redemption or repayment).
Accrued interest from the date of issue or from the last date to which
interest has been paid or duly provided for with respect to any Floating Rate
Note will be calculated by multiplying the face amount of such Note by an
accrued Interest Factor (as defined below). This accrued Interest Factor will be
computed by adding the Interest Factors calculated for each day in the period
for which accrued interest is being calculated. Unless otherwise specified in
the applicable Pricing Supplement, the "Interest Factor" for any Floating Rate
Note for each such day will be computed by dividing the Interest Rate applicable
to such day by 360, or, in the case of any Treasury Rate Note or CMT Rate Note,
by the actual number of days in the year.
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The Interest Rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually, or annually (each date on which such reset
occurs, an "Interest Reset Date"), as specified therein and in the applicable
Pricing Supplement.
Unless otherwise specified in the Note and in the applicable Pricing
Supplement, the "Interest Reset Date" will be, in the case of Floating Rate
Notes which reset (a) daily, each Business Day, (b) weekly, the Wednesday of
each week (other than weekly reset Treasury Rate Notes, which reset on the
Tuesday of each week, except as provided below), (c) monthly, the third
Wednesday of each month (with the exception of monthly reset 11th District Cost
of Funds Rate Notes, which will reset on the first calendar day of the month),
(d) quarterly, the third Wednesday of March, June, September, and December of
each year, (e) semi-annually, the third Wednesday of the two months specified in
the Note and in the applicable Pricing Supplement, and (f) annually, the third
Wednesday of the month specified in the Note and in the applicable Pricing
Supplement. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day for such Floating Rate Note, the
Interest Reset Date for such Floating Rate Note shall be postponed to the next
succeeding Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Reset Date
will be the immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, (i) the
Interest Determination Date pertaining to an Interest Reset Date for a CD Rate
Note, CMT Rate Note, Commercial Paper Rate Note, Federal Funds Rate Note, or
Prime Rate Note will be the second Business Day next preceding the Interest
Reset Date, (ii) the Interest Determination Date pertaining to an Interest Reset
Date for a LIBOR Note will be the second London Business Day next preceding the
Interest Reset Date, (iii) the Interest Determination Date pertaining to an
Interest Reset Date for the 11th District Cost of Funds Rate Note will be the
last working day of the month of the Federal Home Loan Bank of San Francisco
(the "FHLB of San Francisco") next preceding the Interest Reset Date on which
the FHLB of San Francisco publishes the monthly 11th District Cost of Funds
Index (as defined below), and (iv) the Interest Determination Date pertaining to
an Interest Reset Date for a Treasury Rate Note will be the day of the week in
which such Interest Reset Date falls on which Treasury bills would normally be
auctioned. Treasury bills are usually sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is usually held on
the following Tuesday, except that such auction may be held on the preceding
Friday. If, as a result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Interest Determination Date pertaining
to the Interest Reset Date occurring in the next succeeding week. If an auction
date shall fall on any Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the first Business Day immediately
following such auction date.
Unless otherwise specified in the applicable Pricing Supplement, the
Interest Rate determined with respect to any Interest Determination Date for any
Floating Rate Note will become effective on and as of the next Interest Reset
Date; provided, however, that the Interest Rate in effect with respect to any
Floating Rate Note for the period from the Issue Date to the first Interest
Reset Date will be the "Initial Interest Rate" as set forth or described in the
applicable Pricing Supplement.
The Interest Rate determined with respect to any Interest Determination
Date for any Floating Rate Note will be determined by the Calculation Agent in
accordance with the provisions below. The Calculation Agent will, upon the
request of the holder of any Floating Rate Note and to the extent available,
provide the Interest Rate then in effect for such Note and, if different, the
Interest Rate to be in effect as a result of a determination made on the most
recent Interest Determination Date with respect to such Note.
LIBOR Notes. The Interest Rate on any LIBOR Note will be equal to the then
applicable LIBOR, as adjusted by the Spread and/or the Spread Multiplier, if
any, specified in such LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
applicable LIBOR will be determined according to the method specified in the
Note and in the applicable Pricing Supplement for each Interest Determination
Date relating to a LIBOR Note in accordance with the following provisions:
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(i) On each Interest Determination Date relating to a LIBOR Note,
LIBOR will be (a) where the applicable Pricing Supplement specifies
LIBOR-Telerate (as defined below) as the method for determining LIBOR, the
rate for deposits in a Designated Deposit Currency (as defined below)
having the Index Maturity specified in the applicable Pricing Supplement
which appears on the Telerate Page 3750 (as defined below) as of 11:00
a.m., London time, on such Interest Determination Date ("LIBOR-Telerate")
or (b) where the applicable Pricing Supplement specifies LIBOR-Reuters (as
defined below) as the method of determining LIBOR, the arithmetic mean of
the offered rates for deposits in U.S. dollars having the Index Maturity
specified in the applicable Pricing Supplement which appear on the Reuters
Screen LIBO Page (as defined below) as of 11:00 a.m., London time, on such
Interest Determination Date, provided that at least two such offered rates
appear on the Reuters Screen LIBO Page ("LIBOR-Reuters"); provided,
however, that if the method for determining LIBOR with respect to any LIBOR
Note is not specified therein or in the applicable Pricing Supplement,
"LIBOR" means LIBOR-Telerate.
(ii) If on any Interest Determination Date, (x) in any case where
LIBOR-Telerate applies, the rate for deposits in U.S. dollars having the
applicable Index Maturity does not appear on the Telerate Page 3750 as
specified in (i)(a) above, or, (y) in any case where LIBOR-Reuters applies,
fewer than two offered rates for deposits in U.S. dollars having the
applicable Index Maturity appear on the Reuters Screen LIBO Page as
specified in (i)(b) above, LIBOR will be determined on the basis of the
rates at which deposits in U.S. dollars are offered by four major banks in
the London interbank market selected by the Calculation Agent at
approximately 11:00 a.m., London time, on such Interest Determination Date
to prime banks in the London interbank market having the Index Maturity
specified in the applicable Pricing Supplement commencing on the second
London Business Day immediately following such Interest Determination Date
and in a principal amount equal to an amount 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 banks to provide a
quotation of its rate. If at least two such quotations are provided, the
rate in respect of such Interest Determination Date will be the arithmetic
mean of the quotations. If fewer than two quotations are provided, LIBOR in
respect of such Interest Determination Date will be the arithmetic mean of
the rates quoted by three major banks in The City of New York, selected by
the Calculation Agent, at approximately 11:00 a.m., New York City time, on
such Interest Determination Date for loans in U.S. dollars to leading
European banks, having the Index Maturity specified in the applicable
Pricing Supplement commencing on the second London Business Day immediately
following such Interest Determination Date and in a principal amount equal
to an amount 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 described in this sentence, the
Interest Rate will be the Interest Rate in effect on such Interest
Determination Date.
"Telerate Page 3750" means the display page designated as page 3750 on the
Dow Jones Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates).
"Reuters Screen LIBO Page" means the display page 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 of displaying London interbank
offered rates).
Treasury Rate Notes. The Interest Rate on any Treasury Rate Note will be
equal to the then applicable Treasury Rate (as defined below), as adjusted by
the Spread and/or Spread Multiplier, if any, specified in such Treasury Note and
in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date, the rate for the
auction of direct obligations of the United States ("Treasury bills") held on
such Interest Determination Date having the Index Maturity specified in the
applicable Pricing Supplement as such rate is published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication of the Board of Governors
of the Federal Reserve System ("H.15(519)"), under the heading "Treasury
bills--auction average (investment)". If Treasury bills have been auctioned on
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such Interest Determination Date but such rate has not been so published by 9:00
a.m., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the Treasury Rate means, with respect to such Interest
Determination Date, the auction average rate for the aforementioned auction for
such Interest Determination Date (expressed as a bond equivalent, on the basis
of a year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise reported by the United States Department of the Treasury. In the event
that the results of the auctions of Treasury bills are not published or reported
as provided above by 3:00 p.m., New York City time, on such Calculation Date or
no auction was held during the week in which the Interest Reset Date falls (or
on the Friday preceding such week as described above), then the Treasury Rate
will be calculated by the Calculation Agent and shall be the yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
on such Interest Determination Date of three leading primary United States
government securities dealers selected by the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the applicable Index
Maturity; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as described in this sentence, the Interest
Rate will be the Interest Rate in effect on such Interest Determination Date.
Commercial Paper Rate Notes. The Interest Rate on any Commercial Paper Rate
Note will be equal to the then applicable Commercial Paper Rate (as defined
below), as adjusted by the Spread and/or Spread Multiplier, if any, specified in
such Commercial Paper Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield (as defined below) of the rate on that date for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as such rate is published in H.15(519), under the heading "Commercial
Paper". In the event that such rate is not published by 3:00 p.m., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
then the Commercial Paper Rate will be the Money Market Yield of the rate on
such Interest Determination Date for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 p.m.
Quotations for U.S. Government Securities", or any successor publication of the
Federal Reserve Bank of New York ("Composite Quotations"), under the heading
"Commercial Paper". If by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date such rate is not yet published in
either H. 15(519) or Composite Quotations, the Commercial Paper Rate for that
Interest Determination Date will be the Money Market Yield of the arithmetic
mean of the offered rates of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent as of 11:00 a.m., New York
City time, on that Interest Determination Date, for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement placed for
industrial issuers whose bond rating is "AA", or the equivalent, from a
nationally recognized rating agency. If the dealers selected as aforesaid by the
Calculation Agent are not quoting as described in the preceding sentence, the
Interest Rate will be the Interest Rate in effect on such Interest Determination
Date.
"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 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.
CD Rate Notes. The Interest Rate on any CD Rate Note will be equal to the
then applicable CD Rate (as defined below), as adjusted by the Spread and/or
Spread Multiplier, if any, specified in such CD Rate Note and in the applicable
Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on that date
for negotiable certificates of deposit having the Index Maturity specified in
the applicable Pricing Supplement as such rate is published in H.15(519) under
the heading "CDs (Secondary Market)". In the event such rate is not published by
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the CD Rate will be the rate on such Interest
Determination Date for negotiable certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Certificates of Deposit". If by 3:00
p.m., New York City time, on such Calculation Date such rate is not published in
either H.15(519) or Composite Quotations, the CD Rate 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 that Interest
Determination Date, of major United States money center banks in The City of New
York selected by the Calculation Agent for negotiable certificates of deposit
with a remaining maturity closest to the specified Index Maturity in a
denomination of U.S. $5,000,000; provided, however, that if fewer than three
dealers selected as aforesaid by the Calculation Agent are quoting as described
in this sentence, the Interest Rate will be the Interest Rate in effect on such
Interest Determination Date.
Federal Funds Rate Notes. The Interest Rate on any Federal Funds Rate Note
will be equal to the then applicable Federal Funds Rate (as defined below), as
adjusted by the Spread and/or Spread Multiplier, if any, as specified in such
Federal Funds Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date, the rate on
that date for Federal Funds as such rate is published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate is not
published prior to 9:00 a.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then the Federal Funds Rate will
be the rate on such Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not published in
either H.15(519) or Composite Quotations, the Federal Funds Rate will be the
arithmetic mean of the rates, as of 9:00 a.m., New York City time, on such
Interest Determination Date for the last transaction in overnight Federal Funds
arranged by three leading brokers of Federal Funds transactions in The City of
New York selected by the Calculation Agent; provided, however, that if fewer
than three brokers selected as aforesaid by the Calculation Agent are quoting as
described in this sentence, the Interest Rate will be the Interest Rate in
effect on such Interest Determination Date.
Prime Rate Notes. The Interest Rate on any Prime Rate Note will be equal to
the then applicable Prime Rate (as defined below), as adjusted by the Spread
and/or Spread Multiplier, if any, specified in such Prime Rate Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date, the prime rate or
base lending rate on that date as such rate is published in H.15(519) under the
heading "Bank Prime Loan". In the event that such rate is not published prior to
9:00 a.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then 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 Interest Determination Date as quoted on the Reuters Screen NYMF Page. If
fewer than four such rates appear on the Reuters Screen NYMF Page on such date,
then the Prime Rate will be the arithmetic mean of the prime rates or base
lending rates (quoted on the basis of the actual number of days in the year
divided by a 360-day year) as of the close of business on such Interest
Determination Date by three major banks in The City of New York selected by the
Calculation Agent; provided, however, that if fewer than three banks selected as
aforesaid by the Calculation Agent are quoting as described in this sentence,
the Interest Rate will be the Interest Rate in effect on such Interest
Determination Date.
"Reuters Screen NYMF Page" means the display page 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).
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11th District Cost of Funds Rate Notes. The Interest Rate on any 11th
District Cost of Funds Rate Note will be equal to the then applicable 11th
District Cost of Funds Rate (as defined below), as adjusted by the Spread and/or
Spread Multiplier, if any, as specified in the 11th District Cost of Funds Rate
Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "11th
District Cost of Funds Rate" means, with respect to any Interest Determination
Date, the rate equal to the monthly weighted average cost of funds for the
calendar month immediately preceding the month in which such Interest
Determination Date falls, as set forth under the caption "11th District" on
Telerate Page 7058 (as defined below) as of 11:00 A.M., San Francisco time, on
such Interest Determination Date. If such rate does not appear on Telerate Page
7058 on the applicable Interest Determination Date, the 11th District Cost of
Funds Rate for such Interest Determination Date shall be the monthly weighted
average cost of funds paid by member institutions of the Eleventh Federal Home
Loan Bank District that was most recently announced (the "Index") by the FHLB of
San Francisco as such cost of funds for the calendar month immediately preceding
the date of such announcement. If the FHLB of San Francisco fails to announce
such rate for the calendar month immediately preceding such Interest
Determination Date, then the 11th District Cost of Funds Rate for such Interest
Determination Date will be the 11th District Cost of Funds Rate in effect on
such Interest Determination Date.
"Telerate Page 7058" means the display page designated as page 7058 on the
Dow Jones Telerate Service (or such other page as may replace page 7058 on that
service for the purpose of displaying the monthly weighted average cost of funds
paid by member institutions of the Eleventh Federal Home Loan Bank District).
CMT Rate Notes. The Interest Rate on any CMT Rate Note will be equal to the
then applicable CMT Rate (as defined below), as adjusted by the Spread and/or
Spread Multiplier, if any, as specified in the CMT Rate Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page (as defined below) under the caption
"...Treasury Constant Maturities...Federal Reserve Board Release H.15...Mondays
Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index
(as defined below) for (i) if the Designated CMT Telerate Page is 7055, the rate
on such Interest Determination Date and (ii) if the Designated CMT Telerate Page
is 7052, the week, or the month, as applicable, ended immediately preceding the
week in which the applicable Interest Determination Date occurs. If such rate is
no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the CMT Rate for such Interest Determination Date will
be such treasury constant maturity rate for the Designated CMT Maturity Index as
published in the relevant H.15(519). If such rate is no longer published, or if
not published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then the CMT Rate for such
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the Interest Determination Date with respect
to such Interest Reset Date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, then the CMT Rate for the Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity, based on the
arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on the Interest Determination Date
reported, according to their written records, by three leading primary United
States government securities dealers (each, a "Reference Dealer") in The City of
New York selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
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remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity based on the arithmetic
mean of the secondary market offer side prices as of approximately 3:30 P.M.,
New York City time, on the Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100,000,000. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided however, that
if fewer than three Reference Dealers selected by the Calculation Agent are
quoting as described herein, the CMT Rate will be the CMT Rate in effect on such
Interest Determination Date. If two Treasury Notes with an original maturity as
described in the third preceding sentence, have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the CMT Rate
Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Pricing Supplement (or any other
page as may replace such page on that service for the purpose of displaying
Treasury Constant Maturities as published in H.15(519)), for the purpose of
displaying Treasury Constant Maturities as published in H.15(519). If no such
page is specified in the applicable Pricing Supplement, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the Treasury Notes (either one, two, three, five, seven, ten, twenty or thirty
years) specified in the applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.
Extendible Notes
Interest on Extendible Notes during the "Initial Interest Period" specified
in the applicable Pricing Supplement is payable at the initial interest rate
(which may be a fixed rate or a floating rate adjusted by a Spread and/or Spread
Multiplier) (the "Initial Interest Rate") specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, for
any Extension Period (as defined below) the Corporation shall establish,
pursuant to the procedures specified in the applicable Pricing Supplement, (i)
the Interest Rate or the interest rate basis and formula for determining the
Interest Rate for such Extension Period in the case of Floating Rate Notes, (ii)
the length of such Extension Period, (iii) the time of any Redemption Period (as
defined below) during such Extension Period, and (iv) the percentage or
percentages of the principal amount at which the Extendible Notes are to be
redeemable during such Redemption Period. An "Extension Period" will be a period
of one or more whole calendar periods (e.g., weeks, months, or years) commencing
on the day following the last day of the Initial Interest Period or any
subsequent Extension Period.
Unless otherwise specified in the applicable Pricing Supplement, the
Extendible Notes will be repayable in whole or in part on the day immediately
following the end of the Initial Interest Period and on the day immediately
following the end of each Extension Period, at the option of the holder, at 100%
of the principal amount to be repaid, in each case plus accrued interest, if
any, to the repayment date. The applicable Pricing Supplement will specify the
procedures that must be followed in order to effect such a repayment.
Unless otherwise specified in the applicable Pricing Supplement, (i) the
Extendible Notes will not be redeemable before the day immediately following the
end of the Initial Interest Period and (ii) the Corporation, at its option, may
redeem any or all of the Extendible Notes either in whole or in part, upon not
less than 30 nor more than 60 days' notice by mail, on the day immediately
following the end of the Initial Interest Period at 100% of their principal
amount and, during any Extension Period thereafter, on any date during any
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period within such Extension Period in which the Extendible Notes are redeemable
at the option of the Corporation (a "Redemption Period") at such percentage or
percentages of their principal amount as shall have been established by the
Corporation, in each case plus accrued interest, if any, to the date fixed for
redemption. The applicable Pricing Supplement will specify the procedures that
must be followed in order to effect such a redemption.
Foreign Currency, Currency Indexed, and Other Indexed Notes
The Corporation may from time to time offer Notes ("Foreign Currency
Notes") which are denominated in a Specified Currency other than U.S. dollars,
as specified in the applicable Pricing Supplement. See "Special Provisions
Relating to Foreign Currency Notes" and "Foreign Currency Risks".
The Corporation may from time to time offer Notes ("Currency Indexed
Notes") of which the principal amount payable on the Maturity Date (or upon
earlier redemption or repayment) and/or interest thereon will be determined with
reference to the exchange rate of a Specified Currency relative to another
currency or composite currency (the "Indexed Currency") or to a currency index
(the "Currency Index"), each as specified in the applicable Pricing Supplement.
Holders of Currency Indexed Notes may receive a principal amount on the Maturity
Date or upon earlier redemption or repayment that is greater than or less than
the face amount of such Notes depending upon the relative value at maturity of
the Specified Currency compared to the Indexed Currency or Currency Index.
Information as to the method for determining the amount of interest payable and
the principal amount payable on the Maturity Date or upon earlier redemption or
repayment, the relative value of the Specified Currency compared to the
applicable Indexed Currency or Currency Index, any exchange controls applicable
to the Specified Currency or Indexed Currency, and certain tax considerations
associated with an investment in the Currency Indexed Notes will be set forth in
the applicable Pricing Supplement. See "Special Provisions Relating to Foreign
Currency Notes" and "Foreign Currency Risks".
The Corporation from time to time may also offer indexed Notes ("Indexed
Notes"), other than Currency Indexed Notes, the principal amount of which
payable on the Maturity Date or upon earlier redemption or repayment and/or
interest thereon may be determined by reference to one or more equity or other
indices and/or formulae or the price of one or more specified commodities or by
such other methods or formulae as may be specified by the Corporation in the
applicable Pricing Supplement. The Pricing Supplement relating to such Indexed
Notes will describe, as applicable, the method by which the amount of interest
payable and the amount of principal payable on the Maturity Date or upon earlier
redemption or repayment in respect of such Indexed Notes will be determined,
certain tax consequences to holders of such Indexed Notes, certain risks
associated with an investment in such Indexed Notes and other information
relating to such Indexed Notes.
An investment in the Currency Indexed Notes or in other Indexed Notes, as
to principal or interest or both, to one or more values of commodities or
interest rate indices entails significant risks that are not associated with
similar investments in a conventional fixed-rate debt security. The interest
rate on Currency Indexed Notes and other Indexed Notes may be 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 or that negative
interest will accrue, and the principal amount of a Currency Indexed Note or
some other Indexed Note payable at maturity may be less than the original
purchase price of such Note if allowed pursuant to the terms of such Note,
including the possibility that no principal will be paid, or if such principal
amount is utilized to net against accrued negative interest, the principal
amount payable at maturity may be less than the possibility that no principal
will be paid. The secondary market for Currency Indexed Notes and other Indexed
Notes will be affected by a number of factors, independent of the
creditworthiness of the Corporation and the value of the applicable currency
commodity or interest rate index, the time remaining to the maturity of such
Notes, the amount outstanding of such Notes and market interest rates. The value
of the applicable currency commodity or interest rate index depends on a number
of interrelated factors, including economic, financial and political events,
over which the Corporation has no control. Additionally, if the formula used to
determine the principal amount or interest payable with respect to such Notes
contains a multiple or leverage factor, the effect of any change in the
applicable currency commodity or interest rate index will be increased. The
historical experience of the relevant currency commodities or interest rate
indices should not be taken as an indication of future performance of such
currencies, commodities or interest rate indices during the term of any Currency
Indexed Note or any other Indexed Note. Accordingly, prospective investors
should consult their own financial and legal advisors as to the risk entailed by
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an investment in Currency Indexed Notes and other Indexed Notes and the
suitability of such Notes in light of their particular circumstances.
Unless otherwise specified in the applicable Pricing Supplement, (a) for
the purpose of determining whether holders of the requisite principal amount of
Debt Securities outstanding under the applicable Indenture have made a demand or
given a notice or waiver or taken any other such action, the outstanding
principal amount of Currency Indexed Notes or of other Indexed Notes will be
deemed to be the face amount thereof, and (b) in the event of an acceleration of
the maturity of a Currency Indexed Note or any other 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 Maturity Date thereof, as if the
date of acceleration were the Maturity Date.
Redemption
Unless otherwise specified in the applicable Pricing Supplement and except
for Extendible Notes, the Notes will not be redeemable prior to maturity. The
Notes will not be entitled to any sinking fund.
Repayment at Option of Holder
Except as otherwise specified in the applicable Pricing Supplement and
except for Extendible Notes, the Notes will not be repayable at the option of
the holder.
Book-Entry System
Unless otherwise specified in the applicable Pricing Supplement and except
for Foreign Currency Notes, upon issuance, the Notes will be represented by a
permanent global Note or Notes. Each permanent global Note will be deposited
with, or on behalf of, the Depositary and registered in the name of a nominee of
the Depositary. Except under the limited circumstances described below,
permanent global Notes will not be exchangeable for definitive certificated
Notes.
Ownership of beneficial interests in a permanent global Note will be
limited to institutions that have accounts with the Depositary or its nominee
("participants") or persons that may hold interests through participants. In
addition, ownership of beneficial interests by participants in such permanent
global Note will be evidenced only by, and the transfer of that ownership
interest will be effected only through, records maintained by the Depositary or
its nominee for such permanent global Note. Ownership of beneficial interests in
such permanent global Note by persons that hold through participants will be
evidenced only by, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
participant. The Depositary has no knowledge of the actual beneficial owners of
the Notes. Beneficial owners will not receive written confirmation from the
Depositary of their purchase, but beneficial owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the participants through which the beneficial
owners entered the transaction. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in such permanent global Note.
The Corporation has been advised by the Depositary that upon the issuance
of a permanent global Note, and the deposit of such permanent global Note with
the Depositary, the Depositary will immediately credit on its book-entry
registration and transfer system the respective principal amounts represented by
such permanent global Note to the accounts of participants.
Payment of principal of, and premium and interest, if any, on Notes
represented by a permanent global Note registered in the name of or held by the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner and holder of the permanent global Note
representing such Notes. The Corporation has been advised by the Depositary that
upon receipt of any payment of principal of, or premium or interest, if any, on
a permanent global Note, the Depositary will immediately credit, on its
book-entry registration and transfer system, accounts of participants with
payments in amounts proportionate to their respective beneficial interests in
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the principal amount of such permanent global Note as shown in the records of
the Depositary. Payments by participants to owners of beneficial interests in a
permanent global Note held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the sole responsibility of such participants, subject
to any statutory or regulatory requirements as may be in effect from time to
time.
None of the Corporation, the Trustee, or any other agent of the Corporation
or the Trustee will have any responsibility or liability for any aspect of the
records of the Depositary, any nominee, or any participant relating to or
payments made on account of beneficial interests in a permanent global Note or
for maintaining, supervising, or reviewing any of the records of the Depositary,
any nominee, or any participant relating to such beneficial interests.
A permanent global Note is exchangeable for definitive Notes registered in
the name of, and a transfer of a permanent global Note may be registered to, any
person other than the Depositary or its nominee, only if:
(a) the Depositary notifies the Corporation that it is unwilling or
unable to continue as Depositary for such permanent global Note or if at
any time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(b) the Corporation in its sole discretion determines that such
permanent global Note shall be exchangeable for definitive Notes in
registered form; or
(c) there shall have occurred and be continuing an event of default
under the applicable Indenture, as described in the accompanying
Prospectus, and the Depositary is notified by the Corporation, the
applicable Trustee, or the applicable Registrar and Paying Agent that such
global Note shall be exchangeable for definitive Notes in registered form.
Any permanent global Note that is exchangeable pursuant to the preceding
sentence will be exchangeable in whole for definitive Notes in registered form,
of like tenor and of an equal aggregate principal amount as the permanent global
Note, in denominations of $1,000 and integral multiples thereof. Such definitive
Notes will be registered in the name or names of such person or persons as the
Depositary shall instruct the applicable Trustee. It is expected that such
instructions may be based upon directions received by the Depositary from its
participants with respect to ownership of beneficial interests in such permanent
global Note.
Except as provided above, owners of beneficial interests in such permanent
global Note will not be entitled to receive physical delivery of Notes in
definitive form and will not be considered the holders thereof for any purpose
under the applicable Indenture, and no permanent global Note shall be
exchangeable, except for another permanent global Note of like denomination and
tenor to be registered in the name of the Depositary or its nominee.
Accordingly, each person owning a beneficial interest in such permanent global
Note must rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the applicable Indenture.
The Corporation understands that, under existing industry practices, in the
event that the Corporation requests any action of holders, or an owner of a
beneficial interest in such permanent global Note desires to give or take any
action that a holder is entitled to give or take under the Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
The Depositary has advised the Corporation that the Depositary is a limited
purpose trust company organized under the laws of the State of New York, a
"banking organization" within the meaning of the New York Banking Law, a member
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of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered under
the Exchange Act. The Depositary was created to hold securities of 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. The Depositary's participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. The Depositary is owned by a
number of its participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depositary's 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. The rules applicable to the Depositary and its participants are on
file with the Securities and Exchange Commission.
Information Concerning the Exchange Rate Agents, Registrars, Paying Agents,
and Authenticating Agents
The Corporation from time to time may borrow from the Trustees, and the
Corporation and certain of its subsidiaries may maintain deposit accounts and
conduct other banking transactions with the Trustees.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
General
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal of and premium and
interest, if any, on the Notes will be made in U.S. dollars. Unless otherwise
specified in the applicable Pricing Supplement, the following provisions shall
apply to Foreign Currency Notes which are in addition to, and to the extent
inconsistent therewith replace, the description of general terms and provisions
of the Notes set forth in the accompanying Prospectus and elsewhere in this
Prospectus Supplement.
Foreign Currency Notes are issuable in registered form only, without
coupons. Unless otherwise specified in the applicable Pricing Supplement,
payment of the purchase price of Foreign Currency Notes will be made in
immediately available funds. Unless otherwise specified in the applicable
Pricing Supplement, Foreign Currency Notes will be issued only in certificated
form.
Currencies
Unless otherwise specified in the applicable Pricing Supplement,
purchasers are required to pay for Foreign Currency Notes in the Specified
Currency. At the present time there are limited facilities in the United States
for conversion of U.S. dollars into the Specified Currencies and vice versa, and
banks offer non-U.S. dollar checking or savings account facilities in the United
States only on a limited basis. However, if requested by a prospective purchaser
of Notes on or prior to the fifth Business Day preceding the date of delivery of
the Notes, or by such other day as determined by the Exchange Rate Agent who
presented such offer to purchase Notes to the Corporation, such Exchange Rate
Agent is prepared to arrange for the conversion of U.S. dollars into the
Specified Currency set forth in the applicable Pricing Supplement to enable the
purchasers to pay for the Foreign Currency Notes. Each such conversion will be
made by such Exchange Rate Agent on such terms and subject to such conditions,
limitations, and charges as such Exchange Rate Agent may from time to time
establish in accordance with its regular foreign exchange practices. All costs
of exchange will be borne by the purchasers of the Foreign Currency Notes.
Specific information about the currency or currency units in which a
particular Foreign Currency Note is denominated, including historical exchange
rates and a description of the currency and any exchange controls, will be set
forth in the applicable Pricing Supplement. 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.
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Payment of Principal and Interest
The principal and premium and interest payments, if any, on Foreign
Currency Notes are payable by the Corporation in the Specified Currency.
However, except as provided below, the Exchange Rate Agent appointed by the
Corporation to convert principal and premium and interest payments, if any, in
respect of Foreign Currency Notes to U.S. dollars will convert all payments of
principal of, and premium and interest, if any, on Foreign Currency Notes to
U.S. dollars. However, unless otherwise specified in the applicable Pricing
Supplement, the holder of a Foreign Currency Note may elect to receive such
payments in the Specified Currency as described below.
Any U.S. dollar amount to be received by a holder of a Foreign Currency
Note will be based on the highest bid quotation in The City of New York received
by the Exchange Rate Agent at approximately 11:00 a.m., New York City time, on
the second Business Day preceding the applicable Interest Payment Date from
three recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent) for the purchase by the quoting dealer of the Specified Currency for U.S.
dollars for settlement on such payment date, in an amount equal to the aggregate
amount of the Specified Currency payable to all holders of Notes not electing to
receive the Specified Currency on such payment date and at which the applicable
dealer commits to execute a contract. If such bid quotations are not available,
payments will be made in the Specified Currency. All currency exchange costs
will be borne by the holder of the Foreign Currency Note by deductions from such
payments.
Unless otherwise specified in the applicable Pricing Supplement, a holder
of a Foreign Currency Note may elect to receive payment of the principal of, and
premium and interest, if any, on the Foreign Currency Note in the Specified
Currency by transmitting a written request for such payment to the principal
offices of the Paying Agent prior to the Record Date immediately preceding any
Interest Payment Date and at least fifteen days prior to the Maturity Date or
the date of redemption or repayment, if any, in the case of payments to be made
on the Maturity Date or upon earlier redemption or repayment. Such request may
be in writing (mailed or hand delivered) or by cable, telex, or other form of
facsimile transmission. A holder of a Foreign Currency Note may elect to receive
payment in the Specified Currency for all payments of principal and premium and
interest, if any, and need not file a separate election for each payment. Such
election will remain in effect until revoked by written notice to the Paying
Agent, but written notice of any such revocation must be received by the Paying
Agent on or prior to the Record Date in the case of any payment of interest or
at least fifteen days prior to the Maturity Date or the date of redemption or
repayment, if any, in the case of the payment of principal and premium, if any.
Holders of Foreign Currency Notes whose Foreign Currency Notes are to be held in
the name of a broker or nominee should contact such broker or nominee to
determine whether and how an election to receive payments in the Specified
Currency may be made.
Unless otherwise specified in the applicable Pricing Supplement, the
payment of the principal of, and premium and interest, if any, on each Foreign
Currency Note to be made in U.S. dollars will be made in the manner specified
under "Description of the Notes--Payment and Paying Agents". Unless otherwise
specified in the applicable Pricing Supplement, the payment of principal of, and
premium and interest, if any, on each Foreign Currency Note to be made in the
Specified Currency will be made as set forth below. The payment of interest on a
Foreign Currency Note (other than interest payable to the holder thereof, if
any, on the Maturity Date or upon earlier redemption or repayment) to be made in
the Specified Currency will be paid by bank draft mailed to the person in whose
name the Note is registered at the close of business on the applicable Record
Date. The principal of and premium, if any, on such Foreign Currency Note and
any interest payable to the holder thereof when the principal of such Foreign
Currency Note is payable will be paid by bank draft upon surrender of such Note
at the corporate trust office of the Paying Agent in the Borough of Manhattan,
The City of New York. Specified Currency drafts will be drawn on a bank office
located outside the United States. If the Paying Agent receives a written
request from a holder of the equivalent of U.S. $1,000,000 or more in aggregate
principal amount of the Foreign Currency Notes not later than the close of
business on a Record Date for an interest payment or the fifteenth day prior to
the Maturity Date or the date of redemption or repayment, if any, the Paying
Agent will, subject to applicable laws and regulations, until it receives notice
to the contrary (but, in the case of payments to be made on the Maturity Date or
earlier redemption or repayment, only after the surrender of the Note or Notes
in the Borough of Manhattan, The City of New York, not later than one Business
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Day prior to the Maturity Date or the date of redemption or repayment, as the
case may be), make all Specified Currency payments to such holder by wire
transfer to an account (i) designated in such written request and (ii)
maintained in the country of the Specified Currency.
Outstanding Foreign Currency Notes
For purposes of calculating the principal amount of any Foreign Currency
Note payable in a Specified Currency for any purpose under the Indentures, the
principal amount of such Foreign Currency Note at any time outstanding shall be
deemed to be the U.S. dollar equivalent, determined as of the date of the
original issuance of such Foreign Currency Note, of the principal amount of such
Foreign Currency Note.
Payment Currency
If a Specified Currency is not available for the payment of principal of,
and premium and interest, if any, with respect to a Foreign Currency Note due to
the imposition of exchange controls or other circumstances beyond the control of
the Corporation, or is no longer used by the government of the country issuing
such currency or for the settlement of transactions by public authorities of or
within the international banking community, the Corporation will be entitled to
satisfy its obligations to holders of Foreign Currency Notes by making such
payment in U.S. dollars on the basis of the noon buying rate in The City of New
York for cable transfers of the Specified Currency as certified for customs
purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") on
the second day prior to such payment, or if such Market Exchange Rate is not
then available, on the basis of the most recently available Market Exchange Rate
or as otherwise specified in an applicable Pricing Supplement. Any payment made
under such circumstances in U.S. dollars where required payment is in a
Specified Currency will not constitute a default under the Indentures.
If payment on a Foreign Currency Note is required to be made in European
Currency Units ("ECU") and ECU are unavailable due to the imposition of exchange
controls or other circumstances beyond the Corporation's control, or are no
longer used in the European Monetary System, all payments due on that date with
respect to such Foreign Currency 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 the ECU for this purpose (the "Components") 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 the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Paying Agent on the basis of the most recently available
Market Exchange Rate, or as otherwise specified in the applicable Pricing
Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be multiplied or divided 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 Component shall be replaced
by amounts of such two or more currencies, each of which shall have a value on
the date of division equal to the amount of the former component currency
divided by the number of currencies into which that currency was divided.
All determinations referred to above by the Exchange Rate Agent or Paying
Agent shall be at its sole discretion (except to the extent expressly provided
herein that any determination is subject to approval by the Corporation) 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 or Paying Agent, as the case
may be, shall have no liability therefor. Any payment made in U.S. dollars under
the aforementioned circumstances where required payment is in a Specified
Currency will not constitute a default under the Indentures.
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FOREIGN CURRENCY RISKS
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND PRICING
SUPPLEMENT DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN CURRENCY INDEXED
NOTES OR NOTES DENOMINATED IN OTHER THAN U.S. DOLLARS AS THEY EXIST AT THE DATES
THEREOF OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE INVESTORS
SHOULD CONSULT THEIR OWN FINANCIAL, TAX 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, CURRENCY UNIT, OR INDEXED TRANSACTIONS.
Exchange Rates and Exchange Controls
An investment in the 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 Currency Indexed Notes entails significant
risks that are not associated with a similar investment in a non-currency
indexed Note. Such risks include, without limitation, the possibility of
significant changes in rates of exchange between the U.S. dollar and the
Specified Currency and the possibility of the imposition or modification of
foreign exchange controls by either the U.S. or foreign governments. Such risks
generally depend on economic and political events over which the Corporation has
no control. In recent years, rates of exchange between the U.S. dollar and
certain foreign currencies have been highly volatile and such volatility may be
expected in the future. The exchange rate between the U.S. dollar and a foreign
currency or currency unit is in most cases established principally by the supply
of and demand for such currencies, and changes in the rate result over time from
the interaction of many factors, among which are rates of inflation, interest
rate levels, balances of payments, and the extent of governmental surpluses or
deficits in the countries of such currencies. These factors are in turn
sensitive to, among other things, the monetary, fiscal, and trade policies
pursued by such governments and those of other countries important to
international trade and finance. Fluctuations in any particular exchange rate
that have occurred in the past are not necessarily indicative, however, of
fluctuations in the rate that may occur during the term of any Note.
Depreciation of the Specified Currency in a Foreign Currency Note against the
U.S. dollar would result in a decrease in the U.S. dollar-equivalent yield of
such Note below its coupon rate, and in certain circumstances could result in a
loss to the investor on a U.S. dollar basis. Similarly, depreciation of the
Specified Currency in 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 Maturity Date (or upon earlier redemption or
repayment) thereof 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.
Foreign exchange rates can either be fixed by sovereign governments or
float. Exchange rates of most economically developed nations are permitted to
fluctuate in value relative to the U.S. dollar. National governments, however,
rarely voluntarily allow their currencies to float freely in response to
economic forces. Sovereign governments in fact use a variety of techniques, such
as intervention by a country's central bank or imposition of regulatory controls
or taxes, to affect the exchange rate of their currencies. Governments may also
issue a new currency to replace an existing currency or alter the exchange rate
or relative exchange characteristics by devaluation or revaluation of a
currency. Thus, a special risk in purchasing Foreign Currency Notes or Currency
Indexed Notes is that their U.S. dollar-equivalent yields could be affected by
governmental actions, which could change or interfere with theretofore freely
determined currency valuation, fluctuations in response to other market forces,
and the movement of currencies across borders. There will be no adjustment or
change in the terms of such Notes in the event that exchange rates should become
fixed, or in the event of any devaluation or revaluation or imposition of
exchange or other regulatory controls or taxes, or in the event of other
developments, affecting the U.S. dollar or any applicable currency or currency
unit.
Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at a Note's maturity. Even if there are no
actual exchange controls, it is possible that the Specified Currency for any
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particular Note that would otherwise be payable in such Specified Currency would
not be available at such Note's maturity. In that event, the Corporation will
make required payments in U.S. dollars on the basis of the Market Exchange Rate
on the second day prior to such payment, or if such Market Exchange Rate is not
then available, on the basis of the most recently available Market Exchange
Rate. See "Special Provisions Relating to Foreign Currency Notes--Payment
Currency".
Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in foreign currencies will not be sold in, or to residents of, the
country of the Specified Currency in which particular Notes are denominated.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are United States residents, and the Corporation
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 of, and
premium and interest, if any, on the Notes. Such persons should consult their
own counsel with regard to such matters.
Judgments
Courts in the United States generally would grant or enforce a judgment
relating to an action based on the Foreign Currency Notes and Currency Indexed
Notes only in U.S. dollars, and the date used to determine the rate of
conversion of foreign currencies into U.S. dollars will depend on various
factors, including which court rendered the judgment. Section 27 of the
Judiciary Law of the State of New York provides that a New York State court
would be required to enter a judgment in the Specified Currency of the
underlying obligation; such judgment would then be converted into U.S. dollars
at the rate of exchange prevailing on the date of entry of the judgment.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary, which was prepared by Schulte Roth & Zabel, counsel
to the Corporation, describes certain United States federal income tax
consequences of the ownership of Notes as of the date hereof. Except where
noted, it deals only with Notes held by initial purchasers as capital assets and
does not deal with special situations, such as those of dealers in securities or
financial institutions, life insurance companies, United States Holders (as
defined below) whose "functional currency" is not the U.S. dollar, or persons
owning (actually or constructively) ten percent or more of the combined voting
power of all classes of voting stock of the Corporation. In addition, with
respect to a particular series of Notes, the discussion below must be read in
conjunction with the discussion of certain federal income tax consequences which
may appear in the applicable Pricing Supplement for such series. Furthermore,
the discussion below is based upon the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), and Treasury Regulations (including proposed
Treasury Regulations), rulings, and judicial decisions thereunder as of the date
hereof, and such authorities may be repealed, revoked, modified or, in the case
of proposed Treasury Regulations, withdrawn or finalized in a form different
from such proposed Treasury Regulations, so as to result in federal income tax
consequences different from those discussed below. PERSONS CONSIDERING THE
PURCHASE, OWNERSHIP, OR DISPOSITION OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR
PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.
United States Holders
As used herein, a "United States Holder" of a Note means a holder that is
(i) a citizen or resident of the United States, (ii) a corporation created or
organized in or under the laws of the United States or any political subdivision
thereof, or (iii) otherwise subject to United States federal income taxation on
a net income basis in respect of a Note. A "Non-United States Holder" is a
holder that is not a United States Holder.
Payments of Interest. Except as set forth below, interest on a Note will
generally be taxable to a United States Holder as ordinary income from domestic
sources at the time it is paid or accrued in accordance with the United States
Holder's method of accounting for tax purposes.
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Original Issue Discount. The following is a summary of the principal United
States federal income tax consequences of the ownership of Original Issue
Discount Notes by United States Holders. Additional rules applicable to Original
Issue Discount Notes which are denominated in or determined by reference to a
Specified Currency are described under "Foreign Currency Notes" below. This
summary is based upon final regulations issued by the Treasury Department, which
are effective for debt instruments issued on or after April 4, 1994.
A Note may be issued for an amount that is less than its stated redemption
price at maturity (the sum of all payments to be made on the Note other than
"qualified stated interest" payments). The difference between the stated
redemption price at maturity of the Note and its "issue price", if such
difference is at least 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity, will be "original issue
discount" ("OID"). The "issue price" of each Note will be the initial offering
price to the public at which a substantial amount of the particular offering is
sold. A "qualified stated interest" payment is stated interest that is
unconditionally payable at least annually at a single fixed rate, or, generally,
at a rate ("Variable Rate") which varies among payment periods if such rate can
reasonably be expected to measure contemporaneous variations in the cost of
newly borrowed funds or which is based upon the changes in the yield or price of
certain actively traded property. Interest is payable at a single fixed rate
only if the rate appropriately takes into account the length of the interval
between payments. Notes that may be redeemed prior to their maturity date at the
option of the issuer shall be treated from the time of issuance as having a
maturity date for federal income tax purposes on such redemption date if such
redemption would result in a lower yield to maturity. Notice will be given in
the applicable Pricing Supplement when the Corporation issues Notes that are
redeemable prior to maturity and determines that such Notes will be deemed to
have a maturity date for federal income tax purposes prior to their Maturity
Date.
In certain cases (e.g., where interest payments are deemed not to be
qualified stated interest payments), Notes that bear interest from a non-tax
standpoint may be deemed instead to be Original Issue Discount Notes for federal
income tax purposes, with the result that the inclusion of interest in income
for federal income tax purposes may vary from the actual cash payments of
interest made on such Notes, generally accelerating income for cash method
taxpayers. For those purposes, the Treasury Regulations provide rules for
determining whether payments pursuant to a Note with a Variable Rate will be
treated as payments of qualified stated interest. The Pricing Supplement for any
series of Notes will specify whether they are Original Issue Discount Notes and,
in the case of Notes with a Variable Rate, will describe the applicable rules
for inclusion of OID in income of a United States Holder.
United States Holders of Original Issue Discount Notes with a maturity upon
issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includible in income by the initial United States Holder of an Original
Issue Discount Note is the sum of the "daily portions" of OID with respect to
the Note for each day during the taxable year or portion of the taxable year in
which such United States Holder held such Note ("accrued OID"). The daily
portion is determined by allocating to each day in any "accrual period" a pro
rata portion of the OID allocable to that accrual period. The accrual period for
an Original Issue Discount Note may be of any length and may vary in length over
the term of the Note provided that each accrual period is no longer than one
year and each scheduled payment of principal or interest occurs at the beginning
or the end of an accrual period. The amount of OID allocable to any accrual
period is an amount equal to the excess (if any) of (a) the product of the
Note's "adjusted issue price" at the beginning of such accrual period and its
yield to maturity (determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the accrual period) over
(b) the sum of any qualified stated interest allocable to the accrual period. In
determining OID allocable to an accrual period, if an interval between payments
of qualified stated interest contains more than one accrual period the amount of
qualified stated interest payable at the end of the interval is allocated on a
pro rata basis to each accrual period in the interval and the adjusted issue
price at the beginning of each accrual period in the interval must be increased
by the amount of any qualified stated interest that has accrued prior to the
beginning of the first day of the accrual period but is not payable until the
end of the interval. The amount of OID allocable to the final accrual period is
the difference between the amount payable at maturity (other than a payment of
qualified stated interest) and the adjusted issue price of the Note at the
beginning of the final accrual period. If all accrual periods are of equal
length, except for an initial short accrual period, the amount of OID allocable
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to the initial short accrual period may be computed under any reasonable method.
The adjusted issue price of the Note at the start of any accrual period is equal
to its issue price increased by the accrued OID for each prior accrual period
and reduced by any prior payments with respect to such Note that were not
qualified stated interest payments. Under these rules, a United States Holder
generally will have to include in income increasingly greater amounts of OID in
successive accrual periods. The Corporation is required to report to the IRS the
amount of OID accrued on Notes held of record by persons other than corporations
and other exempt holders.
In the case of Original Issue Discount Notes having a term of one year or
less ("Short-Term Original Issue Discount Notes"), OID is included in income
currently either on a straight-line basis or, if the United States Holder so
elects, under the constant yield method used generally for OID as described
above. However, certain categories of United States Holders (such as individual
cash method taxpayers) are not required to include accrued OID on Short-Term
Original Issue Discount Notes in their income currently unless they elect to do
so. If such a United States Holder that does not elect to currently include the
OID in income subsequently recognizes a gain upon the disposition of the Note,
such gain will be treated as ordinary interest income to the extent of the
accrued OID. Furthermore, such non-electing United States Holder of a Short-Term
Original Issue Discount Note may be required to defer deductions for a portion
of such United States Holder's interest expense with respect to any indebtedness
incurred or maintained to purchase or carry such Note.
Amortization of Premium. A Note may be considered to have been issued at a
"premium" to the extent that the United States Holder's tax basis in the Note
exceeds the amount payable at maturity. A United States Holder generally may
elect to amortize the premium over the remaining term of the Note on a constant
yield method. Any such election shall apply to all debt securities (other than
debt securities the interest on which is excludible from gross income) held by
the United States Holder at the beginning of the first taxable year to which the
election applies (or thereafter acquired by the United States Holder) and is
irrevocable without the consent of the IRS. The amount amortized in any year
will be treated as a reduction of the United States Holder's interest income
from the Note. Bond premium on a Note held by a United States Holder that does
not make such an election will decrease the gain or increase the loss otherwise
recognized on disposition of the Note.
Election to Treat All Interest as OID. A cash or accrual basis United
States Holder may elect to treat all interest on any Note as OID and calculate
the amount includible in gross income under the constant yield method described
above. For the purposes of this election, interest includes 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. If a United States Holder makes this election for a Note
with amortizable bond premium, the election is treated as an election under the
amortizable bond premium provisions described above and the electing United
States Holder will be required to amortize bond premium for all of the holder's
other debt instruments with amortizable bond premium. The election is to be made
for the taxable year in which the United States Holder acquires the Note, and
may not be revoked without the consent of the IRS. United States Holders should
consult with their own tax advisors about this election.
Sale, Exchange, and Retirement of Notes. A United States Holder's tax basis
in a Note will, in general, be the United States Holder's cost therefor,
increased by all accrued OID and reduced by any amortized premium and any cash
payments on the Note other than qualified stated interest payments. Upon the
sale, exchange, or retirement of a Note, a United States Holder will recognize
gain or loss equal to the difference between the amount realized upon the sale,
exchange, or retirement and the adjusted tax basis of the Note. Except as
described above with respect to certain Short-Term Original Issue Discount
Notes, and except with respect to gain or loss attributable to changes in
exchange rates as described below with respect to certain Foreign Currency
Notes, such gain or loss will be capital gain or loss and will be long-term
capital gain or loss if at the time of sale, exchange, or retirement the Note
has been held for more than one year. Under current law, net capital gains are,
under certain circumstances, taxed at lower rates than ordinary income. The
deductibility of capital losses is subject to limitations.
Extendible Notes. A Note may provide that the Corporation has the option to
reset the interest rate, in the case of a Fixed Rate Note, or the Spread or
Spread Multiplier, in the case of a Floating Rate Note, on an Interest Reset
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Date or to extend the maturity of a Note on the Maturity Date. Pursuant to
proposed Treasury Regulations issued on December 2, 1992, which could differ
materially from the final Treasury Regulations, the treatment of a United States
Holder of Notes with respect to which such an option has been exercised who does
not elect to have the Corporation repay such Notes on the applicable Optional
Reset Date or Original Stated Maturity will depend on the terms established for
such Notes by the Corporation pursuant to the exercise of such option (the
"Revised Terms"). Such holder may be treated for federal income tax purposes as
having exchanged such Notes (the "Old Notes") for new Notes with Revised Terms
(the "New Notes"). If the holder is treated as having exchanged Old Notes for
New Notes, such exchange may be treated as either a taxable exchange or a
tax-free recapitalization.
If the exercise of the option by the Corporation is not treated as an
exchange of Old Notes for New Notes, no gain or loss will be recognized by a
United States Holder as a result thereof. If the exercise of the option is
treated as a taxable exchange of Old Notes for New Notes, a United States Holder
would recognize gain or loss equal to the difference between the issue price of
the New Notes and the holder's adjusted tax basis in the Old Notes. If the
exercise of the option is treated as a tax-free recapitalization, no loss would
be recognized by a United States Holder as a result thereof and gain, if any,
would be recognized to the extent of the fair market value of the excess, if
any, of the principal amount of securities received over the principal amount of
securities surrendered. Although, in this regard, the meaning of the term
"principal amount" is not clear, such term could be interpreted to mean "issue
price" with respect to securities that are received and "adjusted issue price"
with respect to securities that are surrendered.
Foreign Currency Notes. The following is a summary of the principal United
States federal income tax consequences to a United States Holder of the
ownership of a Note denominated in a Specified Currency other than the U.S.
dollar ("Foreign Currency Notes") and deals only with Foreign Currency Notes
that are not treated, for federal income tax purposes, as an integrated economic
transaction in conjunction with one or more spot contracts, futures contracts or
similar financial instruments. Persons considering the purchase of Foreign
Currency Notes should consult their own tax advisors with regard to the
application of the United States federal income tax laws to their particular
situations, as well as any consequences arising under the laws of any other
taxing jurisdiction.
If interest payments are made in a Specified Currency to a United States
Holder who is not required to accrue such interest prior to its receipt, such
holder will be required to include in income the U.S. dollar value of the amount
received (determined by translating the Specified Currency received at the "spot
rate" for such Specified Currency on the date such payment is received),
regardless of whether the payment is in fact converted into U.S. dollars. No
exchange gain or loss is recognized with respect to the receipt of such payment.
A United States Holder who is required to accrue interest on a Foreign
Currency Note prior to receipt of such interest will be required to include in
income for each taxable year the U.S. dollar value of the interest that has
accrued during such year, determined by translating such interest at the average
rate of exchange for the period or periods during which such interest accrued.
The average rate of exchange for an interest accrual period is the simple
average of the exchange rates for each business day of such period (or such
other average that is reasonably derived and consistently applied by the
holder). An accrual basis holder may elect to translate interest income at the
spot rate on the last day of the accrual period (or last day of the taxable year
in the case of an accrual period that straddles the holder's taxable year) or on
the date the interest payment is received if such date is within five days of
the end of the accrual period. Any such election shall apply to all debt
securities held by the United States Holder at the beginning of the first
taxable year to which the election applies (or thereafter acquired by the United
States Holder) and is irrevocable without the consent of the IRS. Upon receipt
of an interest payment on such Note, such holder will recognize ordinary income
or loss in an amount equal to the difference between the U.S. dollar value of
such payment (determined by translating any Specified Currency received at the
spot rate for such Specified Currency on the date received) and the U.S. dollar
value of the interest income that such holder has previously included in income
with respect to such payment. Any such gain or loss generally will not be
treated as interest income or expense, except to the extent provided in Treasury
Regulations or administrative pronouncements of the IRS.
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OID on a Note that is also a Foreign Currency Note will be determined for
any accrual period in the applicable Specified Currency and then translated into
U.S. dollars in the same manner as interest income accrued by a holder on the
accrual basis, as described above. Likewise, a United States Holder will
recognize exchange gain or loss when the OID is paid to the extent of the
difference between the U.S. dollar value of the accrued OID (determined in the
same manner as for accrued interest) and the U.S. dollar value of such payment
(determined by translating any Specified Currency received at the spot rate for
such Specified Currency on the date of payment). For this purpose, all receipts
on a Note will be viewed first as the receipt of any periodic interest payments
called for under the terms of the Note, second as receipts of previously accrued
OID (to the extent thereof), with payments considered made for the earliest
accrual periods first, and thereafter as the receipt of principal.
A United States Holder's tax basis in a Foreign Currency Note will be the
U.S. dollar value of the Specified Currency amount paid for such Foreign
Currency Note determined at the time of such purchase. In the case of a Note
which is denominated in a foreign currency and is traded on an established
securities market, a cash basis taxpayer (or, if it elects, an accrual basis
taxpayer) will determine the U.S. dollar value of the cost of such Note by
translating the amount paid at the spot rate of exchange on the settlement date
of the purchase. A United States Holder who purchases a Note with any previously
owned Specified Currency will recognize exchange gain or loss at the time of
purchase attributable to the difference at the time of purchase, if any, between
his tax basis in such Specified Currency and the fair market value of the Note
in U.S. dollars on the date of purchase. Such gain or loss will be ordinary
income or loss.
For purposes of determining the amount of any gain or loss recognized by a
United States Holder on the sale, exchange, or retirement of a Foreign Currency
Note, the amount realized upon such sale, exchange, or retirement will be the
U.S. dollar value of the amount realized in Specified Currency (other than
amounts attributable to accrued but unpaid interest not previously included in
the holder's income), determined at the time of the sale, exchange, or
retirement and in accordance with his method of accounting. In the case of a
Note which is denominated in a foreign currency and is traded on an established
securities market, a cash basis taxpayer (or, if it elects, an accrual basis
taxpayer) will determine the U.S. dollar value of the amount realized by
translating such amount at the spot rate of exchange on the settlement date of
the sale.
A United States Holder will recognize exchange gain or loss attributable to
the movement in exchange rates between the time of purchase and the time of
disposition (including the sale, exchange or retirement) of a Foreign Currency
Note. Such gain or loss will be treated as ordinary income or loss. Such gain or
loss may be required to be netted against any non-exchange gain or loss in
calculating overall gain or loss on a Note. Under proposed Treasury Regulations
issued on March 17, 1992, which could differ materially from the final Treasury
Regulations, if a Foreign Currency Note is denominated in one of certain
hyperinflationary currencies, generally (i) exchange gain or loss would be
realized with respect to movements in the exchange rate between the beginning
and end of each taxable year (or such shorter period) that such Note was held
and (ii) such exchange gain or loss would be treated as an addition or offset,
respectively, to the accrued interest income on (and an adjustment to the
holder's tax basis in) the Foreign Currency Note.
A United States Holder's tax basis in any Specified Currency received as
interest on (or OID with respect to), or received on the sale or retirement of,
a Foreign Currency Note will be the U.S. dollar value thereof at the spot rate
at the time the holder received such Specified Currency. Any gain or loss
recognized by a United States Holder on a sale, exchange, or other disposition
of Specified Currency will be ordinary income or loss and will not be treated as
interest income or expense, except to the extent provided in Treasury
Regulations or administrative pronouncements of the IRS.
Non-United States Holders
Non-United States Holders will not be subject to United States federal
withholding tax on the interest income (including any OID and income with
respect to Foreign Currency Notes) on any Note, provided that (i) the Non-United
States Holder does not actually or constructively own 10% or more of the voting
stock of the Corporation, (ii) the Non-United States Holder is not a controlled
foreign corporation related to the Corporation through stock ownership, and
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(iii) the Non-United States Holder provides the correct certification of
non-United States Holder status (which may generally be satisfied by providing
an IRS Form W-8 certifying that the beneficial owner is not a United States
Holder and providing the name and address of the beneficial owner).
A Non-United States Holder will not be subject to United States federal
income tax on gain realized from the sale or exchange of a Note provided that,
in the case of a Non-United States Holder who is a nonresident alien individual,
such holder is not present in the United States for 183 or more days during the
taxable year of the sale or exchange.
A Note held by an individual who is not a citizen or resident of the United
States at the time of such holder's death will not be subject to United States
federal estate tax, provided that any interest received on the Note, if received
by the holder at the time of the holder's death, would not be effectively
connected with the conduct of a trade or business in the United States and the
individual does not own, actually or constructively, at the date of death, 10%
or more of the voting stock of the Corporation.
Backup Withholding and Information Reporting
In general, if a United States holder fails to furnish a correct taxpayer
identification number, fails to report dividend and interest income in full, or
fails to certify that such holder has provided a correct taxpayer identification
number and that the holder is not subject to withholding, the Corporation may
withhold a 31 percent federal backup withholding tax on amounts paid to the
holder. An individual's taxpayer identification number is such person's social
security number.
Payments in respect of a Note made within the United States by the
Corporation or any of its paying agents are generally subject to backup
withholding at a rate of 31 percent. Information reporting and backup
withholding do not apply to payments made on a Note if the certification
described in clause (iii) under "Non-United States Holders" above is received,
provided the payor does not have actual knowledge that the holder is a United
States person. Special rules may apply with respect to the payment of the
proceeds from the sale of a Note to or through foreign offices of certain
brokers.
The backup withholding tax is not an additional tax and may be credited
against a holder's regular federal income tax liability or refunded by the IRS
where applicable.
DIVIDEND POLICY
The Corporation, The Dai-Ichi Kangyo Bank, Limited, the 60% stockholder of
the Corporation ("DKB"), and MHC Holdings (Delaware) Inc., a subsidiary of
Chemical Banking Corporation and the 40% stockholder of the Corporation ("MHC
Holdings"), operate under a policy requiring the payment of dividends by the
Corporation to DKB and MHC Holdings equal to and not exceeding 50% of net
operating earnings of the Corporation on a quarterly basis. Such dividends are
paid to DKB and MHC Holdings based upon their respective stock ownership in the
Corporation. The Indentures do not require this policy or otherwise directly
limit the Corporation's ability to pay dividends.
PLAN OF DISTRIBUTION
The Notes are being offered hereby on a continuing basis for sale directly
by the Corporation in those jurisdictions where it is authorized to do so. In
addition, subject to the terms and conditions set forth in the Selling Agency
Agreement, dated April 6, 1995, the Corporation may offer the Notes through any
of the Agents who have separately agreed to use their reasonable best efforts to
solicit offers to purchase the Notes. The Corporation may also sell Notes to any
Agent, as principal, at a discount for resale to one or more investors or other
purchasers at varying prices related to prevailing market prices at the time of
resale, as determined by such Agent or, if so agreed, on a fixed public offering
price basis. Unless otherwise specified in the applicable Pricing Supplement,
the Corporation will pay each Agent a commission, in the form of a discount,
which, depending on the maturity of the Notes placed by such Agent, will range
from .125% to .750% of the principal amount of such Notes, except that the
commission payable by the Corporation to the Agents with respect to Notes with
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maturities of greater than thirty years will be negotiated at the time the
Corporation issues such Notes. No commission will be payable to the Agents on
the Notes sold directly to purchasers by the Corporation. Payment of the
purchase price of the Notes will be required to be made in immediately available
funds.
The Agents may offer the Notes they have purchased as principal to other
dealers. The Agents may sell Notes to any dealer at a discount and, unless
otherwise specified in the applicable Pricing Supplement, such discount allowed
to any dealer will not be in excess of the discount to be received by such Agent
from the Corporation. 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 any agency sale of a Note of identical
maturity, and may be resold by the Agent to investors and other purchasers as
described above. After the initial public offering of Notes to be resold to
investors and other purchasers, the public offering price (in the case of a
fixed price public offering), concession and discount may be changed.
The Corporation will have the sole right to accept offers to purchase Notes
and may, in its absolute discretion, reject any proposed purchase of Notes in
whole or in part. Each Agent will have the right, in its discretion reasonably
exercised, to reject in whole or in part any proposed purchase of Notes through
it.
Each Agent may be deemed to be an "Underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Act"). The Corporation has agreed to
indemnify each Agent against certain liabilities, including liabilities under
the Act, or to contribute to payments each Agent may be required to make in
respect thereof.
The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. The Corporation has been
advised by the Agents that each of the Agents may from time to time purchase and
sell Notes in the secondary market, but is not obligated to do so and may
discontinue making a market in the Notes at any time without notice. No
assurance can be given as to the existence or liquidity of any secondary market
for the Notes.
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PROSPECTUS
The CIT Group Holdings, Inc.
Debt Securities
-------------------
The CIT Group Holdings, Inc. (the "Corporation") intends to issue from time
to time, in one or more series, debt securities (the "Debt Securities"), which
may be either senior (the "Senior Securities") or senior subordinated (the
"Senior Subordinated Securities") in priority of payment, with an aggregate
initial offering price not to exceed $8,511,000,000 (or (i) if the principal of
the Debt Securities is denominated in a foreign currency, the equivalent thereof
at the time of offering, or (ii) if the Debt Securities are issued at an
original issue discount, such greater principal amount as shall result in an
aggregate initial offering price of $8,511,000,000). Each Debt Security will be
a direct, unsecured obligation of the Corporation and will be offered to the
public on terms determined by market conditions at the time of sale. The
Corporation may sell its Debt Securities (i) directly to purchasers, (ii)
through agents designated from time to time, (iii) to dealers, or (iv) through
an underwriter or a group of underwriters. The Debt Securities may be issued in
one or more series with the same or various terms. The specific designation,
aggregate principal amount, currency of payment, authorized denominations,
purchase price, maturity, rate and time of payment of any interest, any
redemption terms, the designation of each Trustee acting under the applicable
Indenture, any listing on a securities exchange, or other specific terms of the
Debt Securities in respect of which this Prospectus is being delivered (the
"Offered Debt Securities") will be set forth in the accompanying supplement to
the Prospectus (the "Prospectus Supplement"), together with the terms of
offering of the Offered Debt Securities. The Corporation reserves the sole right
to accept and either in its sole discretion or together with its agents from
time to time to reject, in whole or in part, any proposed purchase of Offered
Debt Securities.
If any agents of the Corporation or any dealers or underwriters are
involved in the sale of the Offered Debt Securities in respect of which this
Prospectus is being delivered, the names of such agents, dealers, or
underwriters and any applicable agent's commission, dealer's purchase price, or
underwriter's discount will be set forth in or may be calculated from the
Prospectus Supplement. The net proceeds to the Corporation from such sale will
be (i) the purchase price of such Offered Debt Securities less such commission
in the case of an agent, (ii) the purchase price of such Offered Debt Securities
in the case of a dealer, or (iii) the public offering price less such discount
in the case of an underwriter and less, in each case, other applicable issuance
expenses. See "Plan of Distribution" for possible indemnification arrangements
with agents, dealers, and underwriters.
-------------------
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 date of this Prospectus is March 24, 1995.
<PAGE>
No salesman or any other person has been authorized by the Corporation or
any dealer, agent, or underwriter to give any information or to make any
representation, other than as contained in this Prospectus, the Prospectus
Supplement or the documents incorporated by reference, in connection with the
offer contained in this Prospectus and the Prospectus Supplement and, if given
or made, such information or representation must not be relied upon. This
Prospectus and the Prospectus Supplement do not constitute any offer by any
dealer, agent or underwriter to sell, or a solicitation of an offer to buy,
securities in any state to any person to whom it is unlawful for such dealer,
agent or underwriter to make such offer or solicitation in such state. Neither
the delivery of this Prospectus and the Prospectus Supplement nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Corporation and its subsidiaries since the
date of the information contained herein.
-------------------
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
can be inspected and copied at the offices of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission, at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Certain of the Corporation's securities are listed on the New York Stock
Exchange and reports and other information concerning the Corporation can also
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission by the Corporation are
incorporated by reference in this Prospectus:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994, together with the report of KPMG Peat Marwick LLP,
independent certified public accountants, which report refers to a change
in the method of accounting for postretirement benefits other than pensions
in 1993; and
(b) The Corporation's Current Report on Form 8-K dated January 18,
1995.
All documents filed by the Corporation pursuant to Sections 13(a) and (c),
14, or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON REQUEST, A COPY OF ANY OR ALL OF THE FOREGOING
DOCUMENTS DESCRIBED ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE IN
THIS PROSPECTUS OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). SUCH REQUEST SHOULD
BE DIRECTED TO:
Corporate Secretary
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
(212) 536-1950
2
<PAGE>
THE CORPORATION
The CIT Group Holdings, Inc. (the "Corporation"), a Delaware corporation,
is a successor to a company founded in St. Louis, Missouri on February 11, 1908.
It has its principal executive offices at 1211 Avenue of the Americas, New York,
New York 10036, and its telephone number is (212) 536-1950. The Corporation,
operating directly or through its subsidiaries primarily in the United States,
engages in financial services activities through a nationwide distribution
network. The Corporation provides financing primarily on a secured basis to
commercial borrowers, ranging from middle-market to larger companies, and to a
lesser extent to consumers. While these secured lending activities reduce the
risk of losses from extending credit, the Corporation's results of operations
can also be affected by other factors, including general economic conditions,
competitive conditions, the level and volatility of interest rates,
concentrations of credit risk, and government regulation and supervision. The
Corporation does not finance the development or construction of commercial real
estate. The Corporation has eight strategic business units, seven of which offer
corporate financing, dealer and manufacturer financing, and factoring products
and services to clients, and an eighth which offers consumer first and second
mortgage financing and home equity lines of credit.
The Dai-Ichi Kangyo Bank, Limited ("DKB") owns sixty percent (60%) of the
issued and outstanding shares of common stock of the Corporation, which it
purchased from Manufacturers Hanover Corporation ("MHC") at year-end 1989. The
remaining forty percent (40%) common stock interest in the Corporation is owned
by Chemical Banking Corporation ("CBC") through a subsidiary MHC Holdings
(Delaware) Inc. ("MHC Holdings"), which CBC acquired as part of the merger
between MHC and CBC on December 31, 1991.
In accordance with a stockholders agreement among DKB, CBC, as successor to
MHC, and the Corporation (the "Stockholders Agreement"), the Corporation amended
its Certificate of Incorporation and its By-Laws in conformity therewith.
Pursuant to the Stockholders Agreement, immediately after MHC sold the sixty
percent (60%) interest in the Corporation to DKB, the stockholders elected a new
Board of Directors comprised of the President and Chief Executive Officer and
the Vice Chairman of the Corporation, six nominees designated by DKB, and two
nominees designated by MHC. The Stockholders Agreement also contains provisions
for the management of the Corporation, majority voting by DKB on the
Corporation's Executive Committee, consent of MHC Holdings with respect to major
corporate and business changes, and restrictions with respect to the transfer of
the stock of the Corporation to third parties.
Corporate Finance Group
The Corporation's Corporate Finance Group is comprised of Business Credit,
Capital Equipment Financing and Credit Finance.
The CIT Group/Business Credit offers revolving and term loans secured by
accounts receivable, inventories and fixed assets to medium and larger-sized
companies. Such loans are used by clients primarily for acquisitions and
refinancings. It also offers specialty financing for companies in the paper,
printing and chemical industries and debtor-in-possession and workout financing
for turnaround situations. The CIT Group/Business Credit sells participation
interests in such loans to other lenders and will occasionally purchase
participation interests in such loans originated by other lenders. Business is
developed through direct calling efforts and through other sources originated by
new business development officers. The CIT Group/Business Credit is
headquartered in New York City, with sales and customer service offices in New
York, Chicago, Dallas, Los Angeles, Atlanta and Charlotte.
The CIT Group/Capital Equipment Financing specializes in customized secured
financing and leasing including single investor leases, the debt and equity
portions of leveraged leases, and operating leases for major capital equipment
such as aircraft, rail cars, maritime shipping, and containers and chassis, for
its own account and for syndications. Such business is developed directly with
large companies and through third parties. The CIT Group/Capital Equipment
Financing also provides secured financing and leasing products to middle-market
and larger companies seeking medium and longer term financings. Such
transactions are developed through direct calling efforts and financial
intermediaries. Financing products include direct secured loans and leases, sale
and leaseback arrangements, operating leases, and project financings. Two
business groups within The CIT Group/Capital Equipment Financing augment its
marketing efforts and provide services relating to its areas of expertise. The
first group, The CIT Group/Capital Investments, acts as an agent, broker, and
3
<PAGE>
advisor in financing and leasing transactions. The CIT Group/Capital Investments
is a registered broker-dealer and a member of the National Association of
Securities Dealers, Inc. The second group, The CIT Group/Asset Management,
provides asset management services to financial institutions and certain
non-financial institutions for equipment financing transactions and portfolios.
The CIT Group/Capital Equipment Financing is headquartered in New York City,
with sales offices in twelve cities, including New York, Chicago and Los
Angeles.
The CIT Group/Credit Finance offers revolving and term loans to small and
medium-sized companies secured by accounts receivable, inventories, and fixed
assets. Such loans are used by clients for working capital and in refinancings,
acquisitions, and leveraged buyouts. The CIT Group/Credit Finance also offers
financing for reorganizations, restructurings, and Chapter 11 situations.
Business is developed through direct calling efforts and through other sources
developed by new business development officers. The CIT Group/Credit Finance is
headquartered in New York City, with sales and customer service offices in New
York, Chicago and Los Angeles and loan production offices in seven other cities.
Dealer and Manufacturer Financing Group
The Corporation's Dealer and Manufacturer Financing Group is comprised of
Industrial Financing and Sales Financing.
The CIT Group/Industrial Financing offers secured equipment financing and
leasing products, including direct secured loans, leases, secured lines of
credit, sale and leaseback arrangements, vendor financing for manufacturers,
wholesale and retail financing for dealers/distributors, acquisition of chattel
paper and other installment receivables, and acquisition of portfolios
originated by others. It has a nationwide network of local offices and business
aircraft, intermediary and national accounts financing units. The CIT
Group/Industrial Financing is headquartered in Livingston, New Jersey, with
sales offices in fourteen cities, including Berwyn, Pennsylvania, Tempe, Arizona
and Atlanta, Georgia, which also serve as regional and customer service offices.
The CIT Group/Sales Financing, working through dealers and manufacturers,
provides retail secured financing on a nationwide basis for the purchase of
recreational vehicles, recreational boats and manufactured housing. The CIT
Group/Sales Financing also purchases portfolios of these assets from banks,
savings and loans, investment banks and others and provides servicing for
portfolios owned by other financial institutions and securitization trusts. The
CIT Group/Sales Financing is headquartered in Livingston, New Jersey with an
asset service center in Oklahoma City, Oklahoma, and covers the United States
from five regional business centers located in Atlanta, Boston, Kansas City,
Sacramento and Seattle.
Consumer Finance
In December 1992, The CIT Group/Consumer Finance, a newly formed business
unit, began offering loans secured primarily by first or second mortgages on
residential real estate. The CIT Group/Consumer Finance generates business
through brokers and direct marketing efforts. It also acquires "home equity"
portfolios originated by others. In early 1994, The CIT Group/Consumer Finance
began offering home equity lines of credit to consumers. This business unit is
headquartered in Livingston, New Jersey with 33 sales offices serving 24 states,
two of which purchase mortgage loans from third parties. Administrative support
is provided by the Sales Financing asset service center located in Oklahoma
City, Oklahoma.
Factoring
The CIT Group/Commercial Services offers a full range of factoring services
providing for the purchase of accounts receivable, including credit protection,
bookkeeping, and collection activities. Financing is also provided in the form
of revolving and term loans, and letter of credit support. The CIT
Group/Commercial Services is headquartered in New York City, with full service
offices in New York, Los Angeles, Dallas and Charlotte and sales offices in
Miami and Hong Kong. Bookkeeping and collection functions are located in a
service center in Danville, Virginia.
On February 28, 1994, the Corporation acquired, for cash, Barclays
Commercial Corporation ("BCC"), a company of The Barclays Group. BCC had total
assets of approximately $700.0 million at December 31, 1993 and total factoring
volume of approximately $5.00 billion for the year then ended. The business and
4
<PAGE>
acquired assets of BCC were transferred to The CIT Group/Commercial Services,
Inc., a wholly-owned subsidiary of the Corporation. BCC is engaged in the same
lines of business as The CIT Group/Commercial Services, with BCC adding a
significant geographical presence in the Southeastern United States.
Equity Investments
The CIT Group/Equity Investments and its subsidiary The CIT Group/Venture
Capital originate and participate in purchasing private equity and
equity-related securities, and arrange transaction financing, and merger and
acquisition transactions. These units also invest in emerging growth
opportunities in selected industries, including the life sciences, information
technology, communications and consumer products. Business is developed through
direct solicitation, or through referrals from investment banking firms,
financial intermediaries, or the Corporation's other business units. The CIT
Group/Venture Capital is a federal licensee under the Small Business Investment
Act of 1958. The CIT Group/Equity Investments and The CIT Group/Venture Capital
are headquartered in Livingston, New Jersey.
Multi-National Marketing
Supplementing the Corporation's marketing efforts, the Corporation's
Multi-National Marketing Group promotes the services of the Corporation's
various business units to the U.S. subsidiaries of foreign corporations in need
of asset-based financing. Business is developed through referrals from DKB and
through direct calling efforts. The Multi-National Marketing Group is located in
New York City.
Regulation
Both DKB and CBC are bank holding companies within the meaning of the Bank
Holding Company Act of 1956 (the "Act"), and each is registered as such with the
Federal Reserve Board. As a result, the Corporation is subject to certain
provisions of the Act. In general, the Act limits the activities in which a bank
holding company and its subsidiaries may engage to those of banking or managing
or controlling banks or performing services for their subsidiaries and to
continuing activities which the Federal Reserve Board has determined to be "so
closely related to banking or managing or controlling banks as to be a proper
incident thereto." The Corporation's current principal business activities
constitute permissible activities for a subsidiary of a bank holding company.
The operations of the Corporation and its subsidiaries are subject, in
certain instances, to supervision and regulation by governmental authorities and
may be subject to various laws and judicial and administrative decisions
imposing various requirements and restrictions, including among other things,
regulating credit granting activities, establishing maximum interest rates and
finance charges, regulating customers' insurance coverages, requiring
disclosures to customers, governing secured transactions, and setting
collection, repossession, and claims handling procedures and other trade
practices. In most states the consumer sales finance and loan business and the
consumer second mortgage and home equity line of credit businesses are subject
to licensing or regulation. In some states the industrial finance business is
subject to similar licensing or regulation. The consumer second mortgage, home
equity line of credit, sales finance, and loan businesses, including those
conducted by the Corporation, are also subject to a number of Federal statutes,
including the Federal Consumer Credit Protection Act, which requires, among
other things, disclosure of the finance charge in terms of an annual percentage
rate, as well as the total dollar cost.
In the judgment of management, existing statutes and regulations have not
had a materially adverse effect on the business conducted by the Corporation and
its subsidiaries. However, it is not possible to forecast the nature of future
legislation, regulations, judicial decisions, orders, or interpretations, nor
their impact upon the future business, earnings, or otherwise, of the
Corporation and its subsidiaries.
5
<PAGE>
SUMMARY OF FINANCIAL INFORMATION
The following is a summary of certain financial information of the
Corporation and its subsidiaries. The data for the years ended December 31,
1994, 1993 and 1992 were obtained from the Corporation's audited consolidated
financial statements contained in the Corporation's 1994 Annual Report on Form
10-K. The data for the years ended December 31, 1991 and 1990 were obtained from
audited consolidated statements of the Corporation that are not incorporated by
reference in this Prospectus. This summary should be read in conjunction with
the financial information of the Corporation included in the reports referred to
under "Documents Incorporated By Reference."
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Finance income.................................... $1,263,846 $1,111,853 $1,091,562 $1,196,417 $1,106,000
Interest expense.................................. 613,957 508,006 552,017 709,373 711,645
---------- ---------- ---------- ---------- ----------
Net finance income.............................. 649,889 603,847 539,545 487,044 394,355
Fees and other income............................. 174,365 133,805 113,762 115,890 115,675
---------- ---------- ---------- ---------- ----------
Operating Revenue............................... 824,254 737,652 653,307 602,934 510,030
---------- ---------- ---------- ---------- ----------
Salaries and employee benefits.................... 185,868 152,139 137,914 127,060 113,612
General operating expenses........................ 152,068 130,043 123,721 119,273 101,615
---------- ---------- ---------- ---------- ----------
Salaries and general operating expenses........... 337,936 282,182 261,635 246,333 215,227
--------- --------- --------- --------- ---------
Net credit losses................................. 84,152 94,408 98,284 95,169 88,610
Provision for finance receivables increase........ 12,789 10,466 4,891 1,883 9,489
---------- ---------- ---------- ---------- ----------
Total provision for credit losses................. 96,941 104,874 103,175 97,052 98,099
---------- ---------- ---------- ---------- ----------
Depreciation on operating lease equipment......... 64,308 39,799 16,645 8,064 --
---------- ---------- ---------- ---------- ----------
Operating expenses................................ 499,185 426,855 381,455 351,449 313,326
---------- ---------- ---------- ---------- ----------
Income before provision for income taxes,
extraordinary item and cumulative effect of a
change in accounting principle.................. 325,069 310,797 271,852 251,485 196,704
Provision for income taxes........................ 123,941 128,489 105,311 100,032 76,995
---------- ---------- ---------- ---------- ----------
Income before extraordinary item and cumulative
effect of a change in accounting principle...... 201,128 182,308 166,541 151,453 119,709
Extraordinary item - loss on early extinguishment of
debt, net of income tax benefit................ -- -- (4,241) (1,325) (5,937)
Cumulative effect of a change in accounting for
income taxes................................... -- -- -- -- 20,350
---------- ---------- ---------- ---------- ----------
Net income........................................ $ 201,128 $ 182,308 $ 162,300 $ 150,128 $ 134,122
========== ========== ========== ========== ==========
</TABLE>
The following table sets forth the ratio of earnings to fixed charges for
each of the periods indicated.
Ratios of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges ................. 1.52 1.60 1.49 1.35 1.27
</TABLE>
The ratios of earnings to fixed charges have been computed in accordance
with requirements of the Commission's Regulation S-K. Earnings consist of income
from continuing operations before income taxes; fixed charges consist of
interest on indebtedness and the portion of rentals considered representative of
an appropriate interest factor.
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<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities offered hereby will
provide additional working funds for the Corporation and its subsidiaries and
will be used initially to reduce short-term borrowings (presently represented by
commercial paper) incurred primarily for the purpose of originating and
purchasing receivables in the ordinary course of business. The amounts which the
Corporation itself may use in connection with its business and which the
Corporation may furnish to particular subsidiaries are not now determinable.
From time to time the Corporation may also use the proceeds to finance the bulk
purchase of receivables and/or the acquisition of other finance-related
businesses.
DESCRIPTION OF DEBT SECURITIES
General
The Debt Securities will constitute either Superior Indebtedness (as
defined below) or Senior Subordinated Indebtedness (as defined below) of the
Corporation. Senior Securities may be issued from time to time in one or more
separate, unlimited series under one or more separate indentures, each
substantially in the form of a global indenture (each such indenture and
indentures supplemental thereto are hereinafter referred to as a "Senior
Indenture", and collectively as the "Senior Indentures"), in each case between
the Corporation and a banking institution organized under the laws of the United
States or one of the states thereof (each such banking institution is
hereinafter referred to as a "Senior Trustee", and collectively as the "Senior
Trustees"). The Senior Subordinated Securities may be issued from time to time
as either (i) one or more separate, unlimited series of Debt Securities
constituting senior subordinated indebtedness under one or more separate
indentures, each substantially in the form of a global indenture (each such
indenture and indentures supplemental thereto are hereinafter referred to as a
"Senior Subordinated Indenture", and collectively as the "Senior Subordinated
Indentures"), in each case between the Corporation and a banking institution
organized under the laws of the United States or one of the states thereof (each
such banking institution is hereinafter referred to as a "Senior Subordinated
Trustee", and collectively as the "Senior Subordinated Trustees"), or (ii) one
or more separate, unlimited series of Debt Securities constituting senior
subordinated indebtedness under the Senior Subordinated Indentures which is
intended to qualify as "Tier II Capital" under the rules and regulations of the
Ministry of Finance of Japan and the risk-based capital guidelines of the
Federal Reserve Board, if such series have the limited rights of acceleration
described under "Description of Debt Securities--Senior Subordinated Securities"
and "Description of Debt Securities--Events of Default". The Senior Indentures
and the Senior Subordinated Indentures are sometimes herein referred to as the
"Indentures", and the Senior Trustees and the Senior Subordinated Trustees are
sometimes herein referred to as the "Trustees".
The statements under this heading are subject to the detailed provisions of
each Indenture. A form of global Senior Indenture and a form of global Senior
Subordinated Indenture are filed as exhibits to a previously filed Registration
Statement. Wherever particular provisions of an Indenture or terms defined
therein are referred to, such provisions or definitions are incorporated by
reference as a part of the statements made and the statements are qualified in
their entirety by such reference.
The Debt Securities to be issued pursuant to this Prospectus, comprised of
the Senior Securities and the Senior Subordinated Securities, are limited to an
aggregate initial offering price of $8,511,000,000 (or (i) if the principal of
the Debt Securities is denominated in a foreign currency, the equivalent thereof
at the time of offering, or (ii) if the Debt Securities are issued at an
original issue discount, such greater principal amount as shall result in an
aggregate initial offering price of $8,511,000,000). The Senior Indentures do
not limit the amount of Debt Securities or other unsecured Superior Indebtedness
which may be issued thereunder or limit the amount of subordinated debt, secured
or unsecured, which may be issued by the Corporation. Except as described herein
under "Description of Debt Securities--Certain Restrictive Provisions", the
Senior Subordinated Indentures do not limit the amount of Debt Securities or
other unsecured Senior Subordinated Indebtedness which may be issued thereunder
or limit the amount of Junior Subordinated Indebtedness, secured or unsecured,
which may be issued by the Corporation. Certain other agreements by which the
Corporation is bound relating to outstanding debt limit the amount of Senior
Subordinated Indebtedness the Corporation may issue. At December 31, 1994, under
the most restrictive of such provisions in any such agreement, the Corporation
could issue up to approximately $1.79 billion of Senior Subordinated
Indebtedness, of which approximately $300.0 million was issued and outstanding
as of December 31, 1994. The Debt Securities will be issued in fully registered
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<PAGE>
form and, with regard to each issue of Offered Debt Securities in respect of
which this Prospectus is being delivered, in the manner and in the denominations
set forth in the accompanying Prospectus Supplement.
The Debt Securities may be issued in one or more series of Senior
Securities and/or one or more separate series of Senior Subordinated Securities,
in each case with the same or various maturities at par or at a discount.
Offered Debt Securities bearing no interest or interest at a rate which at the
time of issuance is below market rates ("Original Issue Discount Securities")
will be sold at a discount (which may be substantial) below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will be
described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (i) the designation, aggregate principal amount,
and authorized denominations of the Offered Debt Securities; (ii) the percentage
of their principal amount at which such Offered Debt Securities will be issued;
(iii) the date or dates on which the Offered Debt Securities will mature; (iv)
the rate or rates (which may be fixed or variable) per annum, if any, at which
the Offered Debt Securities will bear interest, or the method of determining
such rate or rates, or the original issue discount, if applicable; (v) the times
at which any such interest will be payable and the date from which any such
interest shall accrue; (vi) provisions for a sinking, purchase, or other
analogous fund, if any; (vii) any redemption terms; (viii) the designation of
the office or agency of the Corporation in the Borough of Manhattan, The City of
New York, where the Offered Debt Securities may be presented for payment and may
be transferred or exchanged by the registered holders thereof or by their
attorneys duly authorized in writing; (ix) if other than U.S. dollars, the
currency (including composite currencies) in which the principal of, premium, if
any, and/or interest on the Offered Debt Securities will be payable; (x) any
currency (including composite currencies) other than the stated currency of the
Offered Debt Securities in which the principal of, premium, if any, and/or
interest on the Offered Debt Securities may, at the election of the Corporation
or the holders, be payable, and the periods within which, and terms and
conditions upon which, such election may be made; (xi) if the amount of payments
of principal of, premium, if any, and/or interest on the Offered Debt Securities
may be determined with reference to an index, the manner in which such amounts
will be determined; (xii) whether the Offered Debt Securities are Senior
Securities or Senior Subordinated Securities, or include both; and (xiii) other
specific terms.
Principal, premium, if any, and interest, if any, less applicable
withholding taxes, if any, will be payable at the office or agency of the
Corporation maintained for such purpose in the Borough of Manhattan, The City of
New York, provided that payment of interest, if any, less applicable withholding
taxes, if any, may be made at the option of the Corporation by check mailed to
the address of the person entitled thereto as it appears on the register of the
Corporation. (Section 2.04.)
The Indentures provide that the Debt Securities will be transferable by the
registered holders thereof, or by their attorneys duly authorized in writing, at
the office or agency of the Corporation maintained for such purpose in such
cities as will be designated in the Prospectus Supplement, in the manner and
subject to the limitations provided in the Indentures, and upon surrender of the
Debt Securities. No service charge will be made for any registration of transfer
or exchange of the Debt Securities, but the Corporation may require payment of a
sum sufficient to cover any tax or other governmental charge in connection
therewith. (Section 2.06.)
"Indebtedness", when used in the definition of the terms "Superior
Indebtedness", "Senior Subordinated Indebtedness", and "Junior Subordinated
Indebtedness", means all obligations which in accordance with generally accepted
accounting principles should be classified as liabilities upon a balance sheet
and in any event includes all debt and other similar monetary obligations,
whether direct or guaranteed.
"Superior Indebtedness" means all Indebtedness of the Corporation that is
not by its terms subordinate or junior to any other indebtedness of the
Corporation. As discussed below, the Senior Securities constitute Superior
Indebtedness.
"Senior Subordinated Indebtedness" means all Indebtedness of the
Corporation that is subordinate only to Superior Indebtedness. As discussed
below, the Senior Subordinated Securities constitute Senior Subordinated
Indebtedness.
8
<PAGE>
"Junior Subordinated Indebtedness" means all Indebtedness of the
Corporation that is subordinate to both Superior Indebtedness and Senior
Subordinated Indebtedness.
Senior Securities
The Senior Securities will be direct, unsecured obligations of the
Corporation, and will constitute Superior Indebtedness issued on a parity with
the other Superior Indebtedness of the Corporation. At December 31, 1994,
approximately $13.87 billion of outstanding Superior Indebtedness was reflected
in the Corporation's consolidated audited balance sheet. The Senior Securities
will be senior to all Senior Subordinated Indebtedness, including the Senior
Subordinated Securities, which at December 31, 1994, totaled $300.0 million
outstanding, and Junior Subordinated Indebtedness, none of which was outstanding
at December 31, 1994. The subordination provisions applicable to the Senior
Subordinated Securities are discussed below under "Description of Debt
Securities--Senior Subordinated Securities".
Senior Subordinated Securities
The Senior Subordinated Securities will be direct, unsecured obligations of
the Corporation subordinated as to principal, premium, if any, and interest to
the prior payment in full of all Superior Indebtedness of the Corporation,
including the Senior Securities. In the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization, or similar proceedings or proceedings
for voluntary liquidation, dissolution, or other winding up of the Corporation,
whether or not involving insolvency or bankruptcy proceedings, the holders of
Superior Indebtedness will first be paid in full before any payment on account
of principal, premium, if any, or interest is made on the Senior Subordinated
Securities. An event of default under and/or acceleration of Superior
Indebtedness does not in itself result in the suspension of payments on Senior
Subordinated Securities. However, in the event the Senior Subordinated
Securities are declared due and payable before their expressed maturity because
of the occurrence of one of the events of default specified in the Senior
Subordinated Indentures, holders of the Senior Subordinated Securities will be
entitled to payment only after payment in full of Superior Indebtedness or
provision for such payment is made.
By reason of the foregoing subordination, in the event of insolvency,
holders of Superior Indebtedness may recover more, ratably, than the holders of
the Senior Subordinated Securities. The Senior Subordinated Securities are
intended to rank in all respects on a parity with all other Senior Subordinated
Indebtedness, including the Corporation's outstanding Senior Subordinated
Securities, and superior in right of payment to all Junior Subordinated
Indebtedness and all outstanding capital stock.
Senior Subordinated Securities of certain series may meet the requirements
necessary for such series to be considered "Tier II Capital" under the rules and
regulations of the Ministry of Finance of Japan and the risk-based capital
guidelines of the Federal Reserve Board. If it is intended that any series be
considered Tier II Capital, such series of the Senior Subordinated Securities
may provide that the maturity date of any such series so designated by the
Corporation in a supplement hereto will be subject to acceleration only in the
event of certain circumstances related to the insolvency of the Corporation.
Certain Restrictive Provisions
Except as set forth in the next sentence, no Indenture limits the amount of
other securities which may be issued by the Corporation or its subsidiaries, but
each contains a covenant that neither the Corporation nor any subsidiary will
create or incur any mortgage, pledge, or other lien on any of its properties,
except intercompany pledges from a subsidiary to the Corporation or to another
wholly-owned subsidiary of the Corporation; purchase money liens or liens
existing on properties hereafter acquired; liens on properties of subsidiaries
existing at the time of acquisition of the subsidiary; liens created in the
ordinary course of business by subsidiaries for money borrowed, if such
subsidiaries prior to becoming such had borrowed on a secured basis; liens
created in the ordinary course of business by subsidiaries operating outside the
territorial limits of the United States, if in the countries in which such liens
are created it is necessary or appropriate to borrow on a secured basis or to
deposit collateral to secure all or any of its obligations; renewals or
refundings of any of the foregoing; consensual liens in the ordinary course of
business that secure indebtedness which would not be included in total
liabilities as shown on the Corporation's consolidated balance sheet; sales of
securitized assets or property of the Corporation or its subsidiaries; liens
that secure certain other indebtedness which, in an aggregate principal amount
9
<PAGE>
then outstanding, does not exceed 10% of the Corporation's consolidated tangible
net worth; and certain other minor exceptions. (Section 6.04.) In addition, the
Senior Subordinated Indentures provide that the Corporation will not permit (i)
the aggregate amount of Senior Subordinated Indebtedness outstanding at any time
to exceed 100% of the aggregate amount of the par value of the capital stock
plus the surplus (including retained earnings) of the Corporation and its
consolidated subsidiaries or (ii) the aggregate amount of Senior Subordinated
Indebtedness and Junior Subordinated Indebtedness outstanding at any time to
exceed 150% of the aggregate amount of the par value of the capital stock plus
the surplus (including retained earnings) of the Corporation and its
consolidated subsidiaries. (Senior Subordinated Indenture Section 6.05.) Under
the more restrictive of such tests in the Senior Subordinated Indentures, as of
December 31, 1994, the Corporation could issue up to approximately $1.49 billion
of additional Senior Subordinated Indebtedness. For information as to
restrictions in other agreements on the Corporation's ability to issue Senior
Subordinated Indebtedness, see "Description of Debt Securities--General" above.
The holders of at least a majority in principal amount of the outstanding
Debt Securities of any series may, on behalf of the holders of all Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Corporation with the foregoing restrictions. (Senior Indenture
Section 6.06, Senior Subordinated Indenture Section 6.07.)
Each Indenture provides that, subject to the restrictions described in the
first sentence of the first paragraph under this caption, nothing contained in
such Indenture will prevent the consolidation or merger of the Corporation with
or into any other corporation, or the merger into the Corporation of any other
corporation, or the sale by the Corporation of its property and assets as, or
substantially as, an entirety, or otherwise. Notwithstanding the foregoing: (i)
in the event of any such consolidation or merger in which the Corporation is not
the surviving corporation, the surviving corporation must succeed to and be
substituted for the Corporation and must expressly assume by an indenture
executed and delivered to the applicable Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest, if any, on all Debt
Securities then outstanding and the performance and observance of every covenant
and condition of such Indenture which is required to be performed or observed by
the Corporation, and (ii) as a condition to any sale of the property and assets
of the Corporation as, or substantially as, an entirety, the corporation to
which such property and assets will be sold must (a) expressly assume, as part
of the purchase price thereof, the due and punctual payment of the principal of
(and premium, if any) and interest, if any, on all Debt Securities and the
performance and observance of every covenant and condition of such Indenture
which is required to be performed or observed by the Corporation, and (b)
simultaneously with the delivery to it of the conveyances or instruments of
transfer of such property and assets, execute and deliver to the applicable
Trustee a proper indenture in form satisfactory to such Trustee, pursuant to
which such purchasing corporation will assume the due and punctual payment of
the principal of (and premium, if any) and interest, if any, on all Debt
Securities then outstanding and the performance and observance of every covenant
and condition of such Indenture which is required to be performed or observed by
the Corporation, to the same extent that the Corporation is bound and liable.
(Senior Indenture Section 15.01, Senior Subordinated Indenture Section 16.01.)
Compliance by the Corporation with the foregoing restrictions may be waived by
or on behalf of the holders of the outstanding Debt Securities. For information
as to the modification of each Indenture, see "Description of Debt
Securities--Modification of Indenture" below.
Other than the foregoing restrictions, no Indenture contains covenants of
the Corporation or provisions which afford additional protection to holders of
outstanding Debt Securities in the event of a highly leveraged transaction
involving the Corporation.
Modification of Indenture
Each Indenture contains provisions permitting the Corporation and the
Trustee thereunder to add any provisions to or change in any manner or eliminate
any of the provisions of such Indenture or any indenture supplemental thereto or
to modify in any manner the rights of the holders of any series of Debt
Securities with the consent of the holders of not less than 662/3% in aggregate
principal amount of such series of Debt Securities at the time outstanding,
except that no such amendment or modification may (i) extend the fixed maturity
of any Debt Security, reduce the rate or extend the time of payment of interest
thereon, reduce the amount of the principal thereof, or premium, if any, payable
with respect thereto, or reduce the amount of an Original Issue Discount
10
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Security payable upon the acceleration of the stated maturity thereof, without
the consent of the holder of such Debt Security, or (ii) reduce the aforesaid
percentage of any series of Debt Securities, the holders of which are required
to consent to any such amendment or modification, without the consent of the
holders of all the Debt Securities of such series then outstanding. (Section
14.02.)
Outstanding Debt Securities
In determining whether the holders of the requisite principal amount of
outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent, or waiver under any Indenture, (i) the principal
amount of an Original Issue Discount Security that will be deemed to be
outstanding for such purposes will be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the maturity thereof upon an event of default and (ii) the
principal amount of a Debt Security denominated in a foreign currency or
currencies will be the U.S. dollar equivalent, determined on the date of
original issuance of such Debt Security, of the principal amount. (Section
1.02.)
Events of Default
Each Indenture defines an "event of default" with respect to any series of
Debt Securities as being any one of the following events and such other events
as may be established for the Debt Securities of a particular series: (i)
default for thirty days in any payment of interest on such series; (ii) default
in any payment of principal of, and premium, if any, on such series when due;
(iii) default in the payment of any sinking fund installment of such series when
due; (iv) default for thirty days after appropriate notice in performance of any
other covenant in such Indenture (other than a covenant included in the
Indenture solely for the benefit of another series of Debt Securities); (v)
certain events in bankruptcy, insolvency, or reorganization; or (vi) default in
the payment of any installment of interest on any evidence of indebtedness of,
or assumed or guaranteed by, the Corporation (other than indebtedness
subordinated to such series), or in the payment of any principal of any such
evidence of indebtedness, and with respect to which any period of grace shall
have expired, after appropriate notice. (Section 7.01.) Each Indenture provides
that the Trustee may withhold notice of any default (except in the payment of
principal of, premium, if any, or interest, if any, on any series of Debt
Securities) if it considers such withholding in the interests of the holders of
such series of Debt Securities issued thereunder. (Section 11.03.)
Except as set forth below, each Indenture provides that the Trustee
thereunder or the holders of not less than 25% in principal amount of any series
of Debt Securities then outstanding may declare the principal of all Debt
Securities of such series to be due and payable on an event of default. (Section
7.02.) Notwithstanding the foregoing, any series of Senior Subordinated
Securities which will be considered "Tier II" may provide that the Senior
Subordinated Trustee or the holders of at least 25% in aggregate principal
amount of the Senior Subordinated Securities of that series which are then
outstanding may declare the principal of all Senior Subordinated Securities of
that series to be due and payable immediately only if an event of default
pursuant to (v) above shall have occurred and be continuing. Any such series
will be designated by the Corporation in a supplement hereto.
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt 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.
Within 120 days after the close of each fiscal year, the Corporation must
file with each Trustee a statement, signed by specified officers, stating
whether or not such officers have knowledge of any default, and, if so,
specifying each such default, the nature thereof and what action, if any, has
been taken to cure such default. (Senior Indenture Section 6.05, Senior
Subordinated Indenture Section 6.06.)
Subject to provisions relating to its duties in case of default, no Trustee
is under any obligation to exercise any of its rights or powers thereunder at
the request, order, or direction of any holders of any series of Debt
Securities, unless such holders shall have offered to such Trustee reasonable
indemnity. (Section 11.01.) Subject to such provisions for indemnification, the
holders of a majority in principal amount of any series of Debt Securities
11
<PAGE>
outstanding may direct the time, method, and place of conducting any proceeding
for any remedy available to the Trustee thereunder, or of exercising any trust
or power conferred upon such Trustee.
(Section 7.08.)
Defeasance of the Indenture and Debt Securities
The Corporation at any time may satisfy its obligations with respect to
payments of principal of, premium, if any, and interest, if any, on the Debt
Securities of any series by irrevocably depositing in trust with the Trustee
money or U.S. Government Obligations (as defined in the Indenture) or a
combination thereof sufficient to make such payments when due. If such deposit
is sufficient, as verified by a written report of a nationally recognized,
independent public accounting firm, to make all payments of (i) interest, if
any, on the Debt Securities of such series prior to and on their redemption or
maturity, as the case may be, and (ii) principal of, and premium, if any, on the
Debt Securities of such series when due upon redemption or at the designated
maturity date, as the case may be, then all the obligations of the Corporation
with respect to the Debt Securities of such series and the Indenture insofar as
it relates to the Debt Securities of such series will be satisfied and
discharged (except as otherwise provided in the Indenture). In the event of any
such defeasance, holders of the Debt Securities of such series would be able to
look only to such trust fund for payment of principal of, premium, if any, and
interest, if any, on the Debt Securities of such series until the designated
maturity date or redemption. (Sections 12.01, 12.02 and 12.03)
Such a trust may only be established if, among other things, (i) the
Corporation has obtained an opinion of legal counsel (which may be based on a
ruling from, or published by, the Internal Revenue Service) to the effect that
holders of the Debt Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred and (ii) at that time, with
respect to any series of Debt Securities then listed on The New York Stock
Exchange, the rules of The New York Stock Exchange do not prohibit such deposit
with the Trustee.
Information Concerning the Trustees
The Corporation from time to time may borrow from each of the Trustees, and
the Corporation and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions with some of the Trustees. A Trustee under a
Senior Indenture or a Senior Subordinated Indenture may act as trustee under any
of the Corporation's other indentures.
PLAN OF DISTRIBUTION
The Corporation may sell the Debt Securities being offered hereby (i)
directly to purchasers, (ii) through agents, (iii) to dealers, or (iv) through
an underwriter or a group of underwriters.
Offers to purchase Offered Debt Securities may be solicited directly by the
Corporation or by agents designated by the Corporation from time to time. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment (ordinarily five
business days or less). Agents may be entitled under agreements which may be
entered into with the Corporation to indemnification by the Corporation against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").
If a dealer is utilized in the sale of the Offered Debt Securities in
respect of which this Prospectus is delivered, the Corporation will sell such
Offered Debt Securities to the dealer, as principal. The dealer may then resell
such Offered Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale. Dealers may be entitled under agreements
which may be entered into with the Corporation to indemnification by the
Corporation against certain civil liabilities, including liabilities under the
Securities Act.
If an underwriter or underwriters are utilized in the sale, the Corporation
may enter into an arrangement with such underwriters at the time of sale to them
providing for their indemnification against certain liabilities, including
liabilities under the Securities Act. The names of the underwriters and the
terms of the transaction will be set forth in the Prospectus Supplement which is
intended for use by the underwriters to make resales of the Offered Debt
Securities in respect of which this Prospectus is delivered to the public.
12
<PAGE>
If an affiliate or subsidiary of the Corporation participates in the offer
and sale of the Debt Securities, such participation will comply with the
requirements of Schedule E of the By-Laws of the National Association of
Securities Dealers, Inc. regarding the underwriting of securities of an
affiliate.
The underwriters, dealers, and agents may be deemed to be underwriters and
any discounts, commissions, or concessions received by them from the Corporation
or any profit on the resale of Offered Debt Securities by them may be deemed to
be underwriting discounts and commissions under the Securities Act. Any such
person who may be deemed to be an underwriter and any such compensation received
from the Corporation will be described in the Prospectus Supplement.
Underwriters, dealers, and agents may be customers of, engage in transactions
with, or perform services for the Corporation in the ordinary course of
business.
If so indicated in the Prospectus Supplement, the Corporation will
authorize underwriters and agents to solicit offers by certain institutions to
purchase Offered Debt Securities from the Corporation at the public offering
price set forth in the Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date stated in
the Prospectus Supplement. Each Contract will be for an amount not less than,
and unless the Corporation otherwise agrees the aggregate principal amount of
Offered Debt Securities sold pursuant to Contracts will be not less nor more
than, the respective amounts stated in the Prospectus Supplement. Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions, but shall in all cases be
subject to the approval of the Corporation. Contracts will not be subject to any
conditions except that the purchase by an institution of the Offered Debt
Securities covered by its Contract must not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject. A commission indicated in the Prospectus Supplement will
be granted to underwriters and agents soliciting purchases of Offered Debt
Securities pursuant to Contracts accepted by the Corporation. Underwriters and
agents will have no responsibility in respect of the delivery or performance of
Contracts.
The place and time of delivery for the Offered Debt Securities in respect
of which this Prospectus is delivered will be set forth in the Prospectus
Supplement.
EXPERTS
The financial statements listed under the heading "Exhibits, Financial
Statement Schedule and Reports on Form 8-K" in the Corporation's 1994 Annual
Report on Form 10-K incorporated by reference herein have been incorporated by
reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, also incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP refers to a change in the method of accounting
for postretirement benefits other than pensions in 1993.
LEGAL OPINIONS
The legality of the Debt Securities to which this Prospectus relates has
been passed upon for the Corporation by Schulte Roth & Zabel, 900 Third Avenue,
New York, New York 10022. Paul N. Roth, a director of the Corporation, is a
partner of Schulte Roth & Zabel.
13
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 15, 1995
The CIT Group Holdings, Inc.
Debt Securities
-------------------
The CIT Group Holdings, Inc. (the "Corporation") intends to issue from time
to time, in one or more series, debt securities (the "Debt Securities"), which
may be either senior (the "Senior Securities") or senior subordinated (the
"Senior Subordinated Securities") in priority of payment, with an aggregate
initial offering price not to exceed $8,511,000,000 (or (i) if the principal of
the Debt Securities is denominated in a foreign currency, the equivalent thereof
at the time of offering, or (ii) if the Debt Securities are issued at an
original issue discount, such greater principal amount as shall result in an
aggregate initial offering price of $8,511,000,000). Each Debt Security will be
a direct, unsecured obligation of the Corporation and will be offered to the
public on terms determined by market conditions at the time of sale. The
Corporation may sell its Debt Securities (i) directly to purchasers, (ii)
through agents designated from time to time, (iii) to dealers, or (iv) through
an underwriter or a group of underwriters. The Debt Securities may be issued in
one or more series with the same or various terms. The specific designation,
aggregate principal amount, currency of payment, authorized denominations,
purchase price, maturity, rate and time of payment of any interest, any
redemption terms, the designation of each Trustee acting under the applicable
Indenture, any listing on a securities exchange, or other specific terms of the
Debt Securities in respect of which this Prospectus is being delivered (the
"Offered Debt Securities") will be set forth in the accompanying supplement to
the Prospectus (the "Prospectus Supplement"), together with the terms of
offering of the Offered Debt Securities. The Corporation reserves the sole right
to accept and either in its sole discretion or together with its agents from
time to time to reject, in whole or in part, any proposed purchase of Offered
Debt Securities.
If any agents of the Corporation or any dealers or underwriters are
involved in the sale of the Offered Debt Securities in respect of which this
Prospectus is being delivered, the names of such agents, dealers, or
underwriters and any applicable agent's commission, dealer's purchase price, or
underwriter's discount will be set forth in or may be calculated from the
Prospectus Supplement. The net proceeds to the Corporation from such sale will
be (i) the purchase price of such Offered Debt Securities less such commission
in the case of an agent, (ii) the purchase price of such Offered Debt Securities
in the case of a dealer, or (iii) the public offering price less such discount
in the case of an underwriter and less, in each case, other applicable issuance
expenses. See "Plan of Distribution" for possible indemnification arrangements
with agents, dealers, and underwriters.
-------------------
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 date of this Prospectus is , 1995.
<PAGE>
No salesman or any other person has been authorized by the Corporation or
any dealer, agent, or underwriter to give any information or to make any
representation, other than as contained in this Prospectus, the Prospectus
Supplement or the documents incorporated by reference, in connection with the
offer contained in this Prospectus and the Prospectus Supplement and, if given
or made, such information or representation must not be relied upon. This
Prospectus and the Prospectus Supplement do not constitute any offer by any
dealer, agent or underwriter to sell, or a solicitation of an offer to buy,
securities in any state to any person to whom it is unlawful for such dealer,
agent or underwriter to make such offer or solicitation in such state. Neither
the delivery of this Prospectus and the Prospectus Supplement nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Corporation and its subsidiaries since the
date of the information contained herein.
-------------------
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
can be inspected and copied at the offices of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission, at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Certain of the Corporation's securities are listed on the New York Stock
Exchange and reports and other information concerning the Corporation can also
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission by the Corporation are
incorporated by reference in this Prospectus:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994, together with the report of KPMG Peat Marwick LLP,
independent certified public accountants, which report refers to a change
in the method of accounting for postretirement benefits other than pensions
in 1993; and
(b) The Corporation's Current Report on Form 8-K dated January 18,
1995.
All documents filed by the Corporation pursuant to Sections 13(a) and (c),
14, or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON REQUEST, A COPY OF ANY OR ALL OF THE FOREGOING
DOCUMENTS DESCRIBED ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE IN
THIS PROSPECTUS OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). SUCH REQUEST SHOULD
BE DIRECTED TO:
Corporate Secretary
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
(212) 536-1950
2
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THE CORPORATION
The CIT Group Holdings, Inc. (the "Corporation"), a Delaware corporation,
is a successor to a company founded in St. Louis, Missouri on February 11, 1908.
It has its principal executive offices at 1211 Avenue of the Americas, New York,
New York 10036, and its telephone number is (212) 536-1950. The Corporation,
operating directly or through its subsidiaries primarily in the United States,
engages in financial services activities through a nationwide distribution
network. The Corporation provides financing primarily on a secured basis to
commercial borrowers, ranging from middle-market to larger companies, and to a
lesser extent to consumers. While these secured lending activities reduce the
risk of losses from extending credit, the Corporation's results of operations
can also be affected by other factors, including general economic conditions,
competitive conditions, the level and volatility of interest rates,
concentrations of credit risk, and government regulation and supervision. The
Corporation does not finance the development or construction of commercial real
estate. The Corporation has eight strategic business units, seven of which offer
corporate financing, dealer and manufacturer financing, and factoring products
and services to clients, and an eighth which offers consumer first and second
mortgage financing and home equity lines of credit.
The Dai-Ichi Kangyo Bank, Limited ("DKB") owns sixty percent (60%) of the
issued and outstanding shares of common stock of the Corporation, which it
purchased from Manufacturers Hanover Corporation ("MHC") at year-end 1989. The
remaining forty percent (40%) common stock interest in the Corporation is owned
by Chemical Banking Corporation ("CBC") through a subsidiary MHC Holdings
(Delaware) Inc. ("MHC Holdings"), which CBC acquired as part of the merger
between MHC and CBC on December 31, 1991.
In accordance with a stockholders agreement among DKB, CBC, as successor to
MHC, and the Corporation (the "Stockholders Agreement"), the Corporation amended
its Certificate of Incorporation and its By-Laws in conformity therewith.
Pursuant to the Stockholders Agreement, immediately after MHC sold the sixty
percent (60%) interest in the Corporation to DKB, the stockholders elected a new
Board of Directors comprised of the President and Chief Executive Officer and
the Vice Chairman of the Corporation, six nominees designated by DKB, and two
nominees designated by MHC. The Stockholders Agreement also contains provisions
for the management of the Corporation, majority voting by DKB on the
Corporation's Executive Committee, consent of MHC Holdings with respect to major
corporate and business changes, and restrictions with respect to the transfer of
the stock of the Corporation to third parties.
Corporate Finance Group
The Corporation's Corporate Finance Group is comprised of Business Credit,
Capital Equipment Financing and Credit Finance.
The CIT Group/Business Credit offers revolving and term loans secured by
accounts receivable, inventories and fixed assets to medium and larger-sized
companies. Such loans are used by clients primarily for acquisitions and
refinancings. It also offers specialty financing for companies in the paper,
printing and chemical industries and debtor-in-possession and workout financing
for turnaround situations. The CIT Group/Business Credit sells participation
interests in such loans to other lenders and will occasionally purchase
participation interests in such loans originated by other lenders. Business is
developed through direct calling efforts and through other sources originated by
new business development officers. The CIT Group/Business Credit is
headquartered in New York City, with sales and customer service offices in New
York, Chicago, Dallas, Los Angeles, Atlanta and Charlotte.
The CIT Group/Capital Equipment Financing specializes in customized secured
financing and leasing including single investor leases, the debt and equity
portions of leveraged leases, and operating leases for major capital equipment
such as aircraft, rail cars, maritime shipping, and containers and chassis, for
its own account and for syndications. Such business is developed directly with
large companies and through third parties. The CIT Group/Capital Equipment
Financing also provides secured financing and leasing products to middle-market
and larger companies seeking medium and longer term financings. Such
transactions are developed through direct calling efforts and financial
intermediaries. Financing products include direct secured loans and leases, sale
and leaseback arrangements, operating leases, and project financings. Two
business groups within The CIT Group/Capital Equipment Financing augment its
marketing efforts and provide services relating to its areas of expertise. The
first group, The CIT Group/Capital Investments, acts as an agent, broker, and
3
<PAGE>
advisor in financing and leasing transactions. The CIT Group/Capital Investments
is a registered broker-dealer and a member of the National Association of
Securities Dealers, Inc. The second group, The CIT Group/Asset Management,
provides asset management services to financial institutions and certain
non-financial institutions for equipment financing transactions and portfolios.
The CIT Group/Capital Equipment Financing is headquartered in New York City,
with sales offices in twelve cities, including New York, Chicago and Los
Angeles.
The CIT Group/Credit Finance offers revolving and term loans to small and
medium-sized companies secured by accounts receivable, inventories, and fixed
assets. Such loans are used by clients for working capital and in refinancings,
acquisitions, and leveraged buyouts. The CIT Group/Credit Finance also offers
financing for reorganizations, restructurings, and Chapter 11 situations.
Business is developed through direct calling efforts and through other sources
developed by new business development officers. The CIT Group/Credit Finance is
headquartered in New York City, with sales and customer service offices in New
York, Chicago and Los Angeles and loan production offices in seven other cities.
Dealer and Manufacturer Financing Group
The Corporation's Dealer and Manufacturer Financing Group is comprised of
Industrial Financing and Sales Financing.
The CIT Group/Industrial Financing offers secured equipment financing and
leasing products, including direct secured loans, leases, secured lines of
credit, sale and leaseback arrangements, vendor financing for manufacturers,
wholesale and retail financing for dealers/distributors, acquisition of chattel
paper and other installment receivables, and acquisition of portfolios
originated by others. It has a nationwide network of local offices and business
aircraft, intermediary and national accounts financing units. The CIT
Group/Industrial Financing is headquartered in Livingston, New Jersey, with
sales offices in fourteen cities, including Berwyn, Pennsylvania, Tempe, Arizona
and Atlanta, Georgia, which also serve as regional and customer service offices.
The CIT Group/Sales Financing, working through dealers and manufacturers,
provides retail secured financing on a nationwide basis for the purchase of
recreational vehicles, recreational boats and manufactured housing. The CIT
Group/Sales Financing also purchases portfolios of these assets from banks,
savings and loans, investment banks and others and provides servicing for
portfolios owned by other financial institutions and securitization trusts. The
CIT Group/Sales Financing is headquartered in Livingston, New Jersey with an
asset service center in Oklahoma City, Oklahoma, and covers the United States
from five regional business centers located in Atlanta, Boston, Kansas City,
Sacramento and Seattle.
Consumer Finance
In December 1992, The CIT Group/Consumer Finance, a newly formed business
unit, began offering loans secured primarily by first or second mortgages on
residential real estate. The CIT Group/Consumer Finance generates business
through brokers and direct marketing efforts. It also acquires "home equity"
portfolios originated by others. In early 1994, The CIT Group/Consumer Finance
began offering home equity lines of credit to consumers. This business unit is
headquartered in Livingston, New Jersey with 33 sales offices serving 24 states,
two of which purchase mortgage loans from third parties. Administrative support
is provided by the Sales Financing asset service center located in Oklahoma
City, Oklahoma.
Factoring
The CIT Group/Commercial Services offers a full range of factoring services
providing for the purchase of accounts receivable, including credit protection,
bookkeeping, and collection activities. Financing is also provided in the form
of revolving and term loans, and letter of credit support. The CIT
Group/Commercial Services is headquartered in New York City, with full service
offices in New York, Los Angeles, Dallas and Charlotte and sales offices in
Miami and Hong Kong. Bookkeeping and collection functions are located in a
service center in Danville, Virginia.
On February 28, 1994, the Corporation acquired, for cash, Barclays
Commercial Corporation ("BCC"), a company of The Barclays Group. BCC had total
assets of approximately $700.0 million at December 31, 1993 and total factoring
volume of approximately $5.00 billion for the year then ended. The business and
4
<PAGE>
acquired assets of BCC were transferred to The CIT Group/Commercial Services,
Inc., a wholly-owned subsidiary of the Corporation. BCC is engaged in the same
lines of business as The CIT Group/Commercial Services, with BCC adding a
significant geographical presence in the Southeastern United States.
Equity Investments
The CIT Group/Equity Investments and its subsidiary The CIT Group/Venture
Capital originate and participate in purchasing private equity and
equity-related securities, and arrange transaction financing, and merger and
acquisition transactions. These units also invest in emerging growth
opportunities in selected industries, including the life sciences, information
technology, communications and consumer products. Business is developed through
direct solicitation, or through referrals from investment banking firms,
financial intermediaries, or the Corporation's other business units. The CIT
Group/Venture Capital is a federal licensee under the Small Business Investment
Act of 1958. The CIT Group/Equity Investments and The CIT Group/Venture Capital
are headquartered in Livingston, New Jersey.
Multi-National Marketing
Supplementing the Corporation's marketing efforts, the Corporation's
Multi-National Marketing Group promotes the services of the Corporation's
various business units to the U.S. subsidiaries of foreign corporations in need
of asset-based financing. Business is developed through referrals from DKB and
through direct calling efforts. The Multi-National Marketing Group is located in
New York City.
Regulation
Both DKB and CBC are bank holding companies within the meaning of the Bank
Holding Company Act of 1956 (the "Act"), and each is registered as such with the
Federal Reserve Board. As a result, the Corporation is subject to certain
provisions of the Act. In general, the Act limits the activities in which a bank
holding company and its subsidiaries may engage to those of banking or managing
or controlling banks or performing services for their subsidiaries and to
continuing activities which the Federal Reserve Board has determined to be "so
closely related to banking or managing or controlling banks as to be a proper
incident thereto." The Corporation's current principal business activities
constitute permissible activities for a subsidiary of a bank holding company.
The operations of the Corporation and its subsidiaries are subject, in
certain instances, to supervision and regulation by governmental authorities and
may be subject to various laws and judicial and administrative decisions
imposing various requirements and restrictions, including among other things,
regulating credit granting activities, establishing maximum interest rates and
finance charges, regulating customers' insurance coverages, requiring
disclosures to customers, governing secured transactions, and setting
collection, repossession, and claims handling procedures and other trade
practices. In most states the consumer sales finance and loan business and the
consumer second mortgage and home equity line of credit businesses are subject
to licensing or regulation. In some states the industrial finance business is
subject to similar licensing or regulation. The consumer second mortgage, home
equity line of credit, sales finance, and loan businesses, including those
conducted by the Corporation, are also subject to a number of Federal statutes,
including the Federal Consumer Credit Protection Act, which requires, among
other things, disclosure of the finance charge in terms of an annual percentage
rate, as well as the total dollar cost.
In the judgment of management, existing statutes and regulations have not
had a materially adverse effect on the business conducted by the Corporation and
its subsidiaries. However, it is not possible to forecast the nature of future
legislation, regulations, judicial decisions, orders, or interpretations, nor
their impact upon the future business, earnings, or otherwise, of the
Corporation and its subsidiaries.
5
<PAGE>
SUMMARY OF FINANCIAL INFORMATION
The following is a summary of certain financial information of the
Corporation and its subsidiaries. The data for the years ended December 31,
1994, 1993 and 1992 were obtained from the Corporation's audited consolidated
financial statements contained in the Corporation's 1994 Annual Report on Form
10-K. The data for the years ended December 31, 1991 and 1990 were obtained from
audited consolidated statements of the Corporation that are not incorporated by
reference in this Prospectus. This summary should be read in conjunction with
the financial information of the Corporation included in the reports referred to
under "Documents Incorporated By Reference."
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Finance income.................................... $1,263,846 $1,111,853 $1,091,562 $1,196,417 $1,106,000
Interest expense.................................. 613,957 508,006 552,017 709,373 711,645
---------- ---------- ---------- ---------- ----------
Net finance income.............................. 649,889 603,847 539,545 487,044 394,355
Fees and other income............................. 174,365 133,805 113,762 115,890 115,675
---------- ---------- ---------- ---------- ----------
Operating Revenue............................... 824,254 737,652 653,307 602,934 510,030
---------- ---------- ---------- ---------- ----------
Salaries and employee benefits.................... 185,868 152,139 137,914 127,060 113,612
General operating expenses........................ 152,068 130,043 123,721 119,273 101,615
---------- ---------- ---------- ---------- ----------
Salaries and general operating expenses........... 337,936 282,182 261,635 246,333 215,227
--------- --------- --------- --------- ---------
Net credit losses................................. 84,152 94,408 98,284 95,169 88,610
Provision for finance receivables increase........ 12,789 10,466 4,891 1,883 9,489
---------- ---------- ---------- ---------- ----------
Total provision for credit losses................. 96,941 104,874 103,175 97,052 98,099
---------- ---------- ---------- ---------- ----------
Depreciation on operating lease equipment......... 64,308 39,799 16,645 8,064 --
---------- ---------- ---------- ---------- ----------
Operating expenses................................ 499,185 426,855 381,455 351,449 313,326
---------- ---------- ---------- ---------- ----------
Income before provision for income taxes,
extraordinary item and cumulative effect of a
change in accounting principle.................. 325,069 310,797 271,852 251,485 196,704
Provision for income taxes........................ 123,941 128,489 105,311 100,032 76,995
---------- ---------- ---------- ---------- ----------
Income before extraordinary item and cumulative
effect of a change in accounting principle...... 201,128 182,308 166,541 151,453 119,709
Extraordinary item - loss on early extinguishment of
debt, net of income tax benefit................ -- -- (4,241) (1,325) (5,937)
Cumulative effect of a change in accounting for
income taxes................................... -- -- -- -- 20,350
---------- ---------- ---------- ---------- ----------
Net income........................................ $ 201,128 $ 182,308 $ 162,300 $ 150,128 $ 134,122
========== ========== ========== ========== ==========
</TABLE>
The following table sets forth the ratio of earnings to fixed charges for
each of the periods indicated.
Ratios of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1994 1993 1992 1991 1990
---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges ................. 1.52 1.60 1.49 1.35 1.27
</TABLE>
The ratios of earnings to fixed charges have been computed in accordance
with requirements of the Commission's Regulation S-K. Earnings consist of income
from continuing operations before income taxes; fixed charges consist of
interest on indebtedness and the portion of rentals considered representative of
an appropriate interest factor.
6
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities offered hereby will
provide additional working funds for the Corporation and its subsidiaries and
will be used initially to reduce short-term borrowings (presently represented by
commercial paper) incurred primarily for the purpose of originating and
purchasing receivables in the ordinary course of business. The amounts which the
Corporation itself may use in connection with its business and which the
Corporation may furnish to particular subsidiaries are not now determinable.
From time to time the Corporation may also use the proceeds to finance the bulk
purchase of receivables and/or the acquisition of other finance-related
businesses.
DESCRIPTION OF DEBT SECURITIES
General
The Debt Securities will constitute either Superior Indebtedness (as
defined below) or Senior Subordinated Indebtedness (as defined below) of the
Corporation. Senior Securities may be issued from time to time in one or more
separate, unlimited series under one or more separate indentures, each
substantially in the form of a global indenture (each such indenture and
indentures supplemental thereto are hereinafter referred to as a "Senior
Indenture", and collectively as the "Senior Indentures"), in each case between
the Corporation and a banking institution organized under the laws of the United
States or one of the states thereof (each such banking institution is
hereinafter referred to as a "Senior Trustee", and collectively as the "Senior
Trustees"). The Senior Subordinated Securities may be issued from time to time
as either (i) one or more separate, unlimited series of Debt Securities
constituting senior subordinated indebtedness under one or more separate
indentures, each substantially in the form of a global indenture (each such
indenture and indentures supplemental thereto are hereinafter referred to as a
"Senior Subordinated Indenture", and collectively as the "Senior Subordinated
Indentures"), in each case between the Corporation and a banking institution
organized under the laws of the United States or one of the states thereof (each
such banking institution is hereinafter referred to as a "Senior Subordinated
Trustee", and collectively as the "Senior Subordinated Trustees"), or (ii) one
or more separate, unlimited series of Debt Securities constituting senior
subordinated indebtedness under the Senior Subordinated Indentures which is
intended to qualify as "Tier II Capital" under the rules and regulations of the
Ministry of Finance of Japan and the risk-based capital guidelines of the
Federal Reserve Board, if such series have the limited rights of acceleration
described under "Description of Debt Securities--Senior Subordinated Securities"
and "Description of Debt Securities--Events of Default". The Senior Indentures
and the Senior Subordinated Indentures are sometimes herein referred to as the
"Indentures", and the Senior Trustees and the Senior Subordinated Trustees are
sometimes herein referred to as the "Trustees".
The statements under this heading are subject to the detailed provisions of
each Indenture. A form of global Senior Indenture and a form of global Senior
Subordinated Indenture are filed as exhibits to a previously filed Registration
Statement. Wherever particular provisions of an Indenture or terms defined
therein are referred to, such provisions or definitions are incorporated by
reference as a part of the statements made and the statements are qualified in
their entirety by such reference.
The Debt Securities to be issued pursuant to this Prospectus, comprised of
the Senior Securities and the Senior Subordinated Securities, are limited to an
aggregate initial offering price of $8,511,000,000 (or (i) if the principal of
the Debt Securities is denominated in a foreign currency, the equivalent thereof
at the time of offering, or (ii) if the Debt Securities are issued at an
original issue discount, such greater principal amount as shall result in an
aggregate initial offering price of $8,511,000,000). The Senior Indentures do
not limit the amount of Debt Securities or other unsecured Superior Indebtedness
which may be issued thereunder or limit the amount of subordinated debt, secured
or unsecured, which may be issued by the Corporation. Except as described herein
under "Description of Debt Securities--Certain Restrictive Provisions", the
Senior Subordinated Indentures do not limit the amount of Debt Securities or
other unsecured Senior Subordinated Indebtedness which may be issued thereunder
or limit the amount of Junior Subordinated Indebtedness, secured or unsecured,
which may be issued by the Corporation. Certain other agreements by which the
Corporation is bound relating to outstanding debt limit the amount of Senior
Subordinated Indebtedness the Corporation may issue. At December 31, 1994, under
the most restrictive of such provisions in any such agreement, the Corporation
could issue up to approximately $1.79 billion of Senior Subordinated
Indebtedness, of which approximately $300.0 million was issued and outstanding
as of December 31, 1994. The Debt Securities will be issued in fully registered
7
<PAGE>
form and, with regard to each issue of Offered Debt Securities in respect of
which this Prospectus is being delivered, in the manner and in the denominations
set forth in the accompanying Prospectus Supplement.
The Debt Securities may be issued in one or more series of Senior
Securities and/or one or more separate series of Senior Subordinated Securities,
in each case with the same or various maturities at par or at a discount.
Offered Debt Securities bearing no interest or interest at a rate which at the
time of issuance is below market rates ("Original Issue Discount Securities")
will be sold at a discount (which may be substantial) below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will be
described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (i) the designation, aggregate principal amount,
and authorized denominations of the Offered Debt Securities; (ii) the percentage
of their principal amount at which such Offered Debt Securities will be issued;
(iii) the date or dates on which the Offered Debt Securities will mature; (iv)
the rate or rates (which may be fixed or variable) per annum, if any, at which
the Offered Debt Securities will bear interest, or the method of determining
such rate or rates, or the original issue discount, if applicable; (v) the times
at which any such interest will be payable and the date from which any such
interest shall accrue; (vi) provisions for a sinking, purchase, or other
analogous fund, if any; (vii) any redemption terms; (viii) the designation of
the office or agency of the Corporation in the Borough of Manhattan, The City of
New York, where the Offered Debt Securities may be presented for payment and may
be transferred or exchanged by the registered holders thereof or by their
attorneys duly authorized in writing; (ix) if other than U.S. dollars, the
currency (including composite currencies) in which the principal of, premium, if
any, and/or interest on the Offered Debt Securities will be payable; (x) any
currency (including composite currencies) other than the stated currency of the
Offered Debt Securities in which the principal of, premium, if any, and/or
interest on the Offered Debt Securities may, at the election of the Corporation
or the holders, be payable, and the periods within which, and terms and
conditions upon which, such election may be made; (xi) if the amount of payments
of principal of, premium, if any, and/or interest on the Offered Debt Securities
may be determined with reference to an index, the manner in which such amounts
will be determined; (xii) whether the Offered Debt Securities are Senior
Securities or Senior Subordinated Securities, or include both; and (xiii) other
specific terms.
Principal, premium, if any, and interest, if any, less applicable
withholding taxes, if any, will be payable at the office or agency of the
Corporation maintained for such purpose in the Borough of Manhattan, The City of
New York, provided that payment of interest, if any, less applicable withholding
taxes, if any, may be made at the option of the Corporation by check mailed to
the address of the person entitled thereto as it appears on the register of the
Corporation. (Section 2.04.)
The Indentures provide that the Debt Securities will be transferable by the
registered holders thereof, or by their attorneys duly authorized in writing, at
the office or agency of the Corporation maintained for such purpose in such
cities as will be designated in the Prospectus Supplement, in the manner and
subject to the limitations provided in the Indentures, and upon surrender of the
Debt Securities. No service charge will be made for any registration of transfer
or exchange of the Debt Securities, but the Corporation may require payment of a
sum sufficient to cover any tax or other governmental charge in connection
therewith. (Section 2.06.)
"Indebtedness", when used in the definition of the terms "Superior
Indebtedness", "Senior Subordinated Indebtedness", and "Junior Subordinated
Indebtedness", means all obligations which in accordance with generally accepted
accounting principles should be classified as liabilities upon a balance sheet
and in any event includes all debt and other similar monetary obligations,
whether direct or guaranteed.
"Superior Indebtedness" means all Indebtedness of the Corporation that is
not by its terms subordinate or junior to any other indebtedness of the
Corporation. As discussed below, the Senior Securities constitute Superior
Indebtedness.
"Senior Subordinated Indebtedness" means all Indebtedness of the
Corporation that is subordinate only to Superior Indebtedness. As discussed
below, the Senior Subordinated Securities constitute Senior Subordinated
Indebtedness.
8
<PAGE>
"Junior Subordinated Indebtedness" means all Indebtedness of the
Corporation that is subordinate to both Superior Indebtedness and Senior
Subordinated Indebtedness.
Senior Securities
The Senior Securities will be direct, unsecured obligations of the
Corporation, and will constitute Superior Indebtedness issued on a parity with
the other Superior Indebtedness of the Corporation. At December 31, 1994,
approximately $13.87 billion of outstanding Superior Indebtedness was reflected
in the Corporation's consolidated audited balance sheet. The Senior Securities
will be senior to all Senior Subordinated Indebtedness, including the Senior
Subordinated Securities, which at December 31, 1994, totaled $300.0 million
outstanding, and Junior Subordinated Indebtedness, none of which was outstanding
at December 31, 1994. The subordination provisions applicable to the Senior
Subordinated Securities are discussed below under "Description of Debt
Securities--Senior Subordinated Securities".
Senior Subordinated Securities
The Senior Subordinated Securities will be direct, unsecured obligations of
the Corporation subordinated as to principal, premium, if any, and interest to
the prior payment in full of all Superior Indebtedness of the Corporation,
including the Senior Securities. In the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization, or similar proceedings or proceedings
for voluntary liquidation, dissolution, or other winding up of the Corporation,
whether or not involving insolvency or bankruptcy proceedings, the holders of
Superior Indebtedness will first be paid in full before any payment on account
of principal, premium, if any, or interest is made on the Senior Subordinated
Securities. An event of default under and/or acceleration of Superior
Indebtedness does not in itself result in the suspension of payments on Senior
Subordinated Securities. However, in the event the Senior Subordinated
Securities are declared due and payable before their expressed maturity because
of the occurrence of one of the events of default specified in the Senior
Subordinated Indentures, holders of the Senior Subordinated Securities will be
entitled to payment only after payment in full of Superior Indebtedness or
provision for such payment is made.
By reason of the foregoing subordination, in the event of insolvency,
holders of Superior Indebtedness may recover more, ratably, than the holders of
the Senior Subordinated Securities. The Senior Subordinated Securities are
intended to rank in all respects on a parity with all other Senior Subordinated
Indebtedness, including the Corporation's outstanding Senior Subordinated
Securities, and superior in right of payment to all Junior Subordinated
Indebtedness and all outstanding capital stock.
Senior Subordinated Securities of certain series may meet the requirements
necessary for such series to be considered "Tier II Capital" under the rules and
regulations of the Ministry of Finance of Japan and the risk-based capital
guidelines of the Federal Reserve Board. If it is intended that any series be
considered Tier II Capital, such series of the Senior Subordinated Securities
may provide that the maturity date of any such series so designated by the
Corporation in a supplement hereto will be subject to acceleration only in the
event of certain circumstances related to the insolvency of the Corporation.
Certain Restrictive Provisions
Except as set forth in the next sentence, no Indenture limits the amount of
other securities which may be issued by the Corporation or its subsidiaries, but
each contains a covenant that neither the Corporation nor any subsidiary will
create or incur any mortgage, pledge, or other lien on any of its properties,
except intercompany pledges from a subsidiary to the Corporation or to another
wholly-owned subsidiary of the Corporation; purchase money liens or liens
existing on properties hereafter acquired; liens on properties of subsidiaries
existing at the time of acquisition of the subsidiary; liens created in the
ordinary course of business by subsidiaries for money borrowed, if such
subsidiaries prior to becoming such had borrowed on a secured basis; liens
created in the ordinary course of business by subsidiaries operating outside the
territorial limits of the United States, if in the countries in which such liens
are created it is necessary or appropriate to borrow on a secured basis or to
deposit collateral to secure all or any of its obligations; renewals or
refundings of any of the foregoing; consensual liens in the ordinary course of
business that secure indebtedness which would not be included in total
liabilities as shown on the Corporation's consolidated balance sheet; sales of
securitized assets or property of the Corporation or its subsidiaries; liens
that secure certain other indebtedness which, in an aggregate principal amount
9
<PAGE>
then outstanding, does not exceed 10% of the Corporation's consolidated tangible
net worth; and certain other minor exceptions. (Section 6.04.) In addition, the
Senior Subordinated Indentures provide that the Corporation will not permit (i)
the aggregate amount of Senior Subordinated Indebtedness outstanding at any time
to exceed 100% of the aggregate amount of the par value of the capital stock
plus the surplus (including retained earnings) of the Corporation and its
consolidated subsidiaries or (ii) the aggregate amount of Senior Subordinated
Indebtedness and Junior Subordinated Indebtedness outstanding at any time to
exceed 150% of the aggregate amount of the par value of the capital stock plus
the surplus (including retained earnings) of the Corporation and its
consolidated subsidiaries. (Senior Subordinated Indenture Section 6.05.) Under
the more restrictive of such tests in the Senior Subordinated Indentures, as of
December 31, 1994, the Corporation could issue up to approximately $1.49 billion
of additional Senior Subordinated Indebtedness. For information as to
restrictions in other agreements on the Corporation's ability to issue Senior
Subordinated Indebtedness, see "Description of Debt Securities--General" above.
The holders of at least a majority in principal amount of the outstanding
Debt Securities of any series may, on behalf of the holders of all Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Corporation with the foregoing restrictions. (Senior Indenture
Section 6.06, Senior Subordinated Indenture Section 6.07.)
Each Indenture provides that, subject to the restrictions described in the
first sentence of the first paragraph under this caption, nothing contained in
such Indenture will prevent the consolidation or merger of the Corporation with
or into any other corporation, or the merger into the Corporation of any other
corporation, or the sale by the Corporation of its property and assets as, or
substantially as, an entirety, or otherwise. Notwithstanding the foregoing: (i)
in the event of any such consolidation or merger in which the Corporation is not
the surviving corporation, the surviving corporation must succeed to and be
substituted for the Corporation and must expressly assume by an indenture
executed and delivered to the applicable Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest, if any, on all Debt
Securities then outstanding and the performance and observance of every covenant
and condition of such Indenture which is required to be performed or observed by
the Corporation, and (ii) as a condition to any sale of the property and assets
of the Corporation as, or substantially as, an entirety, the corporation to
which such property and assets will be sold must (a) expressly assume, as part
of the purchase price thereof, the due and punctual payment of the principal of
(and premium, if any) and interest, if any, on all Debt Securities and the
performance and observance of every covenant and condition of such Indenture
which is required to be performed or observed by the Corporation, and (b)
simultaneously with the delivery to it of the conveyances or instruments of
transfer of such property and assets, execute and deliver to the applicable
Trustee a proper indenture in form satisfactory to such Trustee, pursuant to
which such purchasing corporation will assume the due and punctual payment of
the principal of (and premium, if any) and interest, if any, on all Debt
Securities then outstanding and the performance and observance of every covenant
and condition of such Indenture which is required to be performed or observed by
the Corporation, to the same extent that the Corporation is bound and liable.
(Senior Indenture Section 15.01, Senior Subordinated Indenture Section 16.01.)
Compliance by the Corporation with the foregoing restrictions may be waived by
or on behalf of the holders of the outstanding Debt Securities. For information
as to the modification of each Indenture, see "Description of Debt
Securities--Modification of Indenture" below.
Other than the foregoing restrictions, no Indenture contains covenants of
the Corporation or provisions which afford additional protection to holders of
outstanding Debt Securities in the event of a highly leveraged transaction
involving the Corporation.
Modification of Indenture
Each Indenture contains provisions permitting the Corporation and the
Trustee thereunder to add any provisions to or change in any manner or eliminate
any of the provisions of such Indenture or any indenture supplemental thereto or
to modify in any manner the rights of the holders of any series of Debt
Securities with the consent of the holders of not less than 662/3% in aggregate
principal amount of such series of Debt Securities at the time outstanding,
except that no such amendment or modification may (i) extend the fixed maturity
of any Debt Security, reduce the rate or extend the time of payment of interest
thereon, reduce the amount of the principal thereof, or premium, if any, payable
with respect thereto, or reduce the amount of an Original Issue Discount
10
<PAGE>
Security payable upon the acceleration of the stated maturity thereof, without
the consent of the holder of such Debt Security, or (ii) reduce the aforesaid
percentage of any series of Debt Securities, the holders of which are required
to consent to any such amendment or modification, without the consent of the
holders of all the Debt Securities of such series then outstanding. (Section
14.02.)
Outstanding Debt Securities
In determining whether the holders of the requisite principal amount of
outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent, or waiver under any Indenture, (i) the principal
amount of an Original Issue Discount Security that will be deemed to be
outstanding for such purposes will be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the maturity thereof upon an event of default and (ii) the
principal amount of a Debt Security denominated in a foreign currency or
currencies will be the U.S. dollar equivalent, determined on the date of
original issuance of such Debt Security, of the principal amount. (Section
1.02.)
Events of Default
Each Indenture defines an "event of default" with respect to any series of
Debt Securities as being any one of the following events and such other events
as may be established for the Debt Securities of a particular series: (i)
default for thirty days in any payment of interest on such series; (ii) default
in any payment of principal of, and premium, if any, on such series when due;
(iii) default in the payment of any sinking fund installment of such series when
due; (iv) default for thirty days after appropriate notice in performance of any
other covenant in such Indenture (other than a covenant included in the
Indenture solely for the benefit of another series of Debt Securities); (v)
certain events in bankruptcy, insolvency, or reorganization; or (vi) default in
the payment of any installment of interest on any evidence of indebtedness of,
or assumed or guaranteed by, the Corporation (other than indebtedness
subordinated to such series), or in the payment of any principal of any such
evidence of indebtedness, and with respect to which any period of grace shall
have expired, after appropriate notice. (Section 7.01.) Each Indenture provides
that the Trustee may withhold notice of any default (except in the payment of
principal of, premium, if any, or interest, if any, on any series of Debt
Securities) if it considers such withholding in the interests of the holders of
such series of Debt Securities issued thereunder. (Section 11.03.)
Except as set forth below, each Indenture provides that the Trustee
thereunder or the holders of not less than 25% in principal amount of any series
of Debt Securities then outstanding may declare the principal of all Debt
Securities of such series to be due and payable on an event of default. (Section
7.02.) Notwithstanding the foregoing, any series of Senior Subordinated
Securities which will be considered "Tier II" may provide that the Senior
Subordinated Trustee or the holders of at least 25% in aggregate principal
amount of the Senior Subordinated Securities of that series which are then
outstanding may declare the principal of all Senior Subordinated Securities of
that series to be due and payable immediately only if an event of default
pursuant to (v) above shall have occurred and be continuing. Any such series
will be designated by the Corporation in a supplement hereto.
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt 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.
Within 120 days after the close of each fiscal year, the Corporation must
file with each Trustee a statement, signed by specified officers, stating
whether or not such officers have knowledge of any default, and, if so,
specifying each such default, the nature thereof and what action, if any, has
been taken to cure such default. (Senior Indenture Section 6.05, Senior
Subordinated Indenture Section 6.06.)
Subject to provisions relating to its duties in case of default, no Trustee
is under any obligation to exercise any of its rights or powers thereunder at
the request, order, or direction of any holders of any series of Debt
Securities, unless such holders shall have offered to such Trustee reasonable
indemnity. (Section 11.01.) Subject to such provisions for indemnification, the
holders of a majority in principal amount of any series of Debt Securities
11
<PAGE>
outstanding may direct the time, method, and place of conducting any proceeding
for any remedy available to the Trustee thereunder, or of exercising any trust
or power conferred upon such Trustee.
(Section 7.08.)
Defeasance of the Indenture and Debt Securities
The Corporation at any time may satisfy its obligations with respect to
payments of principal of, premium, if any, and interest, if any, on the Debt
Securities of any series by irrevocably depositing in trust with the Trustee
money or U.S. Government Obligations (as defined in the Indenture) or a
combination thereof sufficient to make such payments when due. If such deposit
is sufficient, as verified by a written report of a nationally recognized,
independent public accounting firm, to make all payments of (i) interest, if
any, on the Debt Securities of such series prior to and on their redemption or
maturity, as the case may be, and (ii) principal of, and premium, if any, on the
Debt Securities of such series when due upon redemption or at the designated
maturity date, as the case may be, then all the obligations of the Corporation
with respect to the Debt Securities of such series and the Indenture insofar as
it relates to the Debt Securities of such series will be satisfied and
discharged (except as otherwise provided in the Indenture). In the event of any
such defeasance, holders of the Debt Securities of such series would be able to
look only to such trust fund for payment of principal of, premium, if any, and
interest, if any, on the Debt Securities of such series until the designated
maturity date or redemption. (Sections 12.01, 12.02 and 12.03)
Such a trust may only be established if, among other things, (i) the
Corporation has obtained an opinion of legal counsel (which may be based on a
ruling from, or published by, the Internal Revenue Service) to the effect that
holders of the Debt Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred and (ii) at that time, with
respect to any series of Debt Securities then listed on The New York Stock
Exchange, the rules of The New York Stock Exchange do not prohibit such deposit
with the Trustee.
Information Concerning the Trustees
The Corporation from time to time may borrow from each of the Trustees, and
the Corporation and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions with some of the Trustees. A Trustee under a
Senior Indenture or a Senior Subordinated Indenture may act as trustee under any
of the Corporation's other indentures.
PLAN OF DISTRIBUTION
The Corporation may sell the Debt Securities being offered hereby (i)
directly to purchasers, (ii) through agents, (iii) to dealers, or (iv) through
an underwriter or a group of underwriters.
Offers to purchase Offered Debt Securities may be solicited directly by the
Corporation or by agents designated by the Corporation from time to time. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment (ordinarily five
business days or less). Agents may be entitled under agreements which may be
entered into with the Corporation to indemnification by the Corporation against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").
If a dealer is utilized in the sale of the Offered Debt Securities in
respect of which this Prospectus is delivered, the Corporation will sell such
Offered Debt Securities to the dealer, as principal. The dealer may then resell
such Offered Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale. Dealers may be entitled under agreements
which may be entered into with the Corporation to indemnification by the
Corporation against certain civil liabilities, including liabilities under the
Securities Act.
If an underwriter or underwriters are utilized in the sale, the Corporation
may enter into an arrangement with such underwriters at the time of sale to them
providing for their indemnification against certain liabilities, including
liabilities under the Securities Act. The names of the underwriters and the
terms of the transaction will be set forth in the Prospectus Supplement which is
intended for use by the underwriters to make resales of the Offered Debt
Securities in respect of which this Prospectus is delivered to the public.
12
<PAGE>
If an affiliate or subsidiary of the Corporation participates in the offer
and sale of the Debt Securities, such participation will comply with the
requirements of Schedule E of the By-Laws of the National Association of
Securities Dealers, Inc. regarding the underwriting of securities of an
affiliate.
The underwriters, dealers, and agents may be deemed to be underwriters and
any discounts, commissions, or concessions received by them from the Corporation
or any profit on the resale of Offered Debt Securities by them may be deemed to
be underwriting discounts and commissions under the Securities Act. Any such
person who may be deemed to be an underwriter and any such compensation received
from the Corporation will be described in the Prospectus Supplement.
Underwriters, dealers, and agents may be customers of, engage in transactions
with, or perform services for the Corporation in the ordinary course of
business.
If so indicated in the Prospectus Supplement, the Corporation will
authorize underwriters and agents to solicit offers by certain institutions to
purchase Offered Debt Securities from the Corporation at the public offering
price set forth in the Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date stated in
the Prospectus Supplement. Each Contract will be for an amount not less than,
and unless the Corporation otherwise agrees the aggregate principal amount of
Offered Debt Securities sold pursuant to Contracts will be not less nor more
than, the respective amounts stated in the Prospectus Supplement. Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions, but shall in all cases be
subject to the approval of the Corporation. Contracts will not be subject to any
conditions except that the purchase by an institution of the Offered Debt
Securities covered by its Contract must not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject. A commission indicated in the Prospectus Supplement will
be granted to underwriters and agents soliciting purchases of Offered Debt
Securities pursuant to Contracts accepted by the Corporation. Underwriters and
agents will have no responsibility in respect of the delivery or performance of
Contracts.
The place and time of delivery for the Offered Debt Securities in respect
of which this Prospectus is delivered will be set forth in the Prospectus
Supplement.
EXPERTS
The financial statements listed under the heading "Exhibits, Financial
Statement Schedule and Reports on Form 8-K" in the Corporation's 1994 Annual
Report on Form 10-K incorporated by reference herein have been incorporated by
reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, also incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP refers to a change in the method of accounting
for postretirement benefits other than pensions in 1993.
LEGAL OPINIONS
The legality of the Debt Securities to which this Prospectus relates has
been passed upon for the Corporation by Schulte Roth & Zabel, 900 Third Avenue,
New York, New York 10022. Paul N. Roth, a director of the Corporation, is a
partner of Schulte Roth & Zabel.
13
<PAGE>
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No dealer, salesman, or any other person has been authorized by the Corporation
or any agent to give any information or to make any representation, other than
as contained in the Pricing Supplement, this Prospectus Supplement, the
Prospectus or the documents incorporated by reference, in connection with the
offer contained in the Pricing Supplement, this Prospectus Supplement, and the
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Corporation or any underwriter or
agent. The Pricing Supplement, this Prospectus Supplement, and the Prospectus do
not constitute an offer by any agent to sell securities in any State to any
person to whom it is unlawful for such agent to make such offer in such State.
Neither the delivery of the Pricing Supplement, this Prospectus Supplement and
the Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the information
contained or incorporated by reference herein since the respective dates of such
information.
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TABLE OF CONTENTS
Page
----
Prospectus Supplement
Description of the Notes ................................................. S-2
Special Provisions Relating to
Foreign Currency Notes ............................................... S-16
Foreign Currency Risks ................................................... S-19
Certain United States Federal
Income Tax Consequences .............................................. S-20
Dividend Policy .......................................................... S-25
Plan of Distribution ..................................................... S-25
Prospectus
Available Information .................................................... 2
Documents Incorporated by Reference ...................................... 2
The Corporation .......................................................... 3
Summary of Financial Information ......................................... 6
Use of Proceeds .......................................................... 7
Description of Debt Securities ........................................... 7
Plan of Distribution ..................................................... 12
Experts .................................................................. 13
Legal Opinions ........................................................... 13
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<PAGE>
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U.S. $7,611,000,000
[LOGO]
The CIT Group
Holdings, Inc.
Medium-Term Notes
Due 9 Months or More
From Date of Issue
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PROSPECTUS SUPPLEMENT
April 5, 1995
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LEHMAN BROTHERS
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
Incorporated
SALOMON BROTHERS INC
UBS SECURITIES INC.
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