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PROSPECTUS SUPPLEMENT
(To Prospectus Dated August 18, 1997)
U.S. $500,000,000 [LOGO]
CPC INTERNATIONAL INC.
MEDIUM-TERM NOTES, SERIES F
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
CPC International Inc. (the 'Company') may offer from time to time up to
$500,000,000 aggregate initial offering price, or the equivalent thereof in one
or more foreign or composite currencies, of its Medium-Term Notes, Series F (the
'Notes'). Such aggregate principal amount is subject to reduction as a result of
the sale by the Company of certain other Debt Securities as defined in the
accompanying Prospectus. The Notes may be denominated in U.S. dollars or in such
foreign or composite currencies as may be designated by the Company (the
'Specified Currency'). See 'Important Currency Exchange Information.' Each Note
will mature on a day more than nine months from the date of issue (the 'Stated
Maturity'), as specified in a pricing supplement hereto (each, a 'Pricing
Supplement'), and may be subject to redemption at the option of the Company or
repayment at the option of the holder (each, a 'Holder') thereof, in each case,
in whole or in part, prior to its Stated Maturity, as set forth therein and
specified in the applicable Pricing Supplement.
The interest rate, if any, or the formula for the determination of any such
interest rate, applicable to each Note and other variable terms of the Notes as
described herein will be established by the Company at the date of issue of such
Note and will be set forth therein and specified in a Pricing Supplement.
Interest rates, interest rate formulae and such other variable terms are subject
to change by the Company, but no change will affect any Note already issued or
as to which an offer to purchase has been accepted by the Company. Each Note
will be issued in fully registered book-entry form (a 'Book-Entry Note') or in
definitive form (a 'Definitive Note'), as set forth in the applicable Pricing
Supplement, in denominations of $1,000 and integral multiples thereof, unless
otherwise specified in the applicable Pricing Supplement. Each Book-Entry Note
will be represented by one or more fully registered global securities deposited
with or on behalf of The Depository Trust Company (or such other depositary as
is identified in an applicable Pricing Supplement) (the 'Depositary') and
registered in the name of the Depositary or the Depositary's nominee. Interests
in Book-Entry Notes will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary (with respect to its
participants) and the Depositary's participants (with respect to beneficial
owners).
Unless otherwise specified in an applicable Pricing Supplement, the Notes will
bear interest at fixed rates ('Fixed Rate Notes') or at floating rates
('Floating Rate Notes'). The applicable Pricing Supplement will specify whether
the rate of interest for a Floating Rate Note will be determined by reference to
one or more of the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal
Funds Rate, LIBOR, the Prime Rate, the Treasury Rate, or any other interest rate
basis or formula (each as defined herein and each, a 'Base Rate'), as adjusted
by any Spread and/or Spread Multiplier (each as defined herein), if any, and
will specify such other terms applicable to such Note. Notes also may be issued
as Foreign Currency Notes, Indexed Notes or Amortizing Notes (each as defined
herein). See 'Description of Medium-Term Notes, Series F' in this Prospectus
Supplement. Interest on Fixed Rate Notes will accrue from their date of issue
and, unless otherwise specified in the applicable Pricing Supplement, will be
payable semiannually in arrears on May 15 and November 15 of each year and at
Maturity (as defined below). Unless otherwise specified in an applicable Pricing
Supplement, the rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually or annually, as specified in the
applicable Pricing Supplement, and interest on each Floating Rate Note will
accrue from its date of issue and will be payable in arrears monthly, quarterly,
semiannually or annually, as specified in the applicable Pricing Supplement, and
at Maturity. Notes also may be issued with original issue discount, and such
Notes may or may not currently pay interest.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO, OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) COMPANY(2)(3)
<S> <C> <C> <C>
Per Note......................... 100.000% .125% - .875% 99.875% - 99.125%
Total(4)......................... $500,000,000 $625,000 - $4,375,000 $499,375,000 - $495,625,000
</TABLE>
(1) Unless otherwise specified in an applicable Pricing Supplement, the price to
public will be 100% of the principal amount.
(2) The Company will pay a commission to Salomon Brothers Inc and Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, each as agent
(collectively, the 'Agents'), in the form of a discount, depending upon the
Stated Maturity of the Note, ranging from .125% to .875% of the principal amount
of any Note sold through the Agents. Commissions on Notes with a Stated Maturity
in excess of 40 years will be negotiated at the time of sale. See 'Plan of
Distribution.'
(3) Before deduction of expenses payable by the Company estimated at $475,000,
including reimbursement of the Agents' expenses.
(4) Or the equivalent thereof in foreign or composite currencies.
The Notes are being offered on a continuous basis by the Company through the
Agents, which have agreed to use their reasonable efforts to solicit offers to
purchase the Notes. The Company may also sell Notes to the Agents, as principal,
for resale to investors and other purchasers at varying prices relating to
prevailing market prices at the time of resale as determined by the Agents, or,
if so specified in an applicable Pricing Supplement, for resale at a fixed
public offering price, as determined by the Agents. Unless otherwise specified
in an applicable Pricing Supplement, the Notes will not be listed on any
securities exchange and there can be no assurance that the Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary market for
the Notes. The Company reserves the right to withdraw, cancel or modify the
offer made hereby without notice. The Company or the Agents may reject any offer
to purchase Notes in whole or in part. See 'Plan of Distribution.'
SALOMON BROTHERS INC MERRILL LYNCH & CO.
The date of this Prospectus Supplement is August 19, 1997.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICES OF THE NOTES.
SPECIFICALLY, THE AGENTS MAY OVERALLOT IN CONNECTION WITH THE OFFERING AND MAY
BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. SEE 'PLAN OF DISTRIBUTION.'
------------------------
IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers of Notes are required to pay for each Note in the Specified
Currency for such Note, and payments of principal of, premium, if any, and any
interest on, such Notes will be made in the Specified Currency, unless otherwise
provided in the applicable Pricing Supplement. Currently, there are limited
facilities in the United States for the conversion of U.S. dollars into foreign
or composite currencies or currency units, and vice versa, and few banks offer
non-U.S. dollar denominated checking or savings account facilities in the United
States. However, if requested by a prospective purchaser of Notes denominated in
a Specified Currency other than U.S. dollars, the Agent soliciting the offer to
purchase may at its discretion arrange for the conversion of U.S. dollars into
such Specified Currency to enable such purchaser to pay for such Notes. Such
request must be made on or before the third Business Day (as defined below)
preceding the date of delivery of the Notes, or by such other date as determined
by such Agent. Each such conversion will be made by the relevant Agent on such
terms and subject to such conditions, limitations and charges as such Agent may
from time to time establish in accordance with its regular foreign exchange
practice. All costs of exchange will be borne by the purchaser requesting the
conversion. See 'Special Provisions and Risks Relating to Foreign Currency
Notes' below.
DESCRIPTION OF MEDIUM-TERM NOTES, SERIES F
The Notes will be issued as a series of debt securities under an Indenture,
dated as of April 15, 1988, as amended and supplemented by the First
Supplemental Indenture and Amendment dated as of March 2, 1994 (together, the
'Indenture'), between the Company and Bankers Trust Company, as trustee (the
'Trustee'). The following summary of certain provisions of the Notes and of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus are a part. Capitalized terms used but not defined herein have the
meanings given to them in the Indenture or the Notes, as the case may be. The
term 'Securities,' as used in this Prospectus Supplement, refers to all
securities issued and issuable from time to time under the Indenture and
includes the Notes. The following description of Notes will apply to each Note
offered hereby unless otherwise specified in an applicable Pricing Supplement.
The following description of the particular terms of the Notes supplements, and
to the extent inconsistent therewith replaces, the description of the general
terms and provisions of the Debt Securities set forth in the Prospectus, to
which description reference is hereby made.
GENERAL
All Securities, including the Notes, issued and to be issued under the
Indenture will be unsecured general obligations of the Company and will rank
pari passu with all other unsecured and unsubordinated indebtedness of the
Company from time to time outstanding. The Indenture does not limit the
aggregate principal amount of Securities that may be issued thereunder, and
Securities may be issued thereunder from time to time in one or more series up
to the aggregate principal amount from time to time authorized by the Company
for each series. As of the date of this Prospectus Supplement, there are
$750,000,000 aggregate principal amount of Securities outstanding under the
Indenture. The Company may, from time to time, without the consent of the
Holders of the Notes, provide for the issuance of Notes or other Securities
under the Indenture in addition to the $500,000,000 aggregate initial offering
price of Notes offered hereby and any other Securities previously issued.
The Notes are currently limited to $500,000,000 aggregate initial offering
price, or the equivalent thereof in one or more foreign or composite currencies.
The Notes will be offered on a continuous basis and each Note will mature on a
day more than nine months from the date of issue, which maturity date
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may be subject to extension at the option of the Company, all as specified in
the applicable Pricing Supplement. Notwithstanding the foregoing, each Note
having a Specified Currency of Pounds Sterling will mature in compliance with
such regulations as the Bank of England may promulgate from time to time. Notes
may be issued at significant discounts from their principal amount payable at
the Stated Maturity or on any prior date on which the principal or an
installment of principal of a Note becomes due and payable, whether by the
declaration of acceleration, call for redemption at the option of the Company,
repayment at the option of the Holder or otherwise (each such date, a
'Maturity'), and some Notes may not bear interest.
The Pricing Supplement relating to a Note will describe the following
terms: (i) the Specified Currency for such Note (and, if the Specified Currency
is other than U.S. dollars, certain other terms relating to such Note and such
Specified Currency, including the authorized denominations of such Note); (ii)
whether such Note is a Fixed Rate Note, a Floating Rate Note, a Foreign Currency
Note, an Amortizing Note and/or an Indexed Note; (iii) if other than 100%, the
price (expressed as a percentage of the aggregate principal amount or face
amount thereof) at which such Note will be issued; (iv) the date on which such
Note will be issued (the 'Original Issue Date'); (v) the Stated Maturity; (vi)
if such Note is a Fixed Rate Note, the rate per annum at which such Note will
bear interest, if any, and whether such rate may be changed prior to its Stated
Maturity (as a result of a change in the debt rating of the Notes or otherwise);
(vii) if such Note is a Floating Rate Note, the Base Rate, the Initial Interest
Rate, the Interest Reset Period, the Interest Payment Dates, the Index Maturity,
the Maximum Interest Rate, if any, the Minimum Interest Rate, if any, the Spread
and/or Spread Multiplier, if any (all as defined below), and any other terms
relating to the particular method of calculating the interest rate for such Note
and whether such Spread and/or Spread Multiplier may be changed prior to Stated
Maturity (as a result of a change in the debt rating of the Notes or otherwise);
(viii) if such Note is an Amortizing Note, whether payments of principal thereof
and interest thereon will be made quarterly or semiannually and the repayment
information in respect thereof; (ix) whether such Note is an Original Issue
Discount Note (as defined below); (x) if such Note is an Indexed Note, the
manner in which the amount of any indexed interest payment or, if the principal
amount of such Note payable at Stated Maturity is indexed, the manner in which
such principal amount will be determined; (xi) whether such Note may be redeemed
at the option of the Company, or repaid at the option of the Holder, prior to
Stated Maturity as described herein and, if so, the provisions relating to such
redemption or repayment, including, in the case of an Original Issue Discount
Note or Indexed Note, the information necessary to determine the amount due upon
redemption or repayment; and (xii) any other terms of such Note not inconsistent
with the provisions of the Indenture under which such Note will be issued.
'Business Day' with respect to any Note means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law, regulation or executive order to be closed in (a)
the City of New York or (b) if the Specified Currency for such Note is other
than U.S. dollars, the principal financial center of the country issuing such
Specified Currency (which, in the case of the European Currency Unit ('ECU'),
shall be Brussels, Belgium) and (ii) if such Note is a LIBOR Note (as defined
below), also a London Banking Day. 'London Banking Day' with respect to any Note
means any day on which dealings in deposits in the Specified Currency are
transacted in the London interbank market.
Each Note will be issued in fully registered form as a Book-Entry Note or a
Definitive Note and in denominations of $1,000 and integral multiples thereof,
unless otherwise specified in the applicable Pricing Supplement.
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of the Notes
purchased in any single transaction.
Book-Entry Notes may be transferred or exchanged only through the
Depositary. See 'Book-Entry Notes.' Registration of transfer of Definitive Notes
will be made at the office or agency of the Company maintained by the Company
for such purpose in the Borough of Manhattan, The City of New York. No service
charge will be made by the Company or the Trustee for any such registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith (other than exchanges pursuant to the Indenture not
involving any transfer).
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Payments of principal of, premium, if any, and interest, if any, on
Book-Entry Notes will be made by the Company through the Trustee to the
Depositary. See 'Book-Entry Notes.' In the case of Definitive Notes, payment of
principal or premium, if any, at the Maturity of each Definitive Note will be
made in immediately available funds upon presentation of the Definitive Note at
the office or agency of the Company maintained by the Company for such purpose
in the Borough of Manhattan, The City of New York, or at such other place as the
Company may designate (or, in the case of any repayment on an Optional Repayment
Date (as defined below), upon presentation of the Definitive Note in accordance
with the provisions thereof as described below). Payment of interest due at
Maturity will be made to the person to whom payment of the principal shall be
made. Payment of interest due on Definitive Notes (other than at Maturity) will
be made by check mailed to the address of the person entitled thereto as such
address shall appear in the registry books of the Company. Notwithstanding the
foregoing, a Holder of $10,000,000 (or the equivalent thereof in a Specified
Currency other than U.S. dollars determined as provided herein) or more in
aggregate principal amount of Definitive Notes of like tenor and term will, at
the option of the Holder, be entitled to receive interest payments by wire
transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee not less than 15 days
prior to the applicable Interest Payment Date. Such wire instructions, upon
receipt by the Trustee, shall remain in effect until revoked by such Holder.
For special payment terms applicable to Foreign Currency Notes, see
'Special Provisions and Risks Relating to Foreign Currency Notes' below.
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise indicated in an applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. Notes will be redeemable at the option
of the Company prior to their Stated Maturity only if an initial redemption date
is specified therein (the 'Initial Redemption Date') and in the applicable
Pricing Supplement. If so indicated in the applicable Pricing Supplement, the
Notes will be subject to redemption at the option of the Company on any date on
and after the Initial Redemption Date specified in such Pricing Supplement. On
or after the Initial Redemption Date, if any, the related Note may be redeemed
at any time in whole or from time to time in part in increments of $1,000 (or
such other amount as may be specified in the applicable Pricing Supplement) at
the option of the Company at the applicable Redemption Price (as defined below),
together with interest thereon payable to the date of redemption, on notice
given to the Holder (which, in the case of Book-Entry Notes, will be the
Depositary or its nominee) not more than 60 nor less than 30 days prior to the
date of redemption and in accordance with the provisions of the Indenture.
'Redemption Price,' with respect to a Note, will initially mean a percentage
(the 'Initial Redemption Percentage') of the principal amount of such Note to be
redeemed specified in the applicable Pricing Supplement and shall decline at
each anniversary of the Initial Redemption Date by a percentage (the 'Annual
Redemption Percentage Reduction'), if any, specified in the applicable Pricing
Supplement of the principal amount to be redeemed until the Redemption Price is
100% of such principal amount. In the event of redemption of a Note in part, a
new Note or Notes will be issued to the Holder in exchange for the unredeemed
portion.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in the applicable Pricing Supplement, Notes will be
repayable by the Company in whole or in part at the option of the Holders
thereof on the respective optional repayment dates specified in such Pricing
Supplement (the 'Optional Repayment Dates'). If no Optional Repayment Date is
indicated with respect to a Note, such Note will not be repayable at the option
of the Holder prior to its Stated Maturity. Unless otherwise specified in the
applicable Pricing Supplement, the repayment option may be exercised by the
Holder for less than the entire principal amount of the Note. Any repayment in
part will be in increments of $1,000 (or such other amount as may be specified
in the applicable Pricing Supplement); provided that any remaining principal
amount of such Note will be an authorized denomination of such Note. Unless
otherwise provided in the applicable Pricing Supplement that provides for a
repayment option, the repayment price payable to the Holder will be 100% of the
principal amount to be repaid, together with accrued interest thereon payable to
the date of repayment.
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For any Note to be so repaid the Note must be received, together with the form
thereon entitled 'Option to Elect Repayment' duly completed, by the Trustee at
the Corporate Trust Office (or such other address of which the Company shall
from time to time notify the Holders) not more than 60 nor less than 30 days
prior to the Optional Repayment Date. In the event of a repayment in part, a new
Note or Notes will be issued to the Holder in exchange for the unrepaid portion.
Exercise of such repayment option by the Holder will be irrevocable.
While the Book-Entry Notes are represented by global securities held by or
on behalf of the Dcpositary, and registered in the name of the Depositary or the
Depositary's nominee, the Depositary or its nominee will be the Holder of such
Book-Entry Note and therefore will be the only entity that can exercise a right
to repayment. In order to ensure that the Depositary or its nominee will timely
exercise a right to repayment with respect to a particular Book-Entry Note, the
beneficial owner of such Book-Entry Note must instruct the participant through
which it holds an interest in such Book-Entry Note to notify the Depositary of
its desire to exercise a right of repayment. Different firms may have different
deadlines for accepting instructions from their customers. Accordingly,
beneficial owners of Book-Entry Notes should consult the participants through
which they own their interest in the Book-Entry Notes for the respective
deadlines for such participants. All notices must be executed by a duly
authorized officer of such participant (with signature guaranteed) and shall be
irrevocable. In addition, such beneficial owners of Book-Entry Notes must effect
delivery of such Book-Entry Notes at the time such notices of election are given
to the Depositary by causing the participant to transfer such beneficial owner's
interest in the Book-Entry Notes, on the Depositary's records, to the Trustee.
Conveyance of notices and other communications by the Depositary to
participants, by participants to indirect participants and by participants and
indirect participants to beneficial owners of the Book-Entry Notes will be
governed by agreements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and
any other securities laws or regulations in connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, may be surrendered to the Trustee
for cancellation.
INTEREST
General. Unless otherwise specified in the applicable Pricing Supplement,
each Note will bear interest from its Original Issue Date, or from the last
Interest Payment Date to which interest has been paid or duly provided for, at
the rate per annum or, in the case of a Floating Rate Note, pursuant to the
interest rate formula stated therein and in the applicable Pricing Supplement
until the principal thereof is paid or made available for payment. Interest will
be payable in arrears on each Interest Payment Date specified in the applicable
Pricing Supplement on which an installment of interest is due and payable and at
Maturity. Unless otherwise specified in an applicable Pricing Supplement, the
first payment of interest on any Note originally issued between a Record Date
and the related Interest Payment Date will be made on the Interest Payment Date
immediately following the next succeeding Record Date to the registered Holder
on such next succeeding Record Date. Unless otherwise specified in an applicable
Pricing Supplement, a 'Record Date' shall be the fifteenth calendar day (whether
or not a Business Day) immediately preceding the related Interest Payment Date.
Fixed Rate Notes. Unless otherwise specified in the applicable Pricing
Supplement, each Fixed Rate Note will bear interest from, and including, the
Original Issue Date, or from the last Interest Payment Date to which interest
has been paid or duly provided for, at the rate per annum stated on the face
thereof until the principal amount thereof is paid or made available for
payment. Interest payments on Fixed Rate Notes will equal the amount of interest
accrued from and including the next preceding Interest Payment Date in respect
of which interest has been paid (or from and including the Original Issue Date,
if no interest has been paid with respect to such Fixed Rate Notes), to but
excluding the related Interest Payment Date or Maturity, as the case may be.
Unless otherwise specified in an
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applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified in the applicable Pricing Supplement, interest
on Fixed Rate Notes will be payable semiannually in arrears on May 15 and
November 15 of each year and at Maturity. If any Interest Payment Date or the
Maturity of a Fixed Rate Note falls on a day that is not a Business Day, the
related payment of principal, premium, if any, or interest will be made on the
next succeeding Business Day as if 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 Maturity, as the case may be.
Floating Rate Notes. Each Floating Rate Note will bear interest from its
Original Issue Date to the first Interest Reset Date (as defined below) for such
Note at the Initial Interest Rate set forth on the face thereof and in the
applicable Pricing Supplement. Thereafter, the interest rate on such Note for
each Interest Reset Period will be determined by reference to the Base Rate,
plus or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if
any. The 'Spread' is the number of basis points (one basis point equals one
one-hundredth of a percentage point) that may be specified in the applicable
Pricing Supplement as being applicable to such Note, and the 'Spread Multiplier'
is the percentage that may be specified in the applicable Pricing Supplement as
being applicable to such Note. The applicable Pricing Supplement will designate
the Base Rate applicable to a Floating Rate Note, which Base Rate may be one of
the following: (i) LIBOR (a 'LIBOR Note'), (ii) the Commercial Paper Rate (a
'Commercial Paper Rate Note'), (iii) the Treasury Rate (a 'Treasury Rate Note'),
(iv) the Prime Rate (a 'Prime Rate Note'), (v) the Federal Funds Rate (a
'Federal Funds Rate Note'), (vi) the CD Rate (a 'CD Rate Note'), (vii) the CMT
Rate (a 'CMT Rate Note') or (viii) such other Base Rate or formula as is set
forth in such Pricing Supplement and in such Note. The 'Index Maturity' for any
Floating Rate Note is the period of maturity of the instrument or obligation
from which the Base Rate is calculated. 'H.15(519)' means the publication
entitled 'Statistical Release H.15(519), `Selected Interest Rates,' ' or any
successor publication, published by the Board of Governors of the Federal
Reserve System. 'Composite Quotations' means the daily statistical release
entitled 'Composite 3:30 p.m. Quotations for U.S. Government Securities'
published by the Federal Reserve Bank of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ('Maximum Interest
Rate') and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ('Minimum Interest Rate'). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Notes will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law, with
certain exceptions, is 25% per annum on a simple interest basis. Such maximum
rate of interest only applies to obligations that are less than $2,500,000.
Unless otherwise specified in the applicable Pricing Supplement, Bankers
Trust Company will be the calculation agent (the 'Calculation Agent') with
respect to any issue of Floating Rate Notes. All determinations of interest by
the Calculation Agent shall, in the absence of manifest error, be conclusive for
all purposes and binding on the Holders of the Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the 'Interest
Reset Period' for such Note, and the first day of each Interest Reset Period
being an 'Interest Reset Date'), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Dates will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under 'Treasury Rate Notes'); in the case of Floating Rate Notes that
reset monthly, the third Wednesday of each month; in the case of Floating Rate
Notes that reset quarterly, the third Wednesday of March, June, September and
December of each year; in the case of Floating Rate Notes that reset
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semiannually, the third Wednesday of each of two months of each year specified
in the applicable Pricing Supplement; and, in the case of Floating Rate Notes
that reset annually, the third Wednesday of one month of each year specified in
the applicable Pricing Supplement. If an Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be the 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 shall be the immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments on Floating Rate Notes (other than Floating Rate Notes that reset daily
or weekly) will equal the amount of interest accrued from and including the next
preceding Interest Payment Date in respect of which interest has been paid (or
from and including the Original Issue Date, if no interest has been paid with
respect to such Floating Rate Notes), to but excluding the related Interest
Payment Date or Maturity, as the case may be. Unless otherwise specified in the
applicable Pricing Supplement, in the case of Floating Rate Notes that reset
daily or weekly, interest payable shall equal the accrued interest from and
including the Original Issue Date or last date to which interest has been
accrued and paid, as the case may be, to but excluding the Record Date
immediately preceding the applicable Interest Payment Date, except that, at
Maturity, interest payable will include interest accrued to but excluding the
date of Maturity.
With respect to a Floating Rate Note, accrued interest shall be calculated
by multiplying the principal amount of such Note (or, in the case of an Indexed
Note, unless otherwise specified in the applicable Pricing Supplement, the Face
Amount (as defined below) of such Indexed Note) by an accrued interest factor.
Such 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 (expressed as a decimal) for each such day is computed by
dividing the interest rate in effect on such day by 360, in the case of LIBOR
Notes, Commercial Paper Rate Notes, Prime Rate Notes, Federal Funds Rate Notes
and CD Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes or CMT Notes. For purposes of making the foregoing
calculation, the interest rate in effect on any Interest Reset Date will be the
applicable rate as reset on such date.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest 1/100 of 1% (.000001),
with five one-millionths of a percentage point rounded upward, and all currency
amounts used in or resulting from such calculation on Floating Rate Notes will
be rounded to the nearest one-hundredth of a unit (with .005 of a unit being
rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September,
and December of each year; in the case of Floating Rate Notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, on the third Wednesday of one month of each year
specified in the applicable Pricing Supplement (each such day being an 'Interest
Payment Date') and in each case at Maturity. If an Interest Payment Date (other
than at Maturity) with respect to any Floating Rate Note would otherwise be a
day that is not a Business Day, such Interest Payment Date shall be 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
Payment Date shall be the immediately preceding Business Day. If the Maturity
date of a Floating Rate Note falls on a day that is not a Business Day, the
required payment of principal, premium, if any, and/or interest will be made on
the next succeeding Business Day as if made on the date such payment was due,
and no interest shall accrue on such payment for the period from and after the
Maturity date to the date of such payment on the next succeeding Business Day.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become
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effective on the next Interest Reset Date with respect to such Floating Rate
Note. Unless otherwise specified in the applicable Pricing Supplement, the
'Calculation Date,' if applicable, pertaining to any Interest Reset Date will be
the earlier of (i) the tenth calendar day after such Interest Reset Date, or, if
such day is not a Business Day, the next succeeding Business Day or (ii) the
Business Day immediately preceding the applicable Interest Payment Date or the
Maturity date, as the case may be.
The principal amount payable at Stated Maturity, or any earlier redemption
or repayment, of a Floating Rate Note may be linked to an Index (as defined
below) in the case of a Floating Rate Note that is also an Indexed Note. In the
case of such a Floating Rate Note, the rate of interest payable will be based on
the Face Amount of such Floating Rate Note unless specified otherwise in the
applicable Pricing Supplement. See 'Indexed Notes' below.
CD Rate Notes. Each CD Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the CD Rate and the
Spread and/or Spread Multiplier, if any, specified in such CD Rate Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the 'CD
Rate' for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a 'CD Rate
Determination Date') for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading 'CDs (Secondary Market).' In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date pertaining to such CD Rate Determination Date, then the 'CD Rate' for such
Interest Reset Period will be the rate on such CD Rate Determination Date for
negotiable certificates of deposit of the Index Maturity designated in the
applicable Pricing Supplement as published in Composite Quotations under the
heading 'Certificates of Deposit.' If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the 'CD Rate' for such Interest Reset Period will be calculated
by the Calculation Agent for such CD Rate Note and will be the arithmetic mean
of the secondary market offered rates as of 10:00 a.m., New York City time, on
such CD Rate Determination Date of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for such CD Rate Note for negotiable certificates of deposit
of major United States money center banks (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index Maturity
designated in the Pricing Supplement in a denomination of $5,000,000; provided,
however, that if the dealers selected as aforesaid by such Calculation Agent are
not quoting offered rates as mentioned in this sentence, the 'CD Rate' for such
Interest Reset Period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate).
CMT Rate Notes. Each CMT Rate Note will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the CMT Rate and
the Spread and/or Spread Multiplier, if any, specified in the applicable CMT
Rate Note and Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, the 'CMT
Rate' for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a 'CMT
Interest Determination Date') 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 PM.,' 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 CMT Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
week or the month, as applicable, ended immediately preceding the week in which
the related CMT Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT 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 PM., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT 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) as may then be published by either the Federal
Reserve Board or the United States
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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 available by
3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for such CMT 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 PM.
(New York City time) on the CMT Interest Determination Date reported, according
to their written records, by three leading primary United States government
securities dealers (each, a '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 remaining term
to maturity of not less than such Designated CMT Maturity Index minus one year.
If the Calculation Agent cannot obtain three such Treasury Note quotations, the
CMT Rate for such CMT Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 P.M. (New
York City time) on the CMT 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 million. 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 all the offer prices so obtained and neither
the highest nor 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 for such CMT Interest Determination
Date will be the CMT Rate determined on the immediately preceding CMT Interest
Determination Date or, in the case of the first CMT Interest Determination Date,
the Initial Interest Rate specified in the applicable CMT Rate Note and Pricing
Supplement. 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 Treasury Note with the shorter
remaining term to maturity will be used.
'Designated CMT Telerate Page' means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement and CMT Rate
Note (or any other page that may replace such page on that service for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519), for
the purpose of displaying Treasury Constant Maturities as reported in
H.15(519)). If no such page is specified in the applicable Pricing Supplement
and CMT Rate Note, 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 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in the
applicable Pricing Supplement and CMT Rate Note with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement and CMT Rate Note, the Designated CMT Maturity Index shall be
2 years.
Commercial Paper Rate Notes. Each Commercial Paper Rate Note will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Commercial Paper Rate and 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, the
'Commercial Paper Rate' for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Note as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a
'Commercial Paper Rate Determination Date') and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having
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the Index Maturity specified in the applicable Pricing Supplement, as such rate
shall be published in H.15(519) under the heading 'Commercial Paper' or, if
unavailable, under such other heading representing commercial paper issued by
non-financial entities whose bond rating is 'AA' or the equivalent from a
nationally recognized statistical rating agency. In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Commercial Paper Rate Determination Date, then the
'Commercial Paper Rate' for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading 'Commercial Paper.' If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the 'Commercial Paper Rate' for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Rate Note for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated 'AA' or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the 'Commercial Paper Rate' for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
'Money Market Yield' shall be a yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = ---------------------------- x 100
360 - (D x M)
where 'D' refers to the applicable 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 period for which accrued interest is being calculated.
Federal Funds Rate Notes. Each Federal Funds Rate Note will bear interest
for each Interest Reset Period at the interest rate calculated with reference to
the Federal Funds Rate and the Spread and/or Spread Multiplier, if any,
specified in such Federal Funds Rate Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Federal Funds Rate' for each Interest Reset Period shall be the effective rate
on the second Business Day prior to the Interest Reset Date for such Interest
Reset Period (a 'Federal Funds Rate Determination Date') for federal funds as
published in H.15(519) under the heading 'Federal Funds (Effective).' In the
event that such rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date pertaining to such Federal Funds Rate Determination Date,
the 'Federal Funds Rate' for such Interest Reset Period shall be the rate on
such Federal Funds Rate 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 yet published in either
H.15(519) or Composite Quotations, then the 'Federal Funds Rate' for such
Interest Reset Period will be calculated by the Calculation Agent and will be
the arithmetic mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include the Agents) selected by
the Calculation Agent prior to 9:00 a.m., New York City time, on such Federal
Funds Rate Determination Date; provided, however, that if the brokers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the 'Federal Funds Rate' for such interest Reset period will be the same as the
Federal Funds Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Interest Rate).
LIBOR Notes. Each LIBOR Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to LIBOR and the Spread
and/or Spread Multiplier, if any, specified in such LIBOR Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, 'LIBOR'
for each Interest Reset Period will be determined by the Calculation Agent in
accordance with the following provisions:
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(i) With respect to a LIBOR Interest Determination Date (as defined
below) relating to a LIBOR Note, either, as specified in the applicable
Pricing Supplement: (a) the arithmetic mean of the offered rates for
deposits in U.S. dollars for the period of the Index Maturity specified in
the applicable Pricing Supplement commencing on the second London Banking
Day immediately following such LIBOR Interest Determination Date, which
appears on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on
the LIBOR Interest Determination Date ('LIBOR Reuters'), or (b) the rate
for deposits in U.S. dollars having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second London Banking Day
immediately following that LIBOR Interest Determination Date, that appears
on the Telerate Page 3750 as of 11:00 a.m., London time, on that LIBOR
Interest Determination Date ('LIBOR Telerate'). Unless otherwise indicated
in the applicable Pricing Supplement, 'Reuters Screen LIBO Page' means the
display designated as Page 'LIBO' on the Reuters Monitor Money Rate Service
(or such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks).
'Telerate Page 3750' means the display designated as page '3750' on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers' Association (the 'Association') for the purpose of
displaying London interbank offered rates for U.S. dollar deposits). If
neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
Pricing Supplement, LIBOR will be determined as if LIBOR Telerate has been
specified. In the case where (a) above applies, if fewer than two offered
rates appear on the Reuters Screen LIBO Page, or, in the case where (b)
above applies if no rate appears on the Telerate Page 3750, as applicable,
LIBOR in respect of that LIBOR Interest Determination Date will be
determined as if the parties had specified the rate described in (ii)
below.
(ii) With respect to a LIBOR Interest Determination Date on which this
provision applies, LIBOR will be determined on the basis of the rates at
which deposits in U.S. dollars having the Index Maturity designated in the
applicable Pricing Supplement are offered at approximately 11:00 a.m.,
London time, on such LIBOR Interest Determination Date by four major banks
('Reference Banks') in the London interbank market selected by the
Calculation Agent (after consultation with the Association) to prime banks
in the London interbank market commencing on the second London Banking Day
immediately following such LIBOR Interest Determination Date and in a
principal amount of not less than U.S. $1,000,000 that is representative
for a single transaction in such market at such time. The Calculation Agent
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are
provided, LIBOR for such LIBOR Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR for such LIBOR Interest Determination Date will be the
arithmetic mean of the rates quoted at approximately 11:00 a.m., New York
City time, on such LIBOR Interest Determination Date by three major banks
(which may include the Agents) in The City of New York selected by the
Calculation Agent (after consultation with the Association) for loans in
U.S. dollars to leading European banks having the specified Index Maturity
designated in the applicable Pricing Supplement commencing on the second
London Banking Day immediately following such LIBOR Interest Determination
Date and in a principal amount equal to an amount of not less that U.S.
$1,000,000 that is representative for a single transaction in such market
at such time; provided, however, that if fewer than three banks selected as
aforesaid by the Calculation Agent are quoting as mentioned in this
sentence, 'LIBOR' for such Interest Reset Period will be the same as LIBOR
for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate).
Unless otherwise indicated in the applicable Pricing Supplement, the 'LIBOR
Interest Determination Date' pertaining to an Interest Reset Date for a LIBOR
Note will be the second London Banking Day preceding such Interest Reset Date.
Prime Rate Notes. Prime Rate Notes will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the Prime Rate
and the Spread and/or Spread Multiplier, if any, specified in such Prime Rate
Note and in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, the 'Prime
Rate' for each Interest Reset Period will be the rate on the Prime Rate Interest
Determination Date (as defined below) as such rate is published in H.15(519)
under the heading 'Bank Prime Loan.' If such rate is not published prior to 3:00
p.m., New York City time, on the related Calculation Date, then the Prime Rate
shall be the arithmetic mean of the rates of interest publicly announced by each
bank that appears on the Reuters Screen USPRIME1 (as defined below) as such
bank's prime rate or base lending rate as in effect for such Prime Rate Interest
Determination Date. If fewer than four such rates but more than one such rate
appear on the Reuters Screen USPRIME1 for such Prime Rate Interest Determination
Date, the Prime Rate shall be the arithmetic mean of the prime rates quoted on
the basis of the actual number of days in the year divided by 360 as of the
close of business on such Prime Rate Interest Determination Date by four major
money center banks in The City of New York selected by the Calculation Agent. If
fewer than two such rates appear on the Reuters Screen USPRIME1, the Prime Rate
will be determined by the Calculation Agent on the basis of the rates furnished
in The City of New York by three substitute banks or trust companies organized
and doing business under the laws of the United States, or any state thereof, in
each case having total equity capital of at least $500 million and being subject
to supervision or examination by Federal or State authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if the
banks or trust companies selected as aforesaid are not quoting as mentioned in
this sentence, the 'Prime Rate' for such Interest Reset Period will be the same
as the Prime Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Interest Rate).
'Reuters Screen USPRIME1' means the display designated as page 'USPRIME1'
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks). Unless otherwise indicated in
the applicable Pricing Supplement, the Prime Rate Interest Determination Date
pertaining to an Interest Reset Date will be the second Business Day preceding
such Interest Reset Date.
Treasury Rate Notes. Each Treasury Rate Note will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
Treasury Rate and the Spread and/or Spread Multiplier, if any, specified in such
Treasury Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Treasury Rate' for each Interest Reset Period will be the rate for the auction
held on the Treasury Rate Determination Date (as defined below) for such
Interest Reset Period of direct obligations of the United States ('Treasury
bills') having the Index Maturity specified in the applicable Pricing
Supplement, as such rate shall be published in H.15(519) under the heading 'U.S.
Government Securities -- Treasury bills -- auction average (investment)' or, in
the event that such rate is not published prior to 3:00 p.m., New York City
time, on the Calculation Date pertaining to such Treasury Rate Determination
Date, the auction average rate (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) on such
Treasury Rate Determination Date as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury bills having the specified Index Maturity are not published or reported
as provided above by 3:00 p.m., New York City time, on such Calculation Date, or
if no such auction is held on such Treasury Rate Determination Date, then the
'Treasury Rate' for such Interest Reset Period shall be calculated by the
Calculation Agent for such Treasury Rate Note and shall be a 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 Treasury Rate Determination Date, of three leading primary United States
government securities dealers selected by such Calculation Agent for the issue
of Treasury bills with a remaining maturity closest to the specified Index
Maturity; provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting bid rates as mentioned in this sentence, then
the 'Treasury Rate' for such Interest Reset Period will be the same as the
Treasury Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the Initial Interest Rate).
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The 'Treasury Rate Determination Date' for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be auctioned. Treasury bills
are normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Rate Determination Date pertaining to the Interest Reset
Period commencing in the next succeeding week. If an auction date shall fall on
any day that would otherwise be an Interest Reset Date for a Treasury Rate Note,
then such Interest Reset Date shall instead be postponed to the Business Day
immediately following such auction date.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to Notes, including the determination of a Base
Rate, the specification of a Base Rate, calculation of the interest rate
applicable to a Floating Rate Note, its Interest Payment Dates or any other
matter relating thereto may be modified by the terms as specified under 'Other
Provisions' on the face thereof or in an Addendum relating thereto, if so
specified on the face thereof and in the applicable Pricing Supplement.
AMORTIZING NOTES
The Company may from time to time offer Notes on which a portion or all of
the principal amount is payable prior to Stated Maturity in accordance with a
schedule, by application of a formula, or by reference to an Index ('Amortizing
Notes'). Further information concerning additional terms and conditions of any
Amortizing Notes, including terms for repayment of principal thereof, will be
provided in the applicable Pricing Supplement.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued at a price less than their redemption price at Stated
Maturity, resulting in such Notes being treated as if they were issued with
original issue discount for Federal income tax purposes ('Original Issue
Discount Notes'). Such Original Issue Discount Notes may currently pay no
interest or may pay interest at a rate that at the time of issuance is below
market rates. See 'United States Taxation.' Certain additional considerations
relating to any Original Issue Discount Notes may be described in the Pricing
Supplement relating thereto.
INDEXED NOTES
The Company may from time to time offer Notes ('Indexed Notes') on which
certain or all interest payments, or the principal amount payable at Stated
Maturity or earlier redemption or repayment, is determined by reference to the
amount designated in the applicable Pricing Supplement as the 'Face Amount' of
such Indexed Notes and by reference to the price or prices of specified
commodities or stocks, the exchange rate of one or more specified currencies
(including a composite currency such as the ECU) relative to an indexed currency
or by such other objective price, economic or other measures as are described in
the applicable Pricing Supplement (the 'Index'). Holders of such Notes may
receive a principal amount at Maturity that is greater than or less than the
Face Amount of the Notes depending upon the relative value at Maturity of the
specified indexed item. Information as to the method for determining the
principal amount payable at Maturity, certain historical information with
respect to the specified indexed item and tax considerations associated with
investment in Indexed Notes will be set forth in the applicable Pricing
Supplement.
An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate of such a Note is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid, and, if the principal amount of such a Note is so indexed, the principal
amount payable at Maturity may be less than the original purchase price of such
Note if allowed
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pursuant to the terms of such Note, including the possibility that no principal
will be paid. The secondary market for such Notes will be affected by a number
of factors, independent of the creditworthiness of the Company and the value of
the applicable Index, including the volatility of the applicable 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 Index depends on a number
of interrelated factors, including economic, financial and political events,
over which the Company 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 Index may be increased. The historical experience of the relevant
currencies, 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 Note. Accordingly, prospective investors
should consult their own financial and legal advisors as to the risks entailed
by an investment in such Notes and the suitability of an investment in such
Notes in light of their particular circumstances.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes of the same series and bearing interest
(if any) at the same rate or pursuant to the same formula and having the same
date of issuance, redemption provisions (if any), repayment provisions (if any),
Stated Maturity and other terms will be represented by a single global security
(each, a 'Global Security'). Each Global Security representing Book-Entry Notes
will be deposited with, or on behalf of, the Depositary and will be registered
in the name of the Depositary or a nominee of the Depositary.
Upon the issuance of a Global Security, the Depositary will credit accounts
held with it with the respective principal or face amounts of the Book-Entry
Notes represented by such Global Security. The accounts to be credited shall be
designated initially by the Agent through which the Notes were sold or, to the
extent that such Notes are offered and sold directly, by the Company. Ownership
of beneficial interests by participants in a Global Security will be shown on,
and the transfer of that ownership interest will be effected only through,
records maintained by the Depositary for such Global Security. Ownership of
beneficial interest in such Global Security by persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant.
Payment of principal of, premium (if any) and interest (if any) on
Book-Entry Notes represented by any such Global Security will be made to the
Depositary or its nominee, as the case may be, as the sole registered holder of
the Book-Entry Notes represented thereby for all purposes under the Indenture.
None of the Company, the Trustee, the Paying Agent or any agent of the Company
or the Trustee will have any responsibility or liability for any aspect of the
Depositary's records relating to or payments made on account of beneficial
ownership interests in a Global Security representing any Book-Entry Notes or
any other aspect of the relationship between the Depositary and its participants
or the relationship between such participants and the owner of beneficial
interests in a Global Security owning through such participants or for
maintaining, supervising or reviewing any of the Depositary's records relating
to such beneficial ownership interests.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of, premium (if any) or interest (if any) on any such
Global Security, the Depositary will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of the Depositary.
Payments by participants to owners of beneficial interests in a Global Security
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held by such
participants for customer accounts registered in 'street name,' and will be the
sole responsibility of such participants.
No Global Security may be transferred except as a whole by a nominee of the
Depositary to the Depositary or to another nominee of the Depositary, or by the
Depositary or any such nominee to a successor of the Depositary of such
successor.
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Unless otherwise specified in the applicable Pricing Supplement, a Global
Security representing Book-Entry Notes is exchangeable for Definitive Notes of
the same series and bearing interest (if any) at the same rate or pursuant to
the same formula, having the same date of issuance, redemption provisions (if
any), repayment provisions (if any), Stated Maturity and other terms and of
differing authorized denominations aggregating a like amount, only if (x) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security or if at any time the Depositary ceases to
be a clearing agency registered under the Exchange Act, (y) the Company in its
sole discretion determines that such Global Security shall be exchangeable for
Definitive Notes or (z) there shall have occurred and be continuing an Event of
Default with respect to the Notes. Such Definitive Notes shall be registered in
the names of the owners of the beneficial interest in such Global Security as
provided by the Depositary's relevant participants (as identified by the
Depositary).
Except as provided above, owners of beneficial interest in a Global
Security will not be entitled to receive physical delivery of Notes in
certificated form and will not be considered the registered holders thereof for
any purpose under the Indenture, and no Global Security representing Book-Entry
Notes shall be exchangeable or transferable. Accordingly, each person owning a
beneficial interest in such a Global Security 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 registered holder under the Indenture. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in certificated form. Such limits and such laws may impair the
ability of such beneficial owners to transfer beneficial interest in a Global
Security.
The Depositary, as the registered holder of each Global Security, may
appoint agents and otherwise authorized participants to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action that a registered holder is entitled to give or take under the Indenture.
The Company understands that under existing industry practices, in the event
that the Company requests any action of registered holders or that an owner of a
beneficial interest in such a Global Security desires to give or take any action
that a registered 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 Company that the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a 'clearing corporation' within the
meaning of the New York Uniform Commercial Code and a 'clearing agency'
registered under the Exchange Act. The Depositary was created to hold the
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 (including the
Agents), banks (including the Trustee), trust companies, clearing corporations
and certain other organizations, some of whom (and/or their representatives) own
the Depositary. 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.
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SPECIAL PROVISIONS AND RISKS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in other than United States dollars or ECUs will not be sold in, or
to residents of, the country issuing 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
Company disclaims any responsibility to advise prospective purchasers who are
residents of countries other than the United States with respect to any matters
that may affect the purchase, holding or receipt of payments of principal of and
any premium or interest on the Notes. Such persons should consult their own
financial and legal advisors with regard to such matters.
THIS PROSPECTUS SUPPLEMENT DOES NOT DESCRIBE ALL RISKS OF AN INVESTMENT IN
FOREIGN CURRENCY NOTES THAT RESULT FROM SUCH NOTES BEING DENOMINATED OR PAYABLE
IN A FOREIGN OR COMPOSITE CURRENCY, EITHER AS SUCH RISKS EXIST AT THE DATE OF
THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN FOREIGN CURRENCY NOTES. FOREIGN
CURRENCY NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The discussion set forth below does not purport to be complete and
prospective purchasers of Foreign Currency Notes should consult their own
financial and legal advisors with respect to any matters that may affect the
purchase or holding of a Foreign Currency Note or the receipt of payments of
principal of and any premium or interest on a Foreign Currency Note in a
Specified Currency.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a security denominated in United
States dollars. Such risks include, without limitation, the possibility of
significant changes in the rates of exchange between the United States dollar
and the Specified Currency and the possibility of the imposition or modification
of foreign exchange controls by either the United States or foreign governments.
Such risks generally depend on events over which the Company has no control,
such as economic and political events and the supply and demand for the relevant
currencies. In recent years, rates of exchange between the United States dollar
and certain foreign currencies have been highly volatile and such volatility may
be expected in the future. 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 Foreign Currency
Notes. Depreciation of the Specified Currency applicable to a Foreign Currency
Note against the United States dollar would result in a decrease in the United
States dollar-equivalent yield of such Note, in the United States
dollar-equivalent value of the principal payable at Maturity of such Note, and,
generally, in the United States dollar-equivalent market value of such Note.
Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or prior to a Foreign Currency
Note's Maturity which could affect exchange rates as well as the availability of
the Specified Currency at a Foreign Currency Note's Maturity. At present, the
Company has identified the following currencies in which payments of principal
and any premium and/or interest on Notes may be made: English pounds sterling,
French francs, German deutsche marks, U.S. dollars and ECU. However, the Company
may determine at any time to issue Notes with Specified Currencies other than
those listed. There can be no assurance that exchange controls will not restrict
or prohibit payments of principal and any premium and/or interest in any
Specified Currency. Even if there are no exchange controls, it is possible that
the Specified Currency for any particular Foreign Currency Note would not be
available at such Note's Maturity due to other circumstances beyond the control
of the Company. In that event, the Company will make payments of principal and
any premium and/or interest in United States dollars in the manner set forth
under '--Payment Currency' below.
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JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. If an action based on Foreign Currency Notes were
commenced in a court of the United States, it is likely that such court would
grant judgment relating to such Notes only in United States dollars. It is not
clear, however, whether, in granting such judgment, the rate of conversion into
United States dollars would be determined with reference to the date of default,
the date judgment is rendered or some other date. Under current New York law, a
state court in the State of New York rendering a judgment on a Foreign Currency
Note would be required to render such judgment in the Specified Currency in
which such Foreign Currency Note is denominated, and such judgment would be
converted into United States dollars at the exchange rate prevailing on the date
of entry of the judgment. Holders of Foreign Currency Notes would bear the risk
of exchange rate fluctuations between the time the amount of the judgment is
calculated and the time the Paying Agent converts United States dollars to the
Specified Currency for payment of the judgment.
PAYMENT OF PRINCIPAL AND ANY PREMIUM AND/OR INTEREST
The Company is obligated to make payments of principal of and any premium
and/or interest on Foreign Currency Notes in the applicable Specified Currency
(or, if such Specified Currency is not at the time of such payment legal tender
for the payment of public and private debts, in such other coin or currency of
the country which issued such Specified Currency as at the time of such payment
is legal tender for the payment of such debts). Any such amounts paid by the
Company will, unless otherwise specified in the applicable Pricing Supplement,
be converted by the Exchange Rate Agent named in the applicable Pricing
Supplement into United States dollars for payment to Holders. However, unless
otherwise specified in the applicable Pricing Supplement, the Holder of a
Foreign Currency Note may elect to receive such payments in the applicable
Specified Currency as hereinafter described.
Any United States 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 payment date from
three recognized foreign exchange dealers (one of whom may be the Exchange Rate
Agent) selected by the Exchange Rate Agent and approved by the Company for the
purchase by the quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate amount of the
Specified Currency payable to all Holders of Foreign Currency Notes scheduled to
receive United States dollar payments and at which the applicable dealer commits
to execute a contract. All currency exchange costs will be borne by the Holder
of such Foreign Currency Note by deductions from such payments. If three such
bid quotations are not available, payments will be made in the Specified
Currency.
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
any premium and/or interest on such Note in the Specified Currency by submitting
a written request for such payment to the Trustee at its corporate trust office
in the City of New York on or prior to the applicable Record Date or at least
fifteen calendar days prior to the Maturity date, as the case may be. Such
written request may be mailed or hand delivered or sent by cable, telex or other
form of facsimile transmission. A Holder of a Foreign Currency Note may elect to
receive payment in the applicable Specified Currency for all such principal and
any premium and/or interest payments and need not file a separate election for
each payment. Such election will remain in effect until revoked by written
notice to the Trustee, but written notice of any such revocation must be
received by the Trustee on or prior to the applicable Record Date or at least
fifteen calendar days prior to the Maturity Date, as the case may be. Holders of
Foreign Currency Notes whose 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 applicable Specified Currency may be made.
Payments of the principal of and any premium and/or interest on Foreign
Currency Notes that are to be made in U.S. dollars will be made in the manner
specified herein with respect to Notes denominated in United States dollars. See
'Description of Medium-Term Notes, Series F -- General.' Payments of interest on
Foreign Currency Notes which are to be made in the applicable Specified
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Currency on an Interest Payment Date (other than the Maturity date) will be made
by check mailed at the address of the Persons entitled thereto as they appear in
the Security Register. Payments of principal of and any premium and/or interest
on Foreign Currency Notes that are to be made in the applicable Specified
Currency on the Maturity date will be made by wire transfer of immediately
available funds to an account with a bank designated at least fifteen calendar
days prior to the Maturity date by the applicable Holder, provided that such
bank has appropriate facilities therefor and that the applicable Note is
presented at the principal corporate trust office of the Trustee in time for the
Trustee to make such payments in such funds in accordance with its normal
procedures.
Unless otherwise specified in the applicable Pricing Supplement, a
beneficial owner of a Global Security or securities representing Book-Entry
Notes denominated in a Specified Currency other than United States dollars that
elects to receive payments of principal and any premium and/or interest in such
Specified Currency must notify the participant through which its interest is
held on or prior to the applicable Record Date or at least 15 calendar days
prior to the Maturity date, as the case may be, of such beneficial owner's
election to receive all or a portion of such payment in such Specified Currency.
Such participant must notify the Depositary of such election on or prior to the
third Business Day after such Record Date or at least 12 calendar days prior to
the Maturity date, as the case may be, and the Depositary will notify the
Trustee of such election on or prior to the fifth Business Day after such Record
Date or at least 10 calendar days prior to the Maturity date, as the case may
be. If complete instructions are received by the participant and forwarded by
the participant to the Depositary, and by the Depositary to the Trustee, on or
prior to such dates, then the beneficial owner will receive payments in such
Specified Currency.
PAYMENT CURRENCY
If a Specified Currency is not available for the payment of principal or
any premium or interest with respect to a Foreign Currency Note due to the
imposition of exchange controls or other circumstances beyond the control of the
Company, the Company will be entitled to satisfy its obligations to Holders of
Foreign Currency Notes by making such payment in United States dollars on the
basis of the Market Exchange Rate (as defined below) on the second Business 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
indicated in the applicable Pricing Supplement. Any payment made under such
circumstances in United States dollars where the required payment is in other
than United States dollars will not constitute an Event of Default under the
Indenture.
If payment in respect of a Note is required to be made in a composite
currency (e.g., ECU), and such composite currency is unavailable due to the
imposition of exchange controls or other circumstances beyond the Company's
control, then the Company shall make any payments in respect of such Note in
United States dollars until such composite currency is again available. The
amount of each payment in United States dollars shall be computed on the basis
of the Market Exchange Rate on the second Business Day prior to such payment, or
if such Market Exchange Rate is not then available, on the basis of the
equivalent of the composite currency in United States dollars, which shall be
determined by the Company or its agent on the following basis. The component
currencies of the composite currency for this purpose (the 'Component
Currencies' or, individually, a 'Component Currency') shall be the currency
amounts that were components of the composite currency as of the last day on
which the composite currency was used. The equivalent of the composite currency
in United States dollars shall be calculated by aggregating the United States
dollar equivalents of the Component Currencies. The United States dollar
equivalent of each of the Component Currencies shall be determined by the
Company or such agent on the basis of the most recently available Market
Exchange Rate for each such Component Currency, or as otherwise indicated 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 the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single
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currency. If any Component Currency is divided into two or more currencies, the
amount of the original Component Currency shall be replaced by the amounts of
such two or more currencies, the sum of which shall be equal to the amount of
the original Component Currency.
'Market Exchange Rate' means (A) with respect to a Specified Currency that
is the currency of a country other than the United States, the noon U.S. dollar
buying rate in the City of New York for cable transfers for such Specified
Currency on the applicable date as determined by the Federal Reserve Bank of New
York, (B) with respect to a Specified Currency that is the ECU, the exchange
rate between the ECU and the U.S. dollar reported for the applicable date by the
Council of the European Communities (the reports of which currently are based on
the rates in effect at 2:30 p.m., Brussels time, on the exchange markets of the
Component Currencies of the ECU) and (C) with respect to a Specified Currency
that is a composite currency other than the ECU, the exchange rate specified in
the applicable Pricing Supplement for the applicable date.
All determinations referred to above made by the Company or its agent
(including the Exchange Rate Agent) shall be at its sole discretion and shall,
in the absence of manifest error, be conclusive for all purposes and binding on
the Holders of the Notes.
UNITED STATES TAXATION
The following summary describes the principal United States federal income
tax consequences of ownership and disposition of the Notes to initial Holders
purchasing Notes at the 'issue price' (as defined below). This summary is based
on the Internal Revenue Code of 1986, as amended to the date hereof (the
'Code'), administrative pronouncements, judicial decisions and existing and
proposed Treasury Regulations. This summary discusses only Notes held as capital
assets within the meaning of Section 1221 of the Code. It does not discuss all
of the tax consequences that may be relevant to a Holder in light of his
particular circumstances or to holders subject to special rules, such as certain
financial institutions, insurance companies, dealers in securities or foreign
currencies, persons holding Notes as a hedge against, or which are hedged
against, currency risks, or United States Holders whose functional currency (as
defined in Code Section 985) is not the U.S. dollar. Persons considering the
purchase of Notes should consult their tax advisors with regard to the
application of the United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws of any state,
local or foreign taxing jurisdiction.
As used herein, the term 'United States Holder' means an owner of a Note
that (a) is (i) for United States federal income tax purposes a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate the income of which is subject to
United States federal income taxation regardless of its source, or (iv) a trust
if (A) a U.S. court may exercise primary supervision over its administration,
and (B) one or more United States persons have authority to control all
substantial decisions of the trust or (b) is not a Holder described in (a) above
but whose income from a Note is effectively connected with such Holder's conduct
of a United States trade or business. The term also includes certain former
citizens of the United States whose income and gain on the Notes will be
taxable.
As used herein, the term 'United States Alien Holder' means an owner of a
Note that is for United States federal income tax purposes (i) a nonresident
alien individual, (ii) a foreign corporation, (iii) a nonresident alien
fiduciary of a foreign estate or trust or (iv) a foreign partnership.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
Payments of Interest. Interest paid on a Note, including payments of
qualified stated interest (as defined below), will generally be taxable to a
United States Holder as ordinary interest income at the time it accrues or is
received in accordance with the United States Holder's method of accounting for
federal income tax purposes. All payments of interest on a Note that matures one
year or less from its date of issuance will be included in the stated redemption
price at maturity of the Notes and will be taxed in the manner described below
under 'Original Issue Discount Notes.' Special rules governing the treatment of
interest paid with respect to Original Issue Discount Notes, including certain
Floating
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Rate Notes, Foreign Currency Notes and Indexed Notes, are described under
'Original Issue Discount Notes,' 'Foreign Currency Notes' and 'Indexed Notes and
Notes Linked to Commodity Prices, Equity Indices or Other Factors' below.
Original Issue Discount Notes. Under the Code, a Note that has an issue
price that is less than its stated redemption price at maturity will generally
be considered to have been issued at an original issue discount for federal
income tax purposes (an 'Original Issue Discount Note'). In general, each United
States Holder of an Original Issue Discount Note, whether such Holder uses the
cash or the accrual method of tax accounting, will be required to include in
ordinary gross income the sum of the 'daily portions' of OID on the Note for all
days during the taxable year that the United States Holder owns the Note. The
daily portions of OID on an Original Issue Discount Note are determined by
allocating to each day in any accrual period a ratable portion of the OID
allocable to that accrual period. Accrual periods may be any length and may vary
in length over the term of an Original Issue Discount Note, provided that no
accrual period is longer than one year and each scheduled payment of principal
or interest occurs on either the final day or the first day of an accrual
period. In the case of an initial Holder, the amount of OID on an Original Issue
Discount Note allocable to each accrual period is determined by (a) multiplying
the 'adjusted issue price' (as defined below) of the Original Issue Discount
Note at the beginning of the accrual period by the yield to maturity of such
Original Issue Discount Note (appropriately adjusted to reflect the length of
the accrual period) and (b) subtracting from that product the amount (if any) of
qualified stated interest (as defined below) allocable to that accrual period.
The yield to maturity of a Note is the discount rate that causes the present
value of all payments on the Note as of its original issue date to equal the
issue price of such Note. The 'adjusted issue price' of an Original Issue
Discount Note at the beginning of any accrual period will generally be the sum
of its issue price (generally including accrued interest, if any) and the amount
of OID allocable to all prior accrual periods, reduced by the amount of all
payments other than payments of qualified stated interest (if any) made with
respect to such Note in all prior accrual periods. The 'issue price' of a Note
will be the initial offering price to the public (excluding bond houses and
brokers) at which price a substantial amount of debt instruments in the issue
including such Note is sold. The stated redemption price at maturity of a Note
will equal the sum of all payments required under the Note other than certain
contingent payments and 'qualified stated interest' payments. In general,
'qualified stated interest' is stated interest that is unconditionally payable
in cash or in property (other than debt instruments of the issuer) at least
annually at (i) a single fixed rate (as appropriately adjusted to take into
account the length of the interval between payments) or, (ii) in the case of a
variable rate debt instrument (as defined in the Treasury Regulations), a single
qualified floating rate, a single objective rate, or, a single fixed rate
followed by either a qualified floating rate or an objective rate (all as
defined in the Treasury Regulations). Special rules may apply if a Floating Rate
Note is subject to a cap, a floor, a 'governor' (i.e., a restriction on the
amount of increase or decrease in the stated interest rate) or a similar
restriction. Floating Rate Notes that do not provide for qualified stated
interest payments generally will be subject to the rules relating to debt
obligations that provide for contingent payments as described in the applicable
Pricing Supplement. See 'Indexed Notes and Notes Linked to Commodity Prices,
Equity Indices or Other Factors.' Under this method, United States Holders of
Original Issue Discount Notes generally will be required to include in income
increasingly greater amounts of original issue discount in successive accrual
periods.
United States Holders of Original Issue Discount Notes will be required to
include any qualified stated interest payments in income at the time they are
accrued or received, in accordance with such Holder's method of accounting for
federal income tax purposes.
If the difference between a Note's stated redemption price at maturity and
its issue price is less than a de minimis amount, generally 1/4 of 1 percent of
the stated redemption price at maturity multiplied by the number of complete
years to maturity, then the Note generally will not be considered to have
original issue discount.
A Note that matures one year or less from its date of issuance will be
treated as a 'short-term Original Issue Discount Note.' In general, a cash
method United States Holder of a short-term Original Issue Discount Note is not
required to accrue original issue discount for United States federal income tax
purposes unless it elects to do so. A cash basis Holder of a short-term Original
Issue Discount Note will, nevertheless, be required to take stated interest into
income as it is received. Holders who make
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such an election, Holders who report income for federal income tax purposes on
the accrual method and certain other Holders, including banks and dealers in
securities, are required to include original issue discount in income on such
short-term Original Issue Discount Notes as it accrues on a straightline basis,
unless an election is made to accrue the original issue discount according to a
constant yield method based on daily compounding. In the case of a Holder who is
not required, and does not elect to include original issue discount in income
currently, any gain realized on the sale, exchange or retirement of the
short-term Original Issue Discount Note will be ordinary income to the extent of
the original issue discount accrued on a straight-line basis (or, if elected,
according to a constant yield method based on daily compounding) through the
date of sale, exchange or retirement. In addition, such Holders will be required
to defer deductions for any interest paid on indebtedness incurred to purchase
or carry short-term Original Issue Discount Notes in an amount not exceeding the
deferred interest income, until such deferred interest income is recognized.
Certain of the Original Issue Discount Notes may be redeemed prior to
maturity. Original Issue Discount Notes containing such a feature may be subject
to rules that differ from the general rules discussed above. Purchasers of
Original Issue Discount Notes with such a feature should carefully examine the
applicable Pricing Supplement and should consult their tax advisors with respect
to such a feature since the tax consequences with respect to original issue
discount will depend, in part, on the particular terms and the particular
features of the purchased Note.
If a United States Holder purchases a Note for an amount that is greater
than the stated redemption price at maturity, such Holder will be considered to
have purchased such Note with 'amortizable bond premium' equal in amount to such
excess. The Note will not be considered an Original Issue Discount Note in the
case of such Holder and such Holder may elect (in accordance with applicable
Code provisions) to amortize such premium, using a constant yield method, over
the remaining term of the Note (where such Note is not optionally redeemable
prior to its maturity date). If such Note may be optionally redeemed prior to
maturity after such Holder has acquired it, the amount of amortizable bond
premium is determined with reference to either the amount payable on maturity
or, if it results in a smaller premium, attributable to the period of earlier
redemption date, with reference to the amount payable on the earlier redemption
date. A Holder who elects to amortize bond premium must reduce his tax basis in
the Note by the amount of the premium amortized in any year. The amount
amortized in any year will be treated as a reduction of the Holder's interest
income from the Note. An election to amortize bond premium applies to all
taxable debt obligations then owned and thereafter acquired by the taxpayer and
may be revoked only with the consent of the Internal Revenue Service.
Any Holder who acquires a Note may elect to include in gross income its
entire return on a Note (i.e., the excess of all payments to be received on the
Note over the amount paid for the Note by such Holder) in accordance with a
constant yield method based on the compounding of interest. Such an election for
a Note with amortizable bond premium will result in a deemed election to
amortize bond premium for all of the Holder's debt instruments with amortizable
bond premium and may be revoked only with the permission of the Internal Revenue
Service with respect to debt instruments acquired after revocation.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange or
retirement of a Note, a United States Holder will recognize taxable gain or loss
equal to the difference between the amount realized on the sale, exchange or
retirement (not including any amount attributable to accrued but unpaid
interest) and such Holder's adjusted tax basis in the Note. A United States
Holder's adjusted tax basis in a Note will equal the cost of the Note to such
Holder, increased by the amount of any original issue discount previously
included in income by the Holder with respect to such Note and reduced by any
amortized premium and any principal payments received by the Holder and, in the
case of an Original Issue Discount Note, by the amounts of any other payments
that do not constitute qualified stated interest.
Subject to the discussion under 'Foreign Currency Notes' below, gain or
loss realized on the sale, exchange or retirement of a Note will be capital gain
or loss (except in the case of a short-term Original Issue Discount Note, to the
extent of any original issue discount not previously included in such Holder's
taxable income). See 'Original Issue Discount Notes' above. The Taxpayer Relief
Act of 1997 generally reduced the maximum capital gains rates for individuals
with respect to gain recognized upon
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the disposition of capital assets held for more than 18 months to 20% and
retained the maximum capital gains rate of 28% with respect to capital assets
held for more than 1 year but not more than 18 months. In addition, effective
for tax years beginning after December 31, 2000, the maximum capital gains rate
for individuals relating to assets held more than 5 years is 18%. (The holding
period for purposes of the 5 year rule applies to assets whose holding period
begins after December 31, 2000, subject to certain transition rules). Thus, gain
recognized by a Holder upon the disposition of a Note may be subject to the more
favorable capital gains rates depending in part upon the Holder's holding period
for the Note. Prospective Holders should consult their own tax advisor with
respect to the tax consequences to them of the disposition of a Note. The
distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
Foreign Currency Notes. The following summary relates to Foreign Currency
Notes.
A United States Holder of a Foreign Currency Note who uses the cash method
of accounting and who receives a payment of interest (including a payment of
qualified stated interest, but not a payment in respect of original issue
discount) in a foreign currency will be required to include in income the U.S.
dollar value of such foreign currency payment (determined on the date such
payment is received) regardless of whether the payment is in fact converted to
U.S. dollars at that time. Such U.S. dollar value will be the United States
Holder's tax basis in the foreign currency received and will be used to
determine the gain or loss upon the sale, exchange or other disposition of the
foreign currency.
To the extent the above paragraph is not applicable, a United States Holder
will be required to include in income the U.S. dollar value of the amount of
interest income (including original issue discount, but reduced by amortizable
bond premium to the extent applicable) that has accrued and is otherwise
required to be taken into account with respect to a Foreign Currency Note during
an accrual period. The U.S. dollar value of such accrued income will be
determined by translating such income at the average rate of exchange for the
accrual period or, with respect to an accrual period that spans two taxable
years, at the average rate for the partial period within the taxable year. Such
United States Holder will recognize ordinary income or loss with respect to
accrued interest income on the date such income is actually received. The amount
of ordinary income or loss recognized will equal the difference between the U.S.
dollar value of the foreign currency payment received (determined on the date
such payment is received) in respect of such accrual period and the U.S. dollar
value of interest income that has accrued during such accrual period (as
determined above). A United States Holder may elect to translate interest income
(including original issue discount) into U.S. dollars at the spot rate on the
last day of the interest accrual period (or, in the case of a partial accrual
period, the spot rate on the last date of the taxable year) or, if the date of
receipt is within five business days of the last day of the interest accrual
period, the spot rate on the date of receipt. A United States Holder that makes
such an election must apply it consistently to all debt instruments from year to
year and cannot change the election without the consent of the Internal Revenue
Service.
Original issue discount and amortizable bond premium of a Foreign Currency
Note are to be determined in the relevant foreign currency.
Any loss (net of foreign currency exchange gain, if any) realized on the
sale, exchange or retirement of a Foreign Currency Note with amortizable bond
premium by a United States Holder who has not elected to amortize such premium
under Section 171 of the Code will be a capital loss to the extent of such bond
premium. If such an election is made, amortizable bond premium taken into
account on a current basis shall reduce interest income in units of the relevant
foreign currency. Exchange gain or loss is realized on such amortized bond
premium with respect to any period by treating the bond premium amortized in
such period as a return of principal.
A United States Holder's tax basis in a Foreign Currency Note, and the
amount of any subsequent adjustment to such Holder's tax basis, will be the U.S.
dollar value of the foreign currency amount paid for such Foreign Currency Note,
or of the foreign currency amount of the adjustment, determined on the date of
such purchase or adjustment. A United States Holder who purchases a Foreign
Currency Note with previously owned foreign currency will recognize ordinary
income or loss in an amount equal to the difference, if any, between such United
States Holder's tax basis in the foreign currency and the U.S. dollar amount
paid for the Foreign Currency Note on date of purchase.
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Gain or loss recognized upon the sale, exchange or retirement of a Foreign
Currency Note that is attributable to fluctuations in currency exchange rates
will be ordinary income or loss which will not be treated as interest income or
expense, but such income or loss will be taken into account only to the extent
of the total gain or loss on the disposition. Gain or loss attributable to
fluctuations in exchange rates will equal the difference between (i) the U.S.
dollar value of the foreign currency principal amount of such Note, and any
payment with respect to accrued interest, determined on the date such payment is
received or such Note is disposed of, and (ii) the U.S. dollar value of the
foreign currency principal amount of such Note, determined on the date such
United States Holder acquired such Note, and the U.S. dollar value of the
accrued interest received, determined by translating such interest at the
average exchange rate for the accrual period. The source of such foreign
currency gain or loss will be determined by reference to the residence of the
Holder or the 'qualified business unit' of such Holder on whose books the Note
is properly reflected. Any gain or loss realized by such a Holder in excess of
such foreign currency gain or loss will be capital gain or loss (except in the
case of a short-term Original Issue Discount Note, to the extent of any original
issue discount not previously included in such Holder's income).
A United States Holder will have a tax basis in any foreign currency
received on the sale, exchange or retirement of a Foreign Currency Note equal to
the U.S. dollar value of such foreign currency, determined at the time of such
sale, exchange or retirement. Regulations issued under Section 988 of the Code
provide a special rule for purchases and sales of publicly traded Foreign
Currency Notes by a cash method taxpayer under which units of foreign currency
paid or received are translated into U.S. dollars at the spot rate on the
settlement date of the purchase or sale. Accordingly, no exchange gain or loss
will result from currency fluctuations between the trade date and the settlement
date of such a purchase or sale. An accrual method taxpayer may elect the same
treatment required of cash-method taxpayers with respect to the purchase and
sale of publicly traded Foreign Currency Notes provided the election is applied
consistently. Such election cannot be changed without the consent of the
Internal Revenue Service. Any exchange gain or loss realized by a United States
Holder on a sale or other disposition of foreign currency (including its
exchange for U.S. dollars or its use to purchase Foreign Currency Notes) will be
ordinary income or loss.
Indexed Notes and Notes Linked to Commodity Prices, Equity Indices or Other
Factors. The United States federal income tax consequences to a Holder of the
ownership and disposition of indexed notes and notes linked to commodity prices,
equity indices or other factors may vary depending on the exact terms of the
Notes. On June 11, 1996, the IRS released final regulations (the 'Contingent
Payment Regulations') governing the tax treatment of debt obligations that
provide for contingent payments ('contingent debt obligations'). The Contingent
Payment Regulations generally require accrual of interest income on a
constant-yield basis in respect of a contingent debt obligation at a yield
determined at the time of issuance of the obligation, and may require
adjustments to such accruals when any contingent payments are made. Holders
intending to purchase such Notes should refer to the section relating to
taxation in the applicable Pricing Supplement for a discussion of any special
United States federal income tax rules applicable to purchasers of such Notes.
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) payments of principal, interest (including original issue
discount, if any) and premium on the Notes by the Company or any paying
agent to any United States Alien Holder will not be subject to United
States federal withholding tax, provided that, in the case of interest
(including original issue discount), (i) such Holder does not own, actually
or constructively, 10 percent or more of the total combined voting power of
all classes of stock of the Company entitled to vote, is not a controlled
foreign corporation related, directly or indirectly, to the Company through
stock ownership, and (ii) is not a bank receiving interest on an extension
of credit made pursuant to a loan agreement entered into in the ordinary
course of its trade or business;
(b) a United States Alien Holder of a Note will not be subject to
United States federal income tax on gain realized on the sale, exchange or
other disposition of such Note, unless (i) such Holder is an individual who
is present in the United States for 183 days or more in the taxable year of
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disposition, and certain conditions are met or (ii) such gain is
effectively connected with the conduct by such Holder of a trade or
business in the United States; and
(c) a Note or coupon held by an individual who is not a citizen or
resident of the United States at the time of his death will not be subject
to United States federal estate tax as a result of such individual's death,
provided that the individual does not own, actually or constructively, 10
percent or more of the total combined voting power of all classes of stock
of the Company entitled to vote and, at the time of such individual's
death, payments with respect to such Note would not have been effectively
connected to the conduct by such individual of a trade or business in the
United States.
The exemptions from withholding tax and estate tax described in paragraphs
(a) and (c) above are not applicable to payments of contingent interest as
defined in Section 871(h)(4) of the Code. If a Note issued hereunder bears
contingent interest as defined in Section 871(h)(4), that fact will be disclosed
in the applicable Pricing Supplement.
Sections 871(h) and 881(c) of the Code require that, in order to obtain the
portfolio interest exemption from withholding tax described in paragraph (a)
above in the case of a Registered Security, either the beneficial owner of the
Note or a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
(a 'Financial Institution') and that is holding the Note on behalf of such
beneficial owner, files a statement with the withholding agent to the effect
that the beneficial owner of the Note is not a United States Holder, and the
withholding agent does not have actual knowledge or reason to know that the
beneficial owner is a United States Holder. Under temporary United States
Treasury Regulations, such requirement will be fulfilled if the beneficial owner
of a Note certifies on Internal Revenue Service Form W-8, under penalties of
perjury, that it is not a United States Holder and provides its name and
address, and any Financial Institution holding the Note on behalf of the
beneficial owner files a statement with the withholding agent to the effect that
it has received such a statement from the Holder (and furnishes the withholding
agent with a copy thereof).
If a United States Alien Holder of a Note is engaged in a trade or business
in the United States, and if interest (including original issue discount) on the
Note is effectively connected with the conduct of such trade or business, the
United States Alien Holder, although exempt from the withholding tax discussed
in the preceding paragraph, will generally be subject to regular United States
income tax on interest (including any original issue discount) and on any gain
realized on the sale, exchange or other disposition of a Note in the same manner
as if it were a United States Holder. See 'Tax Consequences to United States
Holders' above. In lieu of the certificate described in the preceding paragraph,
such a Holder will be required to provide to the Company a properly executed
Internal Revenue Service Form 4224 in order to claim an exemption from
withholding tax. On April 22, 1996, the IRS published proposed regulations (the
'Proposed Regulations') which, if adopted in their current form, could affect
the procedures to be followed by a United States Alien Holder in establishing
such United States Alien Holder's status as a United States Alien Holder for the
purposes of the withholding rules (including the backup withholding rules
referred to below). The Proposed Regulations, if adopted in their present form,
generally would be effective for payments made after December 31, 1997.
Prospective Holders should contact their own tax advisor concerning the
potential adoption of such Proposed Regulations and the potential effect on
their ownership of the Notes. In addition, if such United States Alien Holder is
a foreign corporation, it may be subject to a branch profits tax equal to 30% of
its effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For purposes of the branch profits tax, interest (including
original issue discount) on and any gain recognized on the sale, exchange or
other disposition of a Note will be included in the earnings and profits of such
United States Alien Holder if such interest is effectively connected with the
conduct by the United States Alien Holder of a trade or business in the United
States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, a 31% backup
withholding tax and information reporting requirements apply to certain payments
of principal, premium and interest (including original issue discount) made to,
and to the proceeds of sale before maturity by, certain Holders of the Notes.
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In the case of a United States Holder, backup withholding will apply only
if such Holder (i) fails to furnish its Taxpayer Identification Number ('TIN')
which, for an individual, would be his Social Security number, (ii) furnishes
an incorrect TIN, (iii) is notified by the Internal Revenue Service that it
has failed to properly report payments of interest and dividends or (iv) under
certain circumstances, fails to certify, under penalties of perjury, that it
has furnished a correct TIN and has not been notified by the Internal Revenue
Service that it is subject to backup withholding for failure to report
interest and dividend payments. United States Holders should consult their tax
advisors regarding their qualification for exemption from backup withholding
and the procedure for obtaining such an exemption if applicable. These
backup withholding tax and information reporting rules are currently under
review by the U.S. Treasury Department. In addition, the Proposed Regulations
would modify certain of such rules generally with respect to payments made
after December 31, 1997. Accordingly, the application of such rules to
payments with respect to the Notes could be changed.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such Holder's United States federal
income tax liability and may entitle such Holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
As discussed above, in the case of a United States Alien Holder, backup
withholding will not apply to payments of principal, premium or interest made by
the Company or any paying agent thereof on a Note if the certifications and
statements required by Sections 871(h) and 881(c) are received. The Company
will, where required, report to Holders of the Notes and the Internal Revenue
Service the amount of any interest paid or original issue discount accruing on
the Notes in each calendar year and the amounts of tax withheld, if any, with
respect to such payments.
Under current Treasury Regulations, if payments of principal, premium or
interest are made to or through the foreign office of a custodian, nominee or
other agent acting on behalf of a beneficial owner of a Note, such custodian,
nominee or other agent will not be required to apply backup withholding to such
payments made to such beneficial owner and generally will not be subject to
information reporting requirements. However, if such custodian, nominee or other
agent is a United States person, a controlled foreign corporation for United
States tax purposes, or a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a specified
three-year period, such custodian, nominee or other agent may be subject to
certain information reporting requirements with respect to such payments unless
it has in its records documentary evidence that the beneficial owner is not a
United States person and certain conditions are met or the beneficial owner
otherwise establishes an exemption. Under proposed Treasury Regulations, backup
withholding may apply to any payment that such custodian, nominee or other agent
is required to report if such custodian, nominee or other agent has actual
knowledge that the payee is a United States person.
Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker generally
will not be subject to backup withholding. However, if such broker is a United
States person, a controlled foreign corporation for United States tax purposes
or a foreign person 50% or more of whose gross income is effectively connected
with a United States trade or business for a specified three-year period,
information reporting will be required unless the broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain other conditions are met or the beneficial owner otherwise establishes
an exemption. Under proposed Treasury Regulations, backup withholding may apply
to any payment that such broker is required to report if such broker has actual
knowledge that the payee is a United States person. Payments to or through the
United States office of a broker will be subject to backup withholding and
information reporting unless the Holder certifies, under penalties of perjury,
that it is not a United States person or otherwise establishes an exemption.
United States Alien Holders of Notes should consult their tax advisers
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from a payment to a United States Alien Holder under the backup withholding
rules will be allowed as a credit against such Holder's United States federal
income tax liability and may entitle such Holder to a refund, provided that the
required information is furnished to the United States Internal Revenue Service.
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PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis for sale by the Company,
through the Agents, who have agreed to use their reasonable efforts to solicit
offers to purchase the Notes. The Company will pay a commission to the Agents,
in the form of a discount, depending upon the Stated Maturity of the Note,
ranging from .125% to .875% of the principal amount of any Note sold through the
Agents. Commissions with respect to Notes with maturities in excess of 40 years
that are sold through the Agents will be negotiated between the Company and the
Agents at the time of such sale. The Company may also sell Notes to the Agents,
as principal, for resale to investors and other purchasers at varying prices
relating to prevailing market prices at the time of resale as determined by the
Agents, or, if so specified in an applicable Pricing Supplement, for resale at a
fixed public offering price, as determined by the Agents. Unless otherwise
specified in an 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 of the principal amount equal to the
commission applicable to an agency sale (as described above) of a Note of
identical maturity.
The Agents may sell Notes they have purchased from the Company as principal
to other dealers for resale to investors and other purchasers and may allow or
reallow any portion of the discount received in connection with such purchase
from the Company to such dealers. The selling concession, if any, and
reallowance, if any, will be set forth in the applicable Pricing Supplement.
After the initial public offering of Notes, the public offering price (in the
case of Notes to be resold at a fixed public offering price), the concession and
the discount may be changed.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice. The Company or the Agents may reject, in whole or in
part, any offer to purchase Notes received by them.
Unless otherwise specified in an applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in New York City on the date of settlement.
No Note will have an established trading market when issued. Unless
otherwise specified in an applicable Pricing Supplement, the Notes will not be
listed on any securities exchange. The Agents may from time to time purchase and
sell Notes in the secondary market, but the Agents are not obligated to do so,
and there can be no assurance that there will be a secondary market for the
Notes or liquidity in the secondary market if one develops. From time to time,
the Agents may make a market in the Notes, but the Agents are not obligated to
do so and may discontinue any market-making activity at any time without notice.
The Agents may be deemed to be 'underwriters' within the meaning of the
Securities Act of 1933, as amended (the 'Securities Act'). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the Agents
may be required to make in respect thereof. The Company has also agreed to
reimburse the Agents for certain other expenses.
Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Securities pursuant to the Indenture
referred to herein.
In order to facilitate the offering of the Notes, the Agents may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Notes. Specifically, the Agents may overallot in connection with the offering,
creating a short position in the Notes for their own account. In addition, to
cover overallotments or to stabilize the price of the Notes, the Agents may bid
for, and purchase, the Notes in the open market. Finally, the underwriting
syndicates may reclaim selling concessions allowed to an underwriter or a dealer
for distributing Notes in the offering, if the syndicate repurchases previously
distributed Notes in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Notes above independent market levels. The
Agents are not required to engage in these activities and may end any of these
activities at any time.
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PROSPECTUS
CPC INTERNATIONAL INC.
[LOGO]
DEBT SECURITIES
CPC International Inc. (the 'Company') may offer from time to time in one
or more series its unsecured debt securities consisting of debentures, notes and
other evidences of indebtedness (the 'Debt Securities') up to an aggregate
initial public offering price of $500,000,000 or the equivalent thereof in one
or more currencies, including composite currencies, other than U.S. dollars.
Debt Securities of each series will be offered in amounts, at prices and on
terms to be determined at the time of sale and described in a supplement to this
Prospectus (a 'Prospectus Supplement'). The price or prices of the Debt
Securities may be payable in one or more currencies, and the principal of and
any premium or interest on the Debt Securities may be payable in the same
currency or currencies or one or more other currencies.
The Indenture pursuant to which the Debt Securities are being offered
provides that Debt Securities of a series may be issued in registered form
without coupons, in bearer form with coupons attached or both, and may be issued
in whole or in part in the form of one or more global securities. At the present
time the Company does not intend to offer securities in bearer form unless
otherwise indicated in the applicable Prospectus Supplement.
When Debt Securities of a series are offered, a Prospectus Supplement will
be delivered setting forth the terms of such Debt Securities and the terms of
their offering and sale. The terms set forth will include, where applicable, the
specific designation, aggregate principal amount, authorized denominations,
maturity, initial public offering price or prices (including the currency in
which such price or prices are payable), rate or rates (which may be fixed,
variable or zero) and times of payment of interest, currency or currencies in
which payments in respect of such Debt Securities may be made, form or forms in
which such Debt Securities may be issued, place or places of payment, terms for
mandatory redemption or sinking fund payments or for redemption at the option of
the Company or the holder, terms of credit enhancement, terms for payment of
additional amounts, terms for defeasance, and listing on any securities
exchange.
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 Debt Securities may be sold through underwriting syndicates represented
by managing underwriters, by underwriters without a syndicate, through agents
designated from time to time or directly to purchasers. The names of any
underwriters or agents of the Company involved in the sale of the Debt
Securities of a series in respect of which this Prospectus is being delivered
and any applicable commissions or discounts will be set forth in the applicable
Prospectus Supplement. The net proceeds to the Company from any such sale also
will be set forth in such Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS AUGUST 18, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the 'Commission'). Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission at 500 West Madison Street, Citicorp Center, Chicago,
Illinois 60661, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such material may also be accessed electronically by means of the
Commission's Web site (http://www.sec.gov). Reports and other information
concerning the Company also can be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York, the Pacific Stock Exchange,
115 Sansome Street, Suite 1104, San Francisco, California 94104 and the Midwest
Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits thereto, the 'Registration
Statement') under the Securities Act of 1933, as amended (the 'Securities Act'),
of which this Prospectus forms a part. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference herein its (i) Annual Report
on Form 10-K for the fiscal year ended December 31, 1996, (ii) Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997, (iii)
Proxy Statement dated March 13, 1997 and (iv) Current Reports on Form 8-K dated
February 27, 1997 and June 24, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus and made a part hereof from the
date of filing of such documents. Any statement contained in this Prospectus or
in a document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
subsequently filed document that also is or is deemed to be incorporated by
reference in this Prospectus modifies or supersedes such prior statement. Any
such prior statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, upon written or oral request, a copy of any or all of the
documents incorporated by reference in this Prospectus (other than exhibits to
such documents that are not specifically incorporated by reference in such
documents). Written requests should be directed to Corporate Secretary, CPC
International Inc., International Plaza, P.O. Box 8000, Englewood Cliffs, New
Jersey 07632. Telephone requests should be directed to Mr. Meagher at (201)
894-4000.
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References in this Prospectus to '$' or 'U.S. dollars' are to the lawful
currency of the United States, and references to 'currencies' are to U.S.
dollars, lawful currencies of countries other than the United States, and
composite currencies, including European Currency Units.
2
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THE COMPANY
The Company and its consolidated subsidiaries constitute a worldwide group
of businesses, principally engaged in three major industry segments: consumer
foods, baking and corn refining.
The Company's consumer foods business consists of three worldwide
businesses: Knorr soups, sauces, bouillons and related products; dressings
(including mayonnaise); and foodservice (catering). Regional businesses include:
starches (basic nutritious foods), desserts and bread spreads. These products
are sold under more than 25 major trademarks including Best Foods, Hellmann's,
Karo, Knorr, Maizena, Mazola, Mueller's, Pfanni and Skippy.
The Company's baking division was created in October 1995 when it acquired
Entenmann's sweet-baked goods, Freihoffer's sweet-baked goods and breads,
Orowheat breads and Boboli pizza crusts and combined them with its existing
Thomas' English muffins and bagels, Arnold and Brownberry breads, and Sahara
pita bread businesses.
On February 26, 1997, the Company announced its intention to spin off its
corn refining business to its stockholders as a new independent, publicly-owned
company, subject to approval by the Board of Directors of the Company of a
definitive plan. The corn refining business manufactures and sells products
including corn starches, corn syrups, high fructose corn syrup, dextrose, corn
oil and animal feed ingredients, which products are used for industrial purposes
and as food ingredients. The objective of the spin-off is to give both the
Company and the new corn refining company the focus, flexibility and resources
needed for faster growth of sales, volumes and profits. The transaction is
expected to be completed by the end of 1997 and is expected to be tax-free to
the Company and its stockholders. The Company is accounting for its corn
refining business as a discontinued operation.
As of December 31, 1996, the Company had a total of 161 operating plants,
of which 42 are in the United States, 7 in Canada, 41 in Europe, 24 in Africa
and the Middle East, 29 in Latin America and 18 in Asia. In addition, as of such
date the Company had interests in joint ventures that operate 4 plants in Latin
America (corn refining products). Of the 161 plants, 118 are engaged solely in
the manufacture of consumer foods products, 25 are engaged in the manufacture of
corn refining products (6 of which also produce consumer foods products) and 1
plant is engaged in the manufacture of other products.
The Company is a Delaware corporation and has its principal executive
offices at International Plaza, Englewood Cliffs, New Jersey 07362. The
Company's telephone number is (201) 894-4000.
RATIOS OF EARNINGS TO FIXED CHARGES
The table below sets forth the ratios of earnings to fixed charges of the
Company and its consolidated subsidiaries on a total enterprise basis for the
years indicated and for continuing operations for the 3 months ended March 31,
1997. The ratios have been computed by dividing income before taxes and fixed
charges by fixed charges. Fixed charges consist of gross interest expense on
debt and a portion of rental expense deemed to be representative of interest.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED ------------------------------------
MARCH 31, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges....................... 5.2* 4.8 6.2 5.6 ** 7.0 6.4
</TABLE>
- ------------
* Reflects continuing operations.
** Includes a charge of $227 million for restructuring included in income before
taxes.
USE OF PROCEEDS
Except as may be stated otherwise in a Prospectus Supplement, the Company
intends to use the proceeds from the sales of the Debt Securities for general
corporate purposes, which may include repayment of short-term debt.
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DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities of
the series offered by a Prospectus Supplement and the extent, if any, to which
such general provisions may apply to such Debt Securities will be described in
such Prospectus Supplement.
The Debt Securities will be issued under an indenture dated as of April 1,
1988, as amended and supplemented by the First Supplemental Indenture and
Amendment dated March 2, 1994 (the 'Indenture'), between the Company and Bankers
Trust Company, as trustee (the 'Trustee'), the forms of which are filed as
Exhibits 4.1 and 4.2 to the Registration Statement. The following summaries of
certain provisions of the Indenture and the Debt Securities are not complete and
are qualified in their entirety by reference to the provisions of the Indenture.
Numerical references in parentheses are to sections in the Indenture and, unless
otherwise indicated, capitalized terms have the meanings given them in the
Indenture.
GENERAL
The Debt Securities are limited to an aggregate initial public offering
price of $500,000,000, or the equivalent thereof, in one or more currencies
other than U.S. dollars. The Indenture does not limit the aggregate principal
amount of Debt Securities that may be issued from time to time. (Section 301)
Debt Securities of a series may be issued in registered form without
coupons and may be issued in whole or in part in the form of one or more global
securities ('Global Securities'), as described below under 'Global Securities.'
Except as provided in the applicable Prospectus Supplement, Registered
Securities denominated in U.S. dollars will be issued only in denominations of
$1,000 or any integral multiple thereof. One or more Global Securities will be
issued in a denomination or aggregate denominations equal to the aggregate
principal amount of Outstanding Debt Securities of the series to be represented
by such Global Security or Securities. (Sections 302 and 305) The applicable
Prospectus Supplement will specify the authorized denominations of Debt
Securities of any series denominated in a currency other than U.S. dollars.
The Debt Securities will be unsecured obligations of the Company and will
rank pari passu with all other unsecured and unsubordinated indebtedness of the
Company.
Reference is made to the applicable Prospectus Supplement for a description
of the terms of the Debt Securities of a series, including, where applicable,
(i) the designation, aggregate principal amount and authorized denominations
(including the currency of denomination) of such Debt Securities; (ii) the price
or prices (each expressed as a percentage of principal amount) at which such
Debt Securities will be issued (including the currency or currencies in which
any such price may be paid) and, if any such price is less than 100%, the
portion of the principal amount (if other than 100%) that will become due and
payable upon the occurrence of an Event of Default (as defined below); (iii) the
date or dates on which such Debt Securities will mature; (iv) the rate or rates
(which may be fixed or variable), if any, at which such Debt Securities will
bear interest, the date or dates from which any such interest will accrue, each
Interest Payment Date on which any such interest will be payable and, if any of
such Debt Securities are Registered Securities, the Regular Record Date for the
interest payable on such Registered Securities on any Interest Payment Date; (v)
the currency or currencies in which payment of the principal of (and any
premium) and any interest on such Debt Securities will be made and any other
currency or currencies in which any such payment may be payable at the election
of the registered holders (the 'Holders') of such Debt Securities; (vi) whether
such Debt Securities are to be issued in whole or in part in the form of one or
more Global Securities and, if so, the identity of the Depositary (as defined
below) for such Global Security or Securities; (vii) if a temporary Global
Security is to be issued with respect to such series, (A) whether any interest
thereon payable on an Interest Payment Date prior to the issuance of a permanent
Global Security will be credited to the account of the persons entitled thereto
on such Interest Payment Date, (B) the terms upon which beneficial interests in
such temporary Global Security may be exchanged for beneficial interests in a
permanent Global Security or
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for definitive Debt Securities of such series and (C) the terms upon which
beneficial interests in a permanent Global Security, if any, may be exchanged
for definitive Debt Securities of such series; (viii) each office or agency
where the principal of (and any premium, if any) and any interest on such Debt
Securities will be payable and each office or agency where any such Debt
Securities may be presented for exchange and any such Debt Securities that are
Registered Securities may be presented for registration of transfer; (ix) any
terms upon which such Debt Securities will be subject to mandatory redemption
(including any terms upon which Holders of such Debt Securities may elect to
have their Debt Securities not redeemed in such a redemption) or to a sinking
fund or upon which any of such Debt Securities may be redeemed at the option of
the Company or their Holders; (x) information regarding any surety bond or other
form of credit enhancement to be issued or entered into with respect to such
Debt Securities; (xi) any terms upon which payments of additional amounts will
be made with respect to such Debt Securities; (xii) any terms upon which such
Debt Securities may be defeased; (xiii) any additional Events of Default or
restrictive covenants provided for with respect to such Debt Securities; and
(xiv) any other terms not inconsistent with the Indenture, including any terms
that may be required by or advisable under United States laws or regulations.
(Section 301)
Reference should also be made to the applicable Prospectus Supplement for a
description of any special United States income tax considerations with respect
to Debt Securities of a series.
EXCHANGES AND TRANSFERS
At the option of the Holder, upon request confirmed in writing, and subject
to the terms of the Indenture, Debt Securities of a series will be exchangeable
into an equal aggregate principal amount of registered Debt Securities of the
same series and terms but having different authorized denominations.
Debt Securities may be presented for exchange or transfer, in the manner,
at the places, and subject to the restrictions set forth in the Indenture and
the Debt Securities. No service charge will be made for any such exchange or
registration of transfer of Debt Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Section 305)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the 'Depositary') identified in the applicable Prospectus
Supplement. Global Securities may be issued in registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for Debt Securities in definitive form, a Global Security may not be
transferred except as a whole (i) by the Depositary for such Global Security to
a nominee of such Depositary, (ii) by a nominee of such Depositary to such
Depositary or to another nominee of such Depositary or (iii) by such Depositary
or any such nominee to a successor of such Depositary or to a nominee of such
successor. (Sections 303 and 305)
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of Persons that have accounts with such Depositary
('participants'). The accounts to be credited shall be designated by the
underwriters or agents of such Debt Securities or by the Company if such Debt
Securities are offered and sold directly by it. Ownership of beneficial
interests in a Global Security will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial interests in
such Global Security will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the Depositary for such Global
Security or by participants or persons that hold through participants. The laws
of certain states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability of owners to transfer beneficial interests in a Global
Security.
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So long as the Depositary for a Global Security, or its nominee, is the
Holder of such Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture. Except
as set forth below, owners of beneficial interests in a Global Security will not
be entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and any interest on Debt
Securities registered in the name of a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the Holder of the Global
Security representing such Debt Securities. None of the Company, the Trustee,
any Paying Agent or the Security Registrar will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for Debt Securities of a series,
upon receipt of any payment of principal, premium or interest in respect of a
permanent Global Security, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in 'street name',
and will be the responsibility of such participants.
If a Depositary for Debt Securities of a series is at any time unwilling or
unable to continue as Depositary and a successor Depositary is not appointed by
the Company within ninety days, the Company will issue Debt Securities of such
series in definitive form in exchange for the Global Security or Securities
representing Debt Securities of such series. In addition, the Company may at any
time and in its sole discretion determine not to have the Debt Securities of a
series represented by one or more Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for the
Global Security or Securities representing the Debt Securities of such series.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing Debt
Securities of such series may, on terms acceptable to the Company and the
Depositary for such Global Security, receive Debt Securities of such series in
definitive form. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to have Debt Securities of the series
represented by such Global Security equal in principal amount to such beneficial
interest registered in its name and will be entitled to physical delivery of
such Debt Securities in definitive form. Debt Securities of such series so
issued in definitive form will be issued in denominations, unless otherwise
specified by the Company, of $1,000 and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) on Debt Securities will be
made in the currency designated for payment, against surrender of such Debt
Securities at the Corporate Trust Office of the Trustee in the City of New York.
Unless otherwise indicated in the applicable Prospectus Supplement, payment of
any installment of interest on Debt Securities will be made to the Person in
whose name such Debt Security is registered at the close of business on the
Regular Record Date for such interest payment. Unless otherwise indicated in the
applicable Prospectus Supplement, payments of such interest will be made at such
Corporate Trust Office of the Trustee or by a check in the designated currency
mailed to the Holder at such Holder's registered address. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of
New York will be appointed as the Company's Paying Agent. Any other Paying Agent
in the United States and any Paying Agents outside the United States initially
appointed by the Company for the Debt Securities of a series will be named in
the applicable Prospectus Supplement. The Company may terminate the appointment
of any of the Paying
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Agents from time to time, except that the Company will maintain at least one
Paying Agent in the Borough of Manhattan, The City of New York for payments with
respect to Debt Securities, provided that so long as the Debt Securities of a
series are listed on The International Stock Exchange of the United Kingdom and
the Republic of Ireland or the Luxembourg Stock Exchange or any other stock
exchange located outside the United States and such stock exchange shall so
require, the Company will maintain a Paying Agent in London or Luxembourg or any
other required city located outside the United States, as the case may be, for
such Debt Securities. (Section 1002)
All moneys paid by the Company to a Paying Agent or the Trustee for the
payment of principal of (or premium, if any) or interest on any Debt Security
that remains unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company, and
the Holder of such Debt Security or any coupon relating thereto will thereafter
look only to the Company for payment thereof. (Section 1003)
LIMITATION ON SECURED INDEBTEDNESS
The Company will not (nor will it permit any Restricted Subsidiary to)
issue, assume or guarantee any debt for money borrowed ('Debt') secured by any
mortgage, pledge, lien or other encumbrance upon any Principal Property of the
Company or any Restricted Subsidiary or on any shares of stock or indebtedness
of the Company or any Restricted Subsidiary without providing that the Debt
Securities of each series and any related coupons shall be secured equally and
ratably with such Debt; provided, however, that the foregoing restrictions shall
not apply to:
(i) encumbrances on property, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a Restricted
Subsidiary;
(ii) encumbrances on property, shares of stock or indebtedness
existing at the time of acquisition of such property, shares of stock or
indebtedness, or encumbrances to secure the payment of all or any part of
the purchase price of such property or shares of stock or to secure any
Debt incurred prior to, at the time of, or within ninety days after the
acquisition of such property or shares of stock for the purpose of
financing all or any part of the purchase price thereof;
(iii) encumbrances securing Debt of a Restricted Subsidiary owing to
the Company or to another Restricted Subsidiary;
(iv) encumbrances on property of a corporation existing at the time
such corporation is merged into or consolidated with the Company or a
Restricted Subsidiary or at the time of a sale, lease or other disposition
of the properties of a corporation or firm as an entirety or substantially
as an entirety to the Company or a Restricted Subsidiary;
(v) encumbrances on property of the Company or a Restricted Subsidiary
in favor of the United States or any state thereof, or in favor of any
other country, or any political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any contract or statute or
to secure any indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of construction of the property
subject to such encumbrances; or
(vi) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any encumbrance referred
to in the foregoing clauses (i) to (v), inclusive; provided, however, that
the principal amount of Debt secured thereby shall not exceed the principal
amount of Debt so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement shall be
limited to all or a part of the property subject to the encumbrance so
extended, renewed or replaced (plus improvements on such property).
Notwithstanding the foregoing provisions, the Company and any one or more
Restricted Subsidiaries may issue, assume or guarantee Debt secured by an
encumbrance that would otherwise be subject to the foregoing restrictions in an
aggregate amount which, together with all other Debt of the Company and its
Restricted Subsidiaries that would otherwise be subject to the foregoing
restrictions (not including Debt permitted to be secured under clauses (i)
through (vi) above) and the aggregate value of the Sale and Leaseback
Transactions in existence at such time (not including Sale and Leaseback
Transactions the proceeds of which have been applied to reduce Debt, as set
forth below),
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does not at the time exceed fifteen percent of the stockholders' equity (as
defined) of the Company. In the event that the Company shall apply an amount
equal to the value of a Sale and Leaseback Transaction to the retirement (other
than any mandatory retirement) within ninety days of the effective date of such
Sale and Leaseback Transaction of Debt incurred or assumed by the Company or any
Restricted Subsidiary which by its terms (i) matures at, or is extendible or
renewable at the sole option of the obligor without requiring the consent of the
obligee to, a date more than twelve months after the date of creation of such
Debt and (ii) is not subordinated to the Debt Securities, then the value of such
Sale and Leaseback Transaction shall not be taken into consideration for
purposes of calculating whether the fifteen percent limitation referred to above
has been met or exceeded.
For purposes of the foregoing, (i) 'Principal Property' means any
manufacturing plant or facility located within the United States (other than its
territories or possessions) owned by the Company or any Restricted Subsidiary
that, in the opinion of the Board of Directors of the Company, is of material
importance to the total business conducted by the Company and its Restricted
Subsidiaries as a whole, (ii) 'Restricted Subsidiary' means any Subsidiary of
the Company (other than a Subsidiary principally engaged in financing the
operations of the Company or its Subsidiaries outside the United States)
substantially all the property of which is located, or substantially all the
business of which is carried on, within the United States (other than its
territories or possessions) and that owns a Principal Property, (iii) 'value'
means, with respect to a Sale and Leaseback Transaction, as of any particular
time, the amount equal to the net proceeds of such property at the time of
entering into such Sale and Leaseback Transaction and (iv) 'Sale and Leaseback
Transaction' means any arrangement with any person providing for the leasing by
the Company or any Restricted Subsidiary of any Principal Property owned as of
June 20, 1967 (except for temporary leases for a term of not more than three
years and except for leases between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries), which property has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such person.
(Section 1004)
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
The Company may not consolidate with or merge into any corporation, or
transfer or lease its properties and assets substantially as an entirety to any
Person, unless: (i) the successor corporation or transferee assumes the
Company's obligations on the Debt Securities and under the Indenture; (ii) after
giving effect to the transaction, no Event of Default and no event which, after
notice or lapse of time, would become an Event of Default shall have occurred
and be continuing; and (iii) certain other conditions are met. (Section 801)
EVENTS OF DEFAULT
The following will constitute Events of Default with respect to Debt
Securities of any series: (i) default in payment of principal of (or premium, if
any, on) any Debt Security of such series when due; (ii) default in payment of
interest on any Debt Security of such series when due, and the continuance of
such default for a period of 30 days; (iii) default in the deposit of any
sinking fund payment on any Debt Security of such series when due; (iv) default
in the performance or breach of any other covenant of the Company in the
Indenture for the benefit of Debt Securities of such series, and the continuance
of such default for a period of 60 days after written notice thereof by the
Trustee or the Holders of at least 25% in aggregate principal amount of the Debt
Securities of such series at the time Outstanding; (v) default resulting in
acceleration of maturity of any other indebtedness of the Company or any
Restricted Subsidiary in an amount aggregating in excess of $25,000,000; (vi)
certain events of bankruptcy, insolvency or reorganization; and (vii) any other
Event of Default provided with respect to Debt Securities of such series.
(Section 501) An Event of Default with respect to Debt Securities of a series
does not necessarily constitute an Event of Default with respect to Debt
Securities of any other series. (Section 502)
If an Event of Default has occurred and is continuing with respect to Debt
Securities of a series, either the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debt Securities of such series then
Outstanding may declare the principal of all such Debt Securities (or in the
case of certain securities sold initially at a substantial discount below their
principal amounts, the portion of
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such principal amounts specified in such Debt Securities and set forth in the
applicable Prospectus Supplement) to be due and payable. In certain cases, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
a series may, on behalf of the Holders of all Debt Securities of such series,
rescind and annul such declaration of acceleration. (Section 502)
If a default has occurred and is continuing with respect to Debt Securities
of a series, the Trustee, subject to its duty to act with the required standard
of care, will be entitled to indemnification by the Holders of such Debt
Securities before proceeding to exercise any right or power under the Indenture
with respect to such Debt Securities at the request of such Holders. (Section
603) No Holders of Debt Securities of a series may institute any proceedings,
judicial or otherwise, to enforce the Indenture except in the case of failure of
the Trustee thereunder, for sixty days, to act after it has received a request
to enforce such Indenture and an offer of reasonable indemnity from the Holders
of at least twenty-five percent in aggregate principal amount of the Outstanding
Debt Securities of such series. (Section 507) This provision will not prevent
any Holder of Debt Securities of such series from enforcing payment of the
principal of (and premium, if any) and interest on such Debt Securities at the
respective due dates thereof. (Section 508) The Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of a series may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on it with
respect to the Debt Securities of such series. The Trustee may, however, refuse
to follow any direction that it determines may not lawfully be taken or would be
illegal or in conflict with the Indenture or involve it in personal liability or
which would be unjustly prejudicial to Holders not joining therein. (Section
512)
The Trustee shall, within ninety days after the occurrence of a default
with respect to Debt Securities of a series, give to the Holders of Debt
Securities of such series notice of such default, unless such default has been
cured or waived. Except in the case of a default in the payment of principal of
(or premium, if any) or interest on any Debt Securities of such series, the
Trustee shall be protected in withholding such notice if it determines in good
faith that the withholding of such notice is in the interest of the Holders of
the Debt Securities of such series. (Section 602)
The Company will be required to file with the Trustee annually an Officers'
Certificate as to the absence of certain defaults under the terms of the
Indenture. (Section 1006)
MODIFICATION AND WAIVER
Modifications of and amendments to the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Debt securities of each series affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby: (i) change the stated maturity date of any
installment of the principal of, or interest on, any Debt Security or coupon;
(ii) reduce the principal amount of (or premium, if any) or interest on any Debt
Security or related coupon; (iii) adversely affect the right of repayment or
repurchase, if any, at the option of the Holder; (iv) reduce the amount of, or
postpone the date fixed for, any payment under any sinking fund or analogous
provisions for any Debt Security; (v) change the place or currency of payment of
the principal of (or premium, if any) or interest on any Debt Security or
coupon; (vi) change or eliminate the rights of a Holder to receive payment in a
designated currency; (vii) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security or coupon; or
(viii) reduce the percentage of the principal amount of the outstanding Debt
Securities of any series the consent of whose Holders is required for
modification or amendment of the Indenture, for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults. (Section
902)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of a series may, on behalf of all Holders of Debt Securities of such
series, waive, insofar as such series is concerned, compliance by the Company
with the provisions of the Indenture described above in 'Limitation on Secured
Indebtedness' and 'Consolidation, Merger and Transfer of Assets' before the time
for such compliance. (Section 1007) The Holders of a majority in principal
amount of the Outstanding Debt Securities of a series may, on behalf of all
Holders of Debt Securities of such series, waive any past
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default under the Indenture with respect to Debt Securities of such series
except a default in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series and except a default in respect of
a covenant or provision the modification or amendment of which would require the
consent of the Holder of each Outstanding Debt Security affected thereby.
(Section 513)
SATISFACTION AND DISCHARGE; DEFEASANCE
At the request of the Company, the Indenture will be canceled by the
Trustee if all sums due to the Trustee under the Indenture have been paid in
full and (i) all Debt Securities previously issued have been canceled or
delivered to the Trustee for cancellation, (ii) the principal of (and premium,
if any) and any interest on all Outstanding Debt Securities have been paid in
full or (iii) funds have been deposited with the Trustee at the maturity of the
Debt Securities sufficient to pay in full the principal of (and premium, if any)
and any interest on all Outstanding Debt Securities and the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the deposit
and related cancellation would not cause the Holders of the Debt Securities of
any series to recognize income, gain or loss for United States federal income
tax purposes. (Sections 401 and 402).
If so specified in the Prospectus Supplement applicable to Debt Securities
of a series, the Company at its option (i) will be discharged from any and all
obligations in respect of the Debt Securities of such series (except for certain
obligations to register the transfer or exchange of Debt Securities of such
series, replace stolen, lost, or mutilated Debt Securities of such series,
maintain paying agencies and hold moneys for payment in trust) or (ii) will not
be subject to provisions of the Indenture described above under 'Limitation of
Secured Indebtedness' and 'Consolidation, Merger and Transfer of Assets' with
respect to the Debt Securities of such series, in each case if the Company
deposits with the Trustee, in trust, money or U.S. Government Obligations that,
through the payment of interest (and premium, if any) thereon and principal
thereof in accordance with their terms, will provide money in an amount
sufficient to pay all the principal (including any mandatory sinking fund
payments) of, and interest (and premium, if any) on, the Debt Securities of such
series on the dates such payments are due in accordance with the terms of such
Debt Securities. To exercise any such option, the Company is required to deliver
to the Trustee an Opinion of Counsel to the effect that (1) the deposit and
related defeasance would not cause the Holders of the Debt Securities of such
series to recognize income, gain or loss for United States federal income tax
purposes and (2) if the Debt Securities of such series are then listed on the
New York Stock Exchange, such Debt Securities would not be delisted as a result
of the exercise of such option. (Sections 1301 and 1302) The Company will not
exercise any such option with respect to Debt Securities of a series at any time
when such Debt Securities are subject to mandatory redemption.
CONCERNING THE TRUSTEE
Bankers Trust Company is the Trustee under the Indenture. Bankers Trust
Company is a depository for funds, participates in certain revolving credit and
commercial paper facilities, and performs other services for the Company and its
subsidiaries.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities of a series in any of three ways:
(i) through underwriters or dealers, (ii) through agents or (iii) directly to a
limited number of purchasers or to a single purchaser. The applicable Prospectus
Supplement will set forth the terms of the offering of the Debt Securities of a
series, including the name or names of any underwriters or agents, the initial
public offering price or prices of such Debt Securities (and the currency or
currencies in which any such price is payable), the proceeds to the Company from
such sale, any underwriting discounts and other items constituting underwriters'
compensation, any discounts or concessions allowed or reallowed or paid to
dealers and any securities exchanges on which the Debt Securities of such series
may be listed.
If underwriters are used in the sale, Debt Securities of a series will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price, or at varying prices determined at the time of
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sale. The Debt Securities of such series may be offered to the public through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate. Unless otherwise set forth in the applicable Prospectus
Supplement, the obligations of the underwriters to purchase Debt Securities of a
series will be subject to certain conditions precedent and the underwriters will
be obligated to purchase all the Debt Securities of such series if any are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
The Debt Securities of a series may be sold directly by the Company or
through agents designated by the Company from time to time. Any agent involved
in the offer or sale of the Debt Securities of such series will be named, and
any commissions payable by the Company to such agent will be set forth in the
applicable Prospectus Supplement. Unless otherwise indicated in such Prospectus
Supplement, any such agent will be acting on a reasonable efforts basis for the
period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain specified
entities to purchase Debt Securities of a series from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date. Such
contracts will be subject only to those conditions set forth in such Prospectus
Supplement. Such Prospectus Supplement will set forth the commissions payable
for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for the Company or its affiliates in the ordinary
course of business.
The Debt Securities may not be offered or sold in Great Britain, by means
of this Prospectus, any Prospectus Supplement or any other document, other than
to persons whose ordinary business is to buy or sell shares or debentures,
whether as principal or agent (except in circumstances that do not constitute an
offer to the public within the meaning of the Companies Act 1985), nor may this
Prospectus, any Prospectus Supplement or any other offering material relating to
the Debt Securities be distributed in or from Great Britain (except by persons
permitted to do so under the securities laws of Great Britain) otherwise than to
persons whose ordinary business involves the acquisition and disposal, or the
holding, of securities, whether as principal or as agent.
LEGAL MATTERS
Certain legal matters in connection with the Debt Securities will be passed
on for the Company by Hanes A. Heller, Esq., Vice President and General Counsel
of the Company. As of June 29, 1997, Mr. Heller owned beneficially and of record
10,826 shares of the Company's common stock and owned currently exercisable
stock options to purchase an additional 15,769 shares of such common stock.
EXPERTS
The financial statements of CPC International Inc. and its consolidated
subsidiaries as of December 31, 1996, 1995 and 1994 and for each of the years in
the three-year period ended December 31, 1996, incorporated by reference herein
and elsewhere in the Registration Statement, have been incorporated herein in
reliance upon the report (incorporated by reference herein) of KPMG Peat Marwick
LLP, independent certified public accountants, given on the authority of that
firm as experts in auditing and accounting.
11
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<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PRICING SUPPLEMENT AND PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PRICING SUPPLEMENT AND PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH
INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PRICING
SUPPLEMENT AND PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PRICING SUPPLEMENT AND PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Important Currency Exchange Information........ S-2
Description of Medium-Term Notes, Series F..... S-2
Special Provisions and Risks Relating to
Foreign Currency Notes....................... S-16
United States Taxation......................... S-19
Plan of Distribution........................... S-26
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents
by Reference................................. 2
The Company.................................... 3
Ratios of Earnings to Fixed Charges............ 3
Use of Proceeds................................ 3
Description of Debt Securities................. 4
Plan of Distribution........................... 10
Legal Matters.................................. 11
Experts........................................ 11
</TABLE>
U.S. $500,000,000
CPC INTERNATIONAL INC.
MEDIUM-TERM NOTES,
SERIES F
DUE MORE THAN
NINE MONTHS
FROM DATE OF ISSUE
[LOGO]
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
PROSPECTUS SUPPLEMENT
DATED AUGUST 19, 1997
<PAGE>
