PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 14, 1994)
$500,000,000
AMERICAN GENERAL FINANCE CORPORATION
MEDIUM-TERM NOTES, SERIES D
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
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American General Finance Corporation (the "Company") may offer from time
to time its medium-term notes which are issuable in one or more series. The
Medium-Term Notes, Series D (the "Notes") offered by this Prospectus
Supplement will be senior debt securities which bear interest at fixed or
variable rates and will mature on any day nine months or more from the date of
issue, as selected by the initial purchaser and agreed to by the Company.
Unless otherwise provided in an accompanying pricing supplement to this
Prospectus Supplement (a "Pricing Supplement"), the Notes will not be subject
to any sinking fund and will not be redeemable at the option of the Company,
or repayable at the option of the holders thereof, prior to their stated
maturity. The Notes will be issued only in fully registered form in
denominations of $1,000 and integral multiples thereof.
Each Note will be represented either by a global security registered in
the name of a nominee of The Depository Trust Company, as Depositary (a
"Book-Entry Note"), or by a certificate issued in definitive form (a
"Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in Book-Entry Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary
and its participants. Owners of beneficial interests in Book-Entry Notes will
be entitled to physical delivery of Certificated Notes only under the limited
circumstances described herein.
The interest rate on or the method of determining the interest rate on
each Note, the issue price and maturity date of each Note and certain other
terms will be established by the Company from time to time and will be set
forth in such Note and described in the applicable Pricing Supplement.
Interest rates, the method of determining interest rates, issue prices and
certain other terms of the Notes are subject to change by the Company, but no
such change will affect any Notes already issued or as to which an offer to
purchase has been accepted by the Company. As specified in the applicable
Pricing Supplement, the Notes will bear interest at a fixed rate (the "Fixed
Rate Notes") or at a floating rate determined by reference to the CD Rate, the
Commercial Paper Rate, the CMT Rate, the Prime Rate, LIBOR, the Treasury Rate,
the Federal Funds Rate, or such other interest rate basis or formula as is set
forth in the Pricing Supplement and may be adjusted by a Spread and/or Spread
Multiplier (as such terms are hereafter defined) and subject to a maximum
and/or minimum interest rate limitation (the "Floating Rate Notes"). See
"Description of Notes" in this Prospectus Supplement.
Unless otherwise specified in the applicable Pricing Supplement, interest
on Fixed Rate Notes will be payable each March 15 and September 15 and at
maturity (or, if applicable, upon redemption or repayment). The dates for
payment of interest on Floating Rate Notes will be established by the Company
at the time of offering and will be set forth in the applicable Pricing
Supplement. See "Description of Notes" in this Prospectus Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO AGENTS' DISCOUNTS PROCEEDS TO
PUBLIC(1)(2) AND COMMISSIONS(2) COMPANY(1)(2)(3)
- --------------------------------------------------------------------------------
Per Note .. 100% Not to exceed .75% Not less than 99.25%
- --------------------------------------------------------------------------------
Total ..... $500,000,000 Not to exceed $3,750,000 Not less than $496,250,000
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(1) Unless otherwise specified in a Pricing Supplement, Notes will be issued
at 100% of their principal amount.
(2) The Company will pay commissions to CS First Boston Corporation, Lehman
Brothers, Lehman Brothers Inc. (including its affiliate Lehman Government
Securities Inc.), Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Smith Barney Inc. (the "Unaffiliated Agents"), in
the form of a discount, not to exceed .75% of the principal amount of any
Note sold through them, depending upon the maturity of such Note. The
Company may also sell Notes to an Unaffiliated Agent as principal for
resale to investors and other purchasers at varying prices relating to
prevailing market prices at the time or times of resale, to be determined
by such Unaffiliated Agent, or, if so agreed, at a fixed public offering
price. Unless otherwise specified in the applicable Pricing Supplement,
any Note sold to an Unaffiliated Agent acting as principal will be
purchased by such Unaffiliated Agent at a price equal to 100% of the
principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Note of identical maturity. No
commissions are payable to AGF Investment Corp. ("AGFIC"). See "Plan of
Distribution of Notes" in this Prospectus Supplement.
(3) Before deducting other expenses payable by the Company, estimated at
$500,000.
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The Notes are being offered on a continuing basis by the Company through
AGFIC and the Unaffiliated Agents, as agents (the "Agents"), each of which has
agreed to use its reasonable best efforts to solicit offers to purchase the
Notes. AGFIC, an affiliate of the Company, will solicit offers to purchase the
Notes in those jurisdictions where it is authorized to do so. Notes may also
be sold to one or more of the Unaffiliated Agents, as principal, for resale to
investors and other purchasers. The Company may also sell Notes directly to
investors in those jurisdictions in which it is authorized to do so. The Notes
will not be listed on any securities exchange, and there can be no assurance
that any or all of the Notes offered hereby 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
soliciting Agent may reject any offer to purchase Notes in whole or in part.
See "Plan of Distribution of Notes" in this Prospectus Supplement.
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AGF INVESTMENT CORP.
CS FIRST BOSTON
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SMITH BARNEY INC.
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The date of this Prospectus Supplement is February 13, 1995.
DESCRIPTION OF NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Debt Securities")
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. Unless
otherwise specified in the applicable Pricing Supplement, the Notes will have
the terms described below. Capitalized terms not defined herein have the
meanings assigned to such terms in the Prospectus.
The Notes constitute a single series of Debt Securities of the Company and
will be issued pursuant to the Indenture. The Notes will rank PARI PASSU with
all other unsecured and unsubordinated indebtedness of the Company. The
Company may issue Notes in an aggregate principal amount of up to
$500,000,000. The foregoing limit, however, may be increased or decreased by
the Company.
The Notes are being issued as the fourth series of the Company's
medium-term notes. The Company reserves the right to offer and sell other
series of its medium-term notes either concurrently with or subsequent to the
offering made hereby.
Reference is made to the applicable Pricing Supplement for the following
terms and other information with respect to a Note being offered thereby: (1)
the public offering price, if other than 100% of the principal amount; (2)
whether interest on such Note will accrue at a fixed rate (Fixed Rate Note) or
be determined by reference to an interest rate basis or formula (Floating Rate
Note); (3) whether such Note will be issued with original issue discount and,
if so, whether such Note shall bear any interest; (4) for Fixed Rate Notes,
the rate per annum at which such Note will bear interest; (5) for Floating
Rate Notes, the interest rate basis or formula, the Initial Interest Rate
(hereafter defined), the Spread and/or Spread Multiplier, if any, the maximum
and/or minimum interest rate, if any, the Interest Reset Dates (hereafter
defined), the Interest Payment Dates (hereafter defined) and any other terms
relating to the particular method of calculating the interest rate on such
Floating Rate Note; (6) the date of maturity of such Note; (7) any provisions
of such Note relating to redemption at the option of the Company, repayment at
the option of the Holder or sinking fund payments prior to the date on which
such Note will mature; (8) whether such Note will be issued initially as a
Book-Entry Note or a Certificated Note; and (9) any other terms of such Note
not inconsistent with the provisions of the Indenture.
The Notes will be offered on a continuing basis and will mature on any day
nine months or more from the date of issue, as selected by the initial
purchaser and agreed to by the Company. Floating Rate Notes will mature on an
Interest Payment Date.
Each Note will be issued initially as either a Book-Entry Note registered
in the name of The Depository Trust Company, New York, New York (the
"Depositary"), or such other depositary (or their nominees) as is specified in
the applicable Pricing Supplement, or as a Certificated Note. Notes will be
issued only in fully registered form without coupons. Except as set forth
below under "Book-Entry Notes," owners of beneficial interests in Book-Entry
Notes will not be entitled to physical delivery of Certificated Notes. The
authorized denominations of the Notes will be $1,000 or any integral multiple
thereof. No service charge will be made for any registration of transfer or
exchange of Certificated 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.
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.
S-2
INTEREST AND PAYMENTS
Unless otherwise specified in the applicable Pricing Supplement, each Note
will bear interest at either (a) a fixed rate or (b) a rate determined by
reference to an interest rate basis or formula, which may be adjusted by adding
or subtracting a Spread ("Spread" is the number of basis points specified in the
applicable Pricing Supplement as being applicable to the interest rate for such
Floating Rate Note) and/or multiplying by a Spread Multiplier ("Spread
Multiplier" is the percentage specified in the applicable Pricing Supplement of
the interest rate basis applicable to such Floating Rate Note). A Floating Rate
Note may also have either or both of the following: (i) a maximum limitation, or
ceiling, on the rate of interest which may accrue during any interest period;
and (ii) a minimum limitation, or floor, on the rate of interest which may
accrue during any interest period. The applicable Pricing Supplement relating to
a Note will designate either a fixed rate of interest per annum payable on the
Note or an interest rate basis or formula applicable to the Note, which basis or
formula may be, without limitation, one of the following: (a) the CD Rate (a "CD
Rate Note"), (b) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (c)
the Prime Rate (a "Prime Rate Note"), (d) the CMT Rate (a "CMT Rate Note"), (e)
LIBOR (a "LIBOR Note"), (f) the Treasury Rate (a "Treasury Rate Note") or (g)
the Federal Funds Rate (a "Federal Funds Rate Note").
Each Note will bear interest from the date of issue at the rate per annum,
or at a rate calculated pursuant to the interest rate basis or formula, stated
therein and in the applicable Pricing Supplement, until the principal thereof
is paid or made available for payment.
Interest rates, interest payment periods, Interest Reset Periods
(hereafter defined), Interest Payment Dates, Interest Reset Dates and all
other aspects of interest rate bases or formulas are subject to change by the
Company from time to time, as specified in the applicable Pricing Supplement,
but no such change will affect any Note already issued or as to which an offer
to purchase has been accepted by the Company.
Principal, premium, if any, and interest payable at Maturity on each Note
will be paid at Maturity against surrender of the Note at the office of The
Chase Manhattan Bank (National Association) (the "Trustee") designated for
that purpose in The City of New York. If the Maturity of any Note would fall
on a day that is not a Business Day, the payment of principal, premium, if
any, and interest due at Maturity will be made on the next succeeding Business
Day, and no interest on such payment will accrue for the period from and after
Maturity.
Unless otherwise specified in the applicable Pricing Supplement, "Business
Day" shall mean any day, other than a Saturday or a Sunday, on which banking
institutions in The City of New York are not required or authorized by law or
executive order to close and, with respect to LIBOR Notes, is also a London
Banking Day. "London Banking Day" shall mean any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.
FIXED RATE NOTES: Unless otherwise specified in the applicable Pricing
Supplement, interest on Fixed Rate Notes will be computed on the basis of a
360-day year consisting of twelve 30-day months and will be payable
semi-annually on March 15 and September 15 of each year and upon Maturity;
PROVIDED, HOWEVER, that if an Interest Payment Date with respect to any Fixed
Rate Note would otherwise fall on a day that is not a Business Day, such
Interest Payment Date will be the following Business Day. Interest payments
will be in the amount of interest accrued from and including the next
preceding Interest Payment Date in respect of which interest has been paid or
duly provided for (or from and including the date of issue, if no interest has
been paid with respect to the applicable Note) to but excluding the applicable
Interest Payment Date or Maturity, as the case may be. In the case of
Certificated Notes, principal, premium, if any, and interest due at Maturity
will be payable in immediately available funds and interest due other than at
Maturity will be payable by check, or at the option of the Company, in
immediately available funds. In the case of Book-Entry Notes, all payments of
principal, premium, if any, and interest due at Maturity and other than at
Maturity will be payable in immediately available funds to the Depositary or
its nominee. See "Book-Entry Notes". Interest will be payable to the person in
whose name the Fixed Rate Note is registered at the close of
S-3
business on the March 1 or September 1 record date next preceding the applicable
March 15 or September 15 Interest Payment Date (each a "Fixed Rate Note Record
Date"); PROVIDED, HOWEVER, that interest payable at Maturity will be payable to
the person to whom principal shall be payable. The first payment of interest on
any Fixed Rate Note originally issued after a Fixed Rate Note Record Date and on
or before the immediately following Interest Payment Date will be made on the
next succeeding Interest Payment Date to the registered owner at the close of
business on the Fixed Rate Note Record Date next preceding such date of payment.
FLOATING RATE NOTES: The interest rate on each Floating Rate Note from
the date of issue to but excluding the first Interest Reset Date will be the
"Initial Interest Rate" specified therein and in the applicable Pricing
Supplement (the "Initial Interest Rate"). Thereafter, from and after each
Interest Reset Date to but excluding the following Interest Reset Date, the
interest rate on a Floating Rate Note will be determined by reference to an
interest rate basis or formula plus or minus the Spread, if any, and/or
multiplied by the Spread Multiplier, if any, and subject to the maximum and/or
minimum interest rate limitations, if any, applicable to such Floating Rate
Note. The Pricing Supplement will also set forth with respect to each Floating
Rate Note the Interest Payment Dates, the Interest Reset Dates and, if
applicable, the Index Maturity. "Index Maturity" means, with respect to a
Floating Rate Note, the period to maturity of the instrument or obligation on
which the interest rate formula is based, as specified in the applicable
Pricing Supplement.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded if necessary to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point being rounded upward
(e.g., 3.876545% (or .03876545) rounded upward to 3.87655% (or .0387655)); and
all dollar amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest cent (with one-half cent being rounded
upward).
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will have daily, weekly, monthly, quarterly, semi-annual or annual
resets of the rate of interest (each an "Interest Reset Period"), which will
be specified in the applicable Pricing Supplement and in the applicable Note.
Unless otherwise specified in the applicable Pricing Supplement, the "Interest
Reset Date" will be, in the case of Floating Rate Notes which reset daily,
each Business Day; in the case of Floating Rate Notes which reset weekly, the
Wednesday of each week (with the exception of weekly reset Treasury Rate
Notes, which will reset the Tuesday of each week, except as specified below);
in the case of Floating Rate Notes which reset monthly, the third Wednesday of
each month; in the case of Floating Rate Notes which reset quarterly, the
third Wednesday of March, June, September and December of each year; in the
case of Floating Rate Notes which reset semi-annually, the third Wednesday of
the two months of each year specified in the applicable Pricing Supplement and
in the applicable Floating Rate Note; and in the case of Floating Rate Notes
which reset annually, the third Wednesday of the month specified in the
applicable Pricing Supplement and in the applicable Floating Rate Note. If any
Interest Reset Date for any Floating Rate Note would otherwise be a day that
is not a Business Day, such Interest Reset Date shall be postponed to the next
succeeding Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the next preceding Business Day.
Except as provided above or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which 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 and in the applicable Floating Rate Note; in the
case of Floating Rate Notes which reset quarterly, on the third Wednesday of
March, June, September and December of each year; in the case of Floating Rate
Notes which reset semi-annually, on the third Wednesday of the two months of
each year specified in the applicable Pricing Supplement and in the applicable
Floating Rate Note; and in the case of Floating Rate Notes which reset
annually, on the third Wednesday of the month specified in the applicable
Pricing Supplement and in the applicable Floating Rate Note (each an "Interest
Payment Date"), and, in each case, at Maturity. If an Interest
S-4
Payment Date with respect to any Floating Rate Note would otherwise fall on a
day that is not a Business Day with respect to such Note, such Interest Payment
Date will be the following Business Day with respect to such Note, except that
in the case of a LIBOR Note, if such day falls in the next succeeding calendar
month, such Interest Payment Date will be the immediately preceding Business Day
with respect to such LIBOR Note.
Interest on a Floating Rate Note will be payable to the person in whose
name the Floating Rate Note is registered at the close of business on the
fifteenth calendar day prior to the Interest Payment Date (the "Floating Rate
Note Record Date"); PROVIDED, HOWEVER, that interest payable at Maturity will
be payable to the person to whom principal shall be payable. Unless otherwise
specified in the applicable Pricing Supplement, the first payment of interest
on any Floating Rate Note issued after a Floating Rate Note Record Date and on
or before the immediately following Interest Payment Date will be made on the
Interest Payment Date following the next succeeding Floating Rate Note Record
Date to the registered owner at the close of business on such next succeeding
Floating Rate Note Record Date.
Unless otherwise indicated in the applicable Pricing Supplement, interest
payments shall be in the amount of interest accrued from and including the
next preceding Interest Payment Date in respect of which interest has been
paid or duly provided for (or from and including the date of issue, if no
interest has been paid with respect to the applicable Note) to but excluding
the applicable Interest Payment Date or Maturity, as the case may be. With
respect to a Floating Rate Note, accrued interest for a specified period is
calculated by multiplying the face amount of such Floating Rate Note by an
accrued interest factor. Such accrued interest factor is computed by adding
the interest factors calculated for each day included in such period. The
interest factor for each such day is computed by dividing the interest rate in
effect on such day by 360, in the case of CD Rate Notes, Commercial Paper Rate
Notes, Prime Rate Notes, LIBOR Notes, and Federal Funds Rate Notes, or by the
actual number of days in the year, in the case of CMT Rate Notes or Treasury
Rate Notes. The interest rate in effect on each day will be (a) if such day is
an Interest Reset Date, the interest rate with respect to the Interest
Determination Date (as defined below) pertaining to such Interest Reset Date,
or (b) if such day is not an Interest Reset Date, the interest rate with
respect to the Interest Determination Date pertaining to the next preceding
Interest Reset Date, subject in either case to any adjustment for a Spread
and/or Spread Multiplier and to any maximum and/or minimum interest rate
limitation; PROVIDED, HOWEVER, that, unless otherwise specified in the
applicable Pricing Supplement, the interest rate in effect for the period from
and including the date of issue to but excluding the first Interest Reset Date
with respect to a Floating Rate Note will be the Initial Interest Rate.
Unless otherwise specified in the applicable Pricing Supplement, the
"Interest Determination Date" pertaining to an Interest Reset Date for CD Rate
Notes, Commercial Paper Rate Notes, Prime Rate Notes, CMT Rate Notes and
Federal Funds Rate Notes will be the second Business Day next preceding such
Interest Reset Date; the Interest Determination Date pertaining to an Interest
Reset Date for LIBOR Notes will be the second London Banking Day next
preceding such Interest Reset Date; and the Interest Determination Date
pertaining to an Interest Reset Date for Treasury Rate Notes will be the day
of the week in which such Interest Reset Date falls on which Treasury Bills
(hereafter defined) are auctioned, except as hereafter provided. 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 Interest Determination Date pertaining to the Interest
Reset Date occurring in the next succeeding week. If an auction falls on a day
that otherwise would be an Interest Reset Date, such Interest Reset Date will
be the next following Business Day. If no auction is held for a particular
week, the Interest Determination Date pertaining to the Interest Reset Date
occurring in that week will be the first Business Day of that week.
S-5
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date," where applicable, pertaining to an Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date, or if any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day prior to the applicable
Interest Payment Date or Maturity, as the case may be.
Unless otherwise provided in the applicable Pricing Supplement, the
Trustee will be the calculation agent (the "Calculation Agent") with respect
to the Floating Rate Notes. Upon the request of the Holder of any Floating
Rate Note, the Calculation Agent will provide the interest rate then in effect
and, if determined, the interest rate which will become effective as a result
of a determination made for the next Interest Reset Date with respect to such
Floating Rate Note.
As mentioned above, the interest rate in effect with respect to a Floating
Rate Note from and including the date of issue to but excluding the first
Interest Reset Date will be the Initial Interest Rate. The interest rate that
will become effective on each subsequent Interest Reset Date will be
determined by the Calculation Agent as follows:
CD RATE NOTES
CD Rate Notes will bear interest at rates to be calculated with reference
to the CD Rate and the Spread and/or Spread Multiplier, if any, in accordance
with the following provisions and the additional or different terms specified
in the applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note (a "Certificate of Deposit Interest Determination Date"), the rate on
such date for negotiable certificates of deposit having the Index Maturity
designated in the applicable Pricing Supplement as such rate shall be
published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication ("H.15(519)"), under the heading "CDs (Secondary Market)," or, if
not so published by 3:00 p.m. New York City time on the Calculation Date
pertaining to such Certificate of Deposit Interest Determination Date, then
the CD Rate shall be the rate on such Certificate of Deposit Interest
Determination Date for negotiable certificates of deposit of the Index
Maturity designated in the applicable Pricing Supplement as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 p.m. Quotations for U.S. Government Securities" or any successor
publication ("Composite Quotations") under the heading "Certificates of
Deposit." If such rate is not published by 3:00 p.m. New York City time on
such Calculation Date, in either H.15(519) or Composite Quotations, then the
CD Rate for that Certificate of Deposit Interest Determination Date shall be
calculated by the Calculation Agent and shall be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m. New York City time on such
Certificate of Deposit Interest Determination Date of three leading nonbank
dealers in negotiable U.S. dollar certificates of deposit in The City of New
York (which may include one or more of the Unaffiliated Agents or one or more
of their affiliates) selected by the Calculation Agent for negotiable
certificates of deposit of major United States money center banks of the
highest credit standing (in the market for negotiable certificates of deposit)
with a remaining maturity closest to the Index Maturity designated in the
applicable Pricing Supplement in a denomination of $5,000,000; PROVIDED,
HOWEVER, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting rates as mentioned in this sentence, the CD Rate with respect
to such Certificate of Deposit Interest Determination Date 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).
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at rates to be calculated
with reference to the Commercial Paper Rate and the Spread and/or Spread
Multiplier, if any, in accordance with the following provisions and the
additional or different terms specified in the applicable Pricing Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date relating to a
Commercial Paper Rate Note (a "Commercial Paper Interest Determination Date"),
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having 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 not so published by 3:00 p.m. New York City time on
the Calculation Date pertaining to such Commercial Paper Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield on such
Commercial Paper Interest Determination Date of the rate for commercial paper of
the specified Index Maturity as published in Composite Quotations under the
heading "Commercial Paper" (with an Index Maturity of one month or three months
being deemed to be equivalent to an Index Maturity of 30 days or 90 days,
respectively). If such rate is not published by 3:00 p.m. New York City time on
such Calculation Date in either H.15(519) or Composite Quotations, then the
Commercial Paper Rate for such Commercial Paper Interest Determination Date
shall be calculated by the Calculation Agent and shall be the Money Market Yield
of the arithmetic mean of the offered rates as of 11:00 a.m. New York City time
on such Commercial Paper Interest Determination Date of three leading dealers in
commercial paper in The City of New York (which may include one or more of the
Unaffiliated Agents or one or more of their affiliates) selected by the
Calculation Agent for commercial paper of the specified Index Maturity placed
for an industrial issuer whose bond rating is "AA" or the equivalent from a
nationally-recognized statistical rating agency; PROVIDED, HOWEVER, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting rates as
mentioned in this sentence, the Commercial Paper Rate with respect to such
Commercial Paper Interest Determination Date will be the same as the Commercial
Paper Rate in effect for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Interest Rate). "Money
Market Yield" shall mean the yield (expressed as a percentage rounded as
aforesaid) calculated in accordance with the following formula:
Money Market Yield = D x 360
------------- 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 interest period for which interest is being
calculated.
CMT RATE NOTES
CMT Rate Notes will bear interest at rates to be calculated with reference
to the CMT Rate and the Spread and/or Spread Multiplier, if any, in accordance
with the following provisions and the additional or different terms specified
in the applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note (a "CMT Rate Interest Determination Date"), the rate displayed on the
Designated CMT Telerate Page (as defined below) under the caption "-- Treasury
Constant Maturities -- Federal Reserve Board Release H.15 -- Mondays
Approximately 3:45 P.M.," under the column for the Designated CMT Maturity
Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055,
such CMT Rate Interest Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the week or the month, as applicable, ended immediately
preceding the week in which the related CMT Rate Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for such CMT Rate Interest Determination Date will be such
treasury constant maturity rate for the Designated CMT Maturity Index as
published in the relevant H.15(519). If such rate is no longer published, or
if not published by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate for such CMT Rate Interest Determination Date will be
such treasury constant maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) for
such CMT Rate Interest Determination Date as may then be published by either
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the Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is
not provided by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate for the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Rate 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 (which may include one or more of
the Unaffiliated Agents or one or more of their affiliates) 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 Rate Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market closing offer side prices
as of approximately 3:30 P.M., New York City time, on the CMT Rate 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 the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; PROVIDED, HOWEVER, that if fewer
than three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate with respect to such CMT Rate Interest
Determination Date will be the same as the CMT Rate in effect for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the Initial Interest Rate). 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 (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519).
If no such page is specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page shall be 7052, or such other page as may replace
such page, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
PRIME RATE NOTES
Prime Rate Notes will bear interest at rates to be calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any,
in accordance with the following provisions and the additional or different
terms specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a
Prime Rate Note (a "Prime Rate Interest
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Determination Date"), the rate on that day set forth in H.15(519) under the
heading "Bank Prime Loan," or if not so published by 3:00 p.m. New York City
time on the Calculation Date pertaining to such Prime Rate Interest
Determination Date, then the Prime Rate shall be determined by the Calculation
Agent and will be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the display designated "Screen NYMF Page"
by Reuters Monitor Money Rates Service ("Reuters"), or such other page as may
replace such page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks, as such bank's prime rate or
base lending rate as in effect for that Prime Rate Interest Determination Date.
If fewer than four such rates appear on Reuters Screen NYMF Page for that Prime
Rate Interest Determination Date, the Prime Rate will be determined by the
Calculation Agent and will 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 that Prime Rate Interest Determination Date by three major
money center banks in The City of New York selected by the Calculation Agent. If
fewer than three quotations are provided, then the Prime Rate shall be
calculated by the Calculation Agent and shall be determined as the arithmetic
mean of the prime rates so quoted in The City of New York on such date by three
substitute banks or trust companies organized and doing business under the laws
of the United States or any State thereof, each having total equity capital of
at least $500,000,000 and being subject to supervision or examination by a
Federal or State authority, selected by the Calculation Agent; PROVIDED,
HOWEVER, that if the banks or trust companies selected as aforesaid by the
Calculation Agent are not quoting rates as mentioned in this sentence, the Prime
Rate with respect to such Prime Rate Interest Determination Date will be the
same as the Prime Rate in effect for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial Interest
Rate).
LIBOR NOTES
LIBOR Notes will bear interest at rates to be calculated with reference to
LIBOR and the Spread and/or Spread Multiplier, if any, in accordance with the
following provisions and the additional or different terms specified in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR"
will be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note (a "LIBOR Interest Determination Date"), LIBOR will be, as specified
in the applicable Pricing Supplement, either (a) the arithmetic mean (as
determined by the Calculation Agent) of the offered rates, as appearing on
the Reuters Screen LIBO Page, or such other page as may replace such page,
at approximately 11:00 a.m. London time on such LIBOR Interest
Determination Date, 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, if at least two such offered rates appear on the
Reuters Screen LIBO Page ("LIBOR-Reuters"), or (b) the rate 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 that appears
as of 11:00 a.m. London time on such LIBOR Interest Determination Date on
the display screen designated "Page 3750" by Dow Jones Telerate Service
("Telerate"), or such other page as may replace such page on that service
or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank
offered rates for U.S. dollar deposits ("LIBOR-Telerate"). If neither
LIBOR-Reuters nor LIBOR-Telerate is specified in the applicable Pricing
Supplement, then LIBOR will be determined as if LIBOR-Telerate had been
specified. If fewer than two offered rates appear on the Reuters Screen
LIBO Page, or if no rate appears on Telerate Page 3750, as applicable,
then LIBOR for such LIBOR Interest Determination Date will be determined
as if the parties had specified the rate described in (ii) below.
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(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Reuters Screen LIBO Page as
described in (i)(a) above, or on which no rate appears on Telerate Page
3750 as specified in (i)(b) above, as applicable, LIBOR will be
determined on the basis of the rates at approximately 11:00 a.m. London
time on such LIBOR Interest Determination Date at which deposits in U.S.
dollars are offered to prime banks in the London interbank market by four
major banks in the London interbank market selected by the Calculation
Agent 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, and in a principal
amount of not less than $1,000,000 that is representative for a single
transaction in such market at such time. The Calculation Agent will
request the principal London office of each of such banks to provide a
quotation of its rate. If at least two such quotations are provided, then
LIBOR for such LIBOR Interest Determination Date will be the arithmetic
mean of such quotations. If fewer than two such quotations are provided,
then 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
in The City of New York selected by the Calculation Agent for loans in
U.S. dollars to leading European banks having the Index Maturity specified
in the applicable Pricing Supplement commencing on the second London
Banking Day immediately following such LIBOR Interest Determination Date,
and in a principal amount of not less than $1,000,000 that is
representative for a single transaction in such market at such time;
PROVIDED, HOWEVER, that if the banks selected as aforesaid by the
Calculation Agent are not quoting rates as mentioned in this sentence,
then LIBOR with respect to such LIBOR Interest Determination Date will be
the same as LIBOR in effect for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial
Interest Rate).
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at rates to be calculated with
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any, in accordance with the following provisions and the additional or
different terms specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note (a "Treasury Interest Determination Date"), the rate from
the auction held on such Treasury Interest Determination Date (the "Auction")
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 "Treasury Bills -- Auction Average
(Investment)," or if not so published by 3:00 p.m. New York City time on the
Calculation Date pertaining to such Treasury Interest Determination Date, then
the Treasury Rate shall be the auction average rate of such Treasury Bills
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the
Auction of Treasury Bills having the Index Maturity specified in the
applicable Pricing Supplement are not published or announced as provided above
by 3:00 p.m. New York City time on such Calculation Date, or if no such
Auction is held, then the Treasury Rate shall be calculated by the Calculation
Agent 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 Interest
Determination Date of three leading primary United States government
securities dealers (which may include one or more of the Unaffiliated Agents
or one or more of their affiliates) selected by the 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 the Calculation Agent are not quoting rates as mentioned in this sentence,
the Treasury Rate with respect to such Treasury Interest Determination Date
will be the same as the Treasury Rate in effect for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period,
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the Initial Interest Rate). Treasury Bills are usually sold at auction on Monday
of each week unless that day is a legal holiday, in which case the auction is
usually held on the following Tuesday, except that such auction may be held on
the preceding Friday.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at rates to be calculated with
reference to the Federal Funds Rate and the Spread and/or Spread Multiplier,
if any, in accordance with the following provisions and the additional or
different terms specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to
a Federal Funds Rate Note (a "Federal Funds Interest Determination Date"), the
rate on that day for Federal Funds as such rate shall be published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not so
published by 3:00 p.m. New York City time on the Calculation Date pertaining
to such Federal Funds Interest Determination Date, then the Federal Funds Rate
shall be the rate on such Federal Funds Interest Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate." If such rate is not published by 3:00 p.m. New York City time on such
Calculation Date, in either H.15(519) or Composite Quotations, then the
Federal Funds Rate for such Federal Funds Interest Determination Date shall be
calculated by the Calculation Agent and shall be the arithmetic mean of the
offered rates as of 9:00 a.m. New York City time on such Federal Funds
Interest Determination Date arranged by each of three leading brokers of
Federal Funds transactions in The City of New York (which may include one or
more of the Unaffiliated Agents or one or more of their affiliates) selected
by the Calculation Agent for the last transaction in overnight Federal Funds;
PROVIDED, HOWEVER, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting rates as mentioned in this sentence, the
Federal Funds Rate with respect to such Federal Funds Interest Determination
Date will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Interest Rate).
REDEMPTION AND REPAYMENT
The Notes will be subject to redemption by the Company on and after the
initial redemption date, if any, fixed at the time of sale and set forth in
the applicable Pricing Supplement and in the applicable Note (the "Initial
Redemption Date"). If no Initial Redemption Date is indicated with respect to
a Note, such Note will not be redeemable prior to Stated Maturity. On and
after the Initial Redemption Date with respect to any Note, such Note will be
redeemable in whole or from time to time in part in increments of $1,000 at
the option of the Company at a redemption price (the "Redemption Price")
determined in accordance with the following paragraph, together with interest
accrued thereon to the date of redemption, on notice given no more than 60
days nor less than 30 days prior to the date of redemption.
The Redemption Price for each Note subject to redemption initially shall
be equal to a percentage (the "Initial Redemption Percentage") of the
principal amount of such Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date with respect to such Note by a
percentage (the "Annual Redemption Percentage Reduction") of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount. The Initial Redemption Percentage and any Annual Redemption Percentage
Reduction with respect to each Note subject to redemption prior to Stated
Maturity will be fixed at the time of sale and set forth in the applicable
Pricing Supplement and in the applicable Note.
The Notes will be subject to repayment at the option of each Holder
thereof in accordance with the terms of the Notes on their respective optional
repayment dates, if any, fixed at the time of sale and set forth in the
applicable Pricing Supplement and in the applicable Note (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
Stated Maturity. On any Optional
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Repayment Date with respect to any Note, such Note will be repayable in whole,
or in part in increments of $1,000, at the option of the Holder thereof at a
price equal to 100% of the principal amount to be repaid, together with interest
accrued thereon to the Optional Repayment Date, on notice given by such Holder
and received by the Company not more than 60 days nor less than 20 days prior to
the Optional Repayment Date. Any such notice shall be delivered to the office or
agency of the Company maintained with respect to the Notes in The City of New
York and shall be duly executed by the Holder of the Note or by his attorney
duly authorized in writing. Such notice shall consist of the Note itself with
the form on such Note entitled "Option to Elect Repayment" duly completed;
PROVIDED, HOWEVER, that in the case of Book-Entry Notes, such notice may consist
of a letter or other writing in the same form as the "Option to Elect Repayment"
on such Note, duly completed, provided that such letter or other writing is
accompanied or preceded by delivery of the Note to be repaid. Such notice duly
received by the Company shall be irrevocable. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of any Note for
repayment will be determined by the Company, whose determination will be final
and binding.
BOOK-ENTRY NOTES
The Notes may be issued in whole or in part as Book-Entry Notes
represented by one or more global Debt Securities. Upon issuance, all Fixed
Rate Notes in book-entry form having the same date of issue, interest rate,
maturity and other terms will be represented by a single Book-Entry Note and
all Floating Rate Notes in book-entry form having the same interest rate basis
or formula, date of issue, Initial Interest Rate, Interest Payment Dates,
Index Maturity, Interest Reset Dates, Spread and/or Spread Multiplier, if any,
maximum and/or minimum interest rate limitations, if any, maturity and other
terms will be represented by a single Book-Entry Note. Each global Debt
Security representing Book-Entry Notes will be deposited with, or on behalf
of, the Depositary or such other depositary as is specified in the applicable
Pricing Supplement and registered in the name of the Depositary or such other
depositary (or their nominees). Book-Entry Notes will not be exchangeable for
Certificated Notes and, except under limited circumstances, will not otherwise
be issuable as Certificated Notes. See "Description of Debt
Securities -- Global Debt Securities" in the accompanying Prospectus. If at
any time individual Certificated Notes are issued, they will be issued in
denominations of $1,000 and integral multiples thereof.
The Depositary has advised the Company and the Agents that it is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. The Depositary was created to hold securities for
persons that have accounts with the Depositary ("Participants") and 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 Unaffiliated Agents), banks, trust companies, clearing
corporations and certain other organizations, some of which (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. Persons who are not Participants
may beneficially own interests in securities held by the Depositary only
through Participants.
UNITED STATES TAX CONSIDERATIONS
The following summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
on laws, regulations, rulings and decisions now in effect, all of which are
subject to change. It deals only with Notes held as capital assets and does
not deal with persons in special tax situations, such as financial
institutions, insurance companies, dealers
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in securities or currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. Except in certain limited
respects, it does not deal with holders other than original purchasers. Persons
considering the purchase of the Notes should consult their tax advisors
concerning the application of United States federal income tax laws to their
particular situations as well as any consequences arising under the laws of any
other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate or trust the income of which is
subject to United States federal income taxation regardless of its source or
(iv) any other person whose income or gain in respect of a Note is effectively
connected with the conduct of a United States trade or business. As used
herein, the term "non-U.S. Holder" means a holder of a Note that is not a U.S.
Holder.
U.S. HOLDERS
INTEREST. Payments of interest on a Note generally will be taxable to a
U.S. Holder as ordinary interest income at the time such payments are accrued
or are received (in accordance with the U.S. Holder's method of accounting for
tax purposes).
ORIGINAL ISSUE DISCOUNT. Notes with a term greater than one year may be
issued with original issue discount for federal income tax purposes.
Generally, original issue discount will arise if the stated redemption price
at maturity (normally the principal amount) of a Note exceeds its issue price
by more than a DE MINIMIS amount or if a Note has certain interest payment
characteristics. If a Note is issued with original issue discount, a U.S.
Holder of the Note will be required to include amounts in gross income for
federal income tax purposes in advance of receipt of the cash payments to
which such amounts are attributable. The amount of original issue discount to
be included in income in any tax period will be determined using a constant
yield to maturity method. Any amounts included in income as original issue
discount will increase a U.S. Holder's tax basis in the Note.
A U.S. Holder who purchases a Note with original issue discount for an
amount greater than its adjusted issue price, as of the purchase date, may be
considered to have purchased such Note at an "acquisition premium." The
adjusted issue price of a Note generally equals the issue price of the Note
increased by any accrued original issue discount. Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder
must include in its gross income with respect to the Note for any taxable year
(or portion thereof in which such U.S. Holder holds the Note) will be reduced
(but not below zero) by the portion of the acquisition premium properly
allocable to the period.
MARKET DISCOUNT. If a U.S. Holder purchases a Note for an amount that is
less than its adjusted issue price, the amount of the difference will be
treated as "market discount" for federal income tax purposes, unless such
difference is less than a specified DE MINIMIS amount. Under the market
discount rules, a U.S Holder will be required to treat any gain on the sale,
exchange, retirement or other disposition of a Note as ordinary income to the
extent of the market discount which has not previously been included in income
(pursuant to an election by the U.S. Holder to include such market discount in
income as it accrues) and is treated as having accrued on the Note at the time
of such payment or disposition. Market discount is accrued on a straight-line
basis unless the U.S. Holder elects to accrue market discount under a constant
yield method. If a Note is disposed of by gift or in certain nonrecognition
transactions, accrued market discount will be recognized as if the Note had
been sold for a price equal to its fair market value. In addition, the U.S.
Holder may be required to defer, until the maturity of the Note or its earlier
disposition in a taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness incurred or maintained to purchase or
carry such Note.
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AMORTIZABLE BOND PREMIUM. If a U.S. Holder purchases a Note for an amount
that is greater than the amount payable at maturity, the U.S. Holder will be
considered to have purchased the Note with "amortizable bond premium" equal in
amount to such excess and may elect (in accordance with applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code") ) to amortize
such premium (as an offset to interest income), using a constant yield method,
over the remaining term of the Note (where such Note is not optionally
redeemable prior to its maturity date).
DISPOSITION OF A NOTE. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize taxable gain
or loss equal to the difference between the amount realized on the sale,
exchange or retirement and such U.S. Holder's adjusted tax basis in the Note.
Such gain or loss generally will be long-term capital gain or loss if the Note
is held for more than one year.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States federal income
taxes on payments of principal or interest (including original issue discount,
if any) on a Note, unless such non-U.S. Holder is a direct or indirect 10% or
greater shareholder of the Company, a controlled foreign corporation related
to the Company or a bank receiving interest described in section 881(c)(3)(A)
of the Code. To qualify for the exemption from taxation, the last United
States payor in the chain of payment prior to payment to a non-U.S. Holder
(the "Withholding Agent") must have received in the year in which a payment of
interest or principal occurs, or in either of the two preceding calendar
years, a statement that (i) is signed by the beneficial owner of the Note
under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an Internal Revenue Service ("IRS") Form W-8 or a
substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However,
in such case, the signed statement must be accompanied by a copy of the IRS
Form W-8 or the substitute form provided by the beneficial owner to the
organization or institution. The Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation is related to holders thereof.
Generally, a non-U.S. Holder will not be subject to federal income taxes
on any amount which constitutes capital gain upon retirement or disposition of
a Note, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder. However, a
non-U.S. Holder who is a nonresident alien individual present in the United
States for a period or periods aggregating 183 days or more during the tax
year will be subject to a 30% tax on capital gains. Certain other exceptions
may be applicable, and a non-U.S. Holder should consult its tax advisor in
this regard.
The Notes will not be includable in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the
Company or, at the time of such individual's death, payments in respect of the
Notes would have been effectively connected with the conduct by such
individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States federal income tax at a rate of 31%
may apply to payments made in respect of the Notes to registered owners who
are not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Notes to a U.S. Holder must be reported to the
IRS, unless the U.S. Holder is an exempt recipient or establishes an
exemption. Compliance with the identification procedures described in the
preceding section
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would establish an exemption from backup withholding for those non-U.S. Holders
who are not exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a
non-U.S. Holder (and certain other conditions are met). Such a sale must also
be reported by the broker to the IRS, unless either (i) the broker determines
that the seller is an exempt recipient or (ii) the seller certifies its
non-U.S. status (and certain other conditions are met). Certification of the
registered owner's non-U.S. status would be made normally on an IRS Form W-8
under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to
a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax liability provided the
required information is furnished to the IRS.
PLAN OF DISTRIBUTION OF NOTES
Under the terms of Distribution Agreements, the Notes are being offered on
a continuing basis by the Company through the Agents, each of which has agreed
to use its reasonable best efforts to solicit offers to purchase the Notes.
The Company will pay to each of the Unaffiliated Agents a commission not to
exceed .75% of the principal amount of each Note, depending on its maturity,
sold through such Unaffiliated Agent. The Company may also sell Notes to an
Unaffiliated Agent as principal at a discount from the principal amount
thereof for resale to investors and other purchasers. No commissions will be
paid to AGFIC, which is an affiliate of the Company acting as an Agent. The
Company will have the sole right to accept offers to purchase Notes and may
reject any such offer, in whole or in part. Each Agent shall have the right,
in its discretion reasonably exercised, without notice to the Company, to
reject any offer to purchase Notes received by it, in whole or in part. The
Notes will be issued only in fully registered form at 100% of the principal
amount thereof, unless otherwise specified in the applicable Pricing
Supplement.
In addition, the Unaffiliated Agents may offer the Notes they have
purchased as principal to other dealers. The Unaffiliated Agents may sell
Notes to any dealer at a discount and, unless otherwise specified in the
applicable Pricing Supplement, such discount allowed to any dealer will not be
in excess of the discount to be received by such Unaffiliated Agent from the
Company. Unless otherwise indicated in the applicable Pricing Supplement, any
Note sold to an Unaffiliated Agent as principal will be purchased by such
Unaffiliated Agent at a price equal to 100% of the principal amount thereof
less a percentage equal to the commission applicable to an agency sale of a
Note of identical maturity, and may be resold by the Unaffiliated Agent to
investors and other purchasers from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale or may be resold to certain
dealers as described above. After the initial public offering of Notes to be
resold to investors and other purchasers, the public offering price (in the
case of Notes to be resold at a fixed public offering price), concession and
discount may be changed.
The Company has reserved the right to sell the Notes through one or more
other agents or to other persons as principal. In any such events, the names
of the other agents or principals will be set forth in the applicable Pricing
Supplements. The Company also has reserved the right to sell Notes directly to
investors on its own behalf.
The Agents and any other agents or principals may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 (the "1933
Act"). The Company has agreed to indemnify the Agents and may agree to
indemnify such other agents or principals against and contribute toward
certain liabilities, including liabilities under the 1933 Act. The Company has
agreed to reimburse the Agents for certain expenses.
S-15
Each of the Unaffiliated Agents may engage in transactions with, or
perform services for, the Company in the ordinary course of business.
Each of the Unaffiliated Agents may from time to time purchase and sell
Notes in the secondary market, but is 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, one or more of the
Unaffiliated Agents may make a market in the Notes.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in The City of New York on the date of settlement.
The Company reserves the right to withdraw, cancel or modify the offer
without notice.
S-16
<PAGE>
$2,000,000,000
AMERICAN GENERAL FINANCE CORPORATION
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
--------------
American General Finance Corporation (the "Company") may offer from time
to time, either jointly or separately, (i) up to $2,000,000,000 aggregate
principal amount of its debt securities (the "Debt Securities") and (ii)
warrants (without limitation as to number or offering price) to purchase such
Debt Securities (the "Warrants") (the Debt Securities and the Warrants being
herein referred to collectively as the "Securities"). The Debt Securities will
be direct, unsecured obligations of the Company and will rank equally with all
other unsecured and unsubordinated indebtedness of the Company. See
"Description of Debt Securities."
The Securities may be offered as separate series in amounts, at prices and
on terms to be determined at the time of sale. The title, aggregate principal
amount, initial public offering price, denominations, maturity, rate (which
may be fixed or variable) and time of payment of any interest, any terms for
redemption at the option of the Company or repayment at the option of the
holder, any terms for sinking fund payments, any listing on a securities
exchange, any exercise provisions and any other terms in connection with the
offering and sale of the Securities in respect of which this Prospectus is
being delivered will be set forth in one or more supplements to this
Prospectus (each, a "Prospectus Supplement").
The Company may sell the Securities directly, through agents designated
from time to time or through underwriters or dealers. If any agents of the
Company or any dealers or underwriters are involved in the sale of the
Securities in respect of which this Prospectus is being delivered, the names
of such agents, dealers or underwriters and any applicable agent's commission,
dealer's purchase price, or underwriter's discount will be set forth in, or
may be calculated on the basis set forth in, the applicable Prospectus
Supplement. The net proceeds to the Company from such sale will be the
purchase price of such Securities less such commission in the case of an
agent, the purchase price of such Securities in the case of a dealer or the
public offering price less such discount in the case of an underwriter, and
less, in each case, other issuance expenses. See "Plan of Distribution" for
possible indemnification arrangements for any such agents, dealers and
underwriters.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
-------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER 14, 1994.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT.
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 filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's Regional Offices at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials may be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, at prescribed rates. In addition, such
material may also be inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus, which constitutes part of the
Registration Statement, 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. Statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-6155), are incorporated by
reference into this Prospectus and shall be deemed to be a part hereof:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1994 (as amended by Form 10-Q/A dated May 19, 1994), June
30, 1994 and September 30, 1994; and
(c) the Company's Current Reports on Form 8-K dated February 1, 1994,
April 27, 1994, July 26, 1994 and October 25, 1994 (which relate to
earnings releases of the Company); and March 22, 1994, April 6, 1994, May
17, 1994, June 8, 1994, September 26, 1994 and November 10, 1994 (which
relate to prior issuances of debt securities of the Company or to its
Medium-Term Notes, Series C).
Each document 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 Securities made hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such document.
Any statement contained herein, in a Prospectus Supplement or in a
document incorporated or deemed to be incorporated by reference herein, shall
be deemed to be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein,
in a Prospectus Supplement or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company files with the Commission Annual Reports on Form 10-K
containing financial information that has been audited and reported upon, with
an opinion expressed, by independent auditors. Such Annual Reports are
available from the Company upon request.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which are incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to the Company, 2929 Allen
Parkway, Houston, Texas 77019, Attention: Treasury Department, telephone (713)
522-1111.
2
THE COMPANY
American General Finance Corporation is a financial services holding
company, the subsidiaries of which are engaged primarily in the consumer
finance and credit insurance businesses.
The Company was incorporated under the laws of the State of Indiana in
1927 as successor to a business started in 1920. All of the common stock of
the Company is owned by American General Finance, Inc. ("AGFI"), which was
incorporated under the laws of the State of Indiana in 1974. Since 1982, AGFI
has been a direct or indirect wholly-owned subsidiary of American General
Corporation, a consumer financial services organization incorporated in the
State of Texas in 1980 as the successor to American General Insurance Company,
a Texas insurance company incorporated in 1926.
At September 30, 1994, the Company and its subsidiaries had over 1,200
offices in 39 states, Puerto Rico and the Virgin Islands. Total finance
receivables, net of unearned finance charges, at September 30, 1994 were $6.3
billion.
The principal executive offices of the Company are located at 601 N.W.
Second Street, Evansville, Indiana 47708, and its telephone number is (812)
424-8031.
USE OF PROCEEDS
Except as may otherwise be provided in an applicable Prospectus
Supplement, the net proceeds to be received by the Company from the sale of
the Securities being offered hereby will be used to repay borrowings incurred
in, or to finance the growth of receivables arising in connection with, the
Company's consumer finance operations or will be available for the purchase of
receivables or for other general corporate purposes. Pending the uses
described above, such net proceeds may be temporarily invested in short-term
marketable securities.
3
SELECTED FINANCIAL INFORMATION
The following selected financial information is derived from consolidated
financial statements of the Company and its subsidiaries which have been
audited by Ernst & Young LLP, independent auditors. The information should be
read in conjunction with the consolidated financial statements, related notes,
and other financial information incorporated herein by reference. See
"Incorporation by Reference."
(DOLLARS IN THOUSANDS)
YEARS ENDED DECEMBER 31,
--------------------------------------
1993 1992 1991
----------- ---------- ----------
SELECTED FINANCIAL INFORMATION
Revenues:
Finance charges ............... $ 974,276 $ 890,989 $ 801,040
Insurance ..................... 142,333 118,950 110,069
Other ......................... 96,308 82,919 82,296
----------- ---------- ----------
Total revenues ............ 1,212,917 1,092,858 993,405
----------- ---------- ----------
Expenses:
Interest expense .............. 368,986 378,679 375,349
Operating expenses ............ 304,037 280,605 243,619
Provision for finance
receivable losses ........... 133,577 107,608 96,732
Insurance losses and loss
adjustment expenses ......... 79,214 66,603 59,410
----------- ---------- ----------
Total expenses ............ 885,814 833,495 775,110
----------- ---------- ----------
Income before provision for
income taxes and cumulative
effect of accounting changes .... 327,103 259,363 218,295
Provision for income taxes ........ 124,884 99,192 82,458
----------- ---------- ----------
Income before cumulative effect
of accounting changes ........... 202,219 160,171 135,837
Cumulative effect of accounting
changes ......................... (12,591) -- --
----------- ---------- ----------
Net income ................ $ 189,628 $ 160,171 $ 135,837
=========== ========== ==========
DECEMBER 31,
--------------------------------------
1993 1992 1991
----------- ---------- ----------
Finance receivables, net of
unearned finance charges ............ $ 5,871,648 $5,607,078 $5,137,942
Total assets .......................... 7,504,798 6,999,570 6,464,519
Short-term debt ....................... 1,647,461 1,718,839 2,030,070
Long-term debt ........................ 3,965,772 3,558,401 2,776,561
Preferred stock ....................... -- -- 4,000
Common shareholder's equity ........... 1,201,889 1,120,494 1,086,756
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical consolidated ratios of
earnings to fixed charges of the Company and its subsidiaries for the periods
indicated:
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, ----------------------------------------
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
1.9 1.9 1.7 1.6 1.5 1.4
For purposes of computing the ratio of earnings to fixed charges, earnings
represent the aggregate of net income, provision for income taxes, cumulative
effect of accounting changes and fixed charges. Fixed charges represent
interest expense and implicit interest in rents.
4
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture dated as of
October 1, 1994 (the "Indenture") between the Company and The Chase Manhattan
Bank (National Association), as trustee (the "Trustee").
The form of the Indenture is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The statements and descriptions
under this heading regarding provisions of the Debt Securities and the
Indenture are summaries thereof, do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the Indenture and the Debt Securities, including the definitions therein of
certain terms. Certain capitalized terms used herein are defined in the
Indenture. Wherever particular sections of the Indenture or terms that are
defined in the Indenture are referred to herein or in a Prospectus Supplement,
it is intended that such sections or defined terms shall be incorporated by
reference herein or therein, as the case may be.
The Indenture allows for the issuance of Debt Securities denominated in
foreign currencies and/or in bearer form. The Company does not intend to issue
any such Debt Securities pursuant to this Prospectus. Accordingly, certain
provisions of the Indenture relating to such Debt Securities are not described
herein.
GENERAL
The Debt Securities will be direct, unsecured and unsubordinated
obligations of the Company, and may be issued in one or more series. The
particular terms of each series of Debt Securities, as well as any
modifications or additions to the general terms of the Debt Securities as
described herein which may be applicable in the case of a particular series of
Debt Securities, are described in the Prospectus Supplement relating to such
series of Debt Securities. Accordingly, for a description of the terms of a
particular series of Debt Securities, reference must be made to both the
Prospectus Supplement relating thereto and to the description of Debt
Securities set forth in this Prospectus.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities being offered thereby: (1) the designation of such Debt
Securities; (2) any limit on the aggregate principal amount of such Debt
Securities and the series in which such Debt Securities shall be included; (3)
the percentage of their principal amount at which such Debt Securities will be
issued and, in the case of Original Issue Discount Securities, the principal
amount thereof payable upon acceleration of the maturity thereof; (4) the date
or dates on which such Debt Securities will mature or the manner in which such
dates are determined; (5) the rate or rates per annum (which may be fixed or
variable) at which such Debt Securities will bear interest, if any, or the
method of determining such rate or rates; (6) the date from which such
interest, if any, on such Debt Securities will accrue, the dates on which such
interest, if any, will be payable, the date on which payment of such interest,
if any, will commence and the record dates for such interest payment dates, if
any; (7) the terms of any mandatory or optional redemption (including any
sinking fund provisions or any provisions for repayment at the option of a
Holder); (8) whether such Debt Securities are to be issued initially or
permanently in the form of a global Debt Security and, if so, the identity of
the Depository (hereinafter defined) for such global Debt Security; and (9)
any other terms of such Debt Securities not inconsistent with the provisions
of the Indenture. Debt Securities may also be issued under the Indenture upon
the exercise of Warrants. See "Description of Warrants."
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder or of any particular series of such
Debt Securities and provides that, in addition to the Debt Securities,
additional securities may be issued thereunder from time to time in one or
more series up to the aggregate principal amount which may be authorized from
time to time by the Company. (Section 301 of the Indenture) All Debt
Securities issued under the Indenture will rank equally and ratably with any
additional Debt Securities issued thereunder. Because the Company is a holding
company, the right of the Company, and hence the right of creditors of the
Company (including the Holders of the Debt Securities), to participate in any
distribution of the assets of any
5
subsidiary upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the
extent that claims of the Company itself as a creditor of the subsidiary may
be recognized.
Unless the Prospectus Supplement relating to a particular issuance of Debt
Securities specifies otherwise, Debt Securities will be issued in
denominations of $1,000 and integral multiples thereof. No service charge will
be made for any transfer or exchange 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. (Sections 302 and 305 of the
Indenture)
Some of the Debt Securities may be issued under the Indenture as Original
Issue Discount Securities (bearing no interest or interest at a rate which at
the time of issuance is below market rates) to be sold at a substantial
discount below their stated principal amount. Federal income tax consequences
and other special considerations applicable to any such Original Issue
Discount Securities will be described in the Prospectus Supplement relating
thereto.
Unless otherwise indicated in the Prospectus Supplement relating to a
particular series of Debt Securities, the principal of and any premium or
interest on Debt Securities issued in certificated form will be payable, and
the transfer of Debt Securities will be registrable, at the office of the
Trustee designated for that purpose in New York City, provided that, at the
option of the Company, interest may be paid by check, wire transfer or any
other means permitted in the form of such Debt Securities. In the case of
global Debt Securities (which will be registered in the name of the Depository
or its nominee), payment will be made to the Depository or its nominee in
accordance with the then-existing arrangements between the paying agent(s) for
such global Debt Securities and the Depository. See "-- Global Debt
Securities." (Sections 305, 307 and 1002 of the Indenture)
The Indenture does not contain any provision that limits the ability of
the Company to incur indebtedness or that would afford Holders of Debt
Securities protection in the event of a highly leveraged or similar
transaction involving the Company, except as described herein under
"-- Limitations on Liens" and "-- Merger and Consolidation." Reference is made
to the Prospectus Supplement relating to the series of Debt Securities offered
thereby for information with respect to any deletions from, modifications of,
or additions to, the Events of Default or covenants that may be included in
the terms of such series of Debt Securities, including any addition of a
covenant or other provision providing event risk or similar protection.
Under the Indenture, the Company will have the ability, in addition to the
ability to issue Debt Securities with terms different from those of Debt
Securities previously issued, to "reopen" a previous issue of a series of Debt
Securities and issue additional Debt Securities of such series.
LIMITATIONS ON LIENS
The Indenture provides that neither the Company nor a Subsidiary shall
create, assume or suffer to exist, except in favor of the Company or a
Wholly-owned Subsidiary, any Mortgage upon any of its or their property,
without equally and ratably securing the Debt Securities, but this restriction
does not apply to certain permitted encumbrances described in the Indenture,
including, without limitation, (a) Mortgages existing on October 1, 1994, (b)
any Mortgages on properties or assets, in addition to those otherwise
permitted, securing Indebtedness which at the time incurred does not, together
with all other Indebtedness so secured and not otherwise permitted, exceed in
the aggregate 10% of Consolidated Net Worth, (c) any Mortgages on properties
or assets securing Indebtedness of Subsidiaries, created in the ordinary
course of business by such Subsidiaries, if, as a matter of practice, such
Subsidiaries prior to becoming Subsidiaries had incurred Indebtedness on a
secured basis, (d) purchase money Mortgages on property acquired or
constructed by the Company or any of its Subsidiaries after October 1, 1994 to
secure the purchase price thereof (or to secure Indebtedness incurred for the
purpose of financing the acquisition or construction thereof), Mortgages
existing on any property at the time of acquisition, Mortgages existing on any
property of any corporation at the time it becomes a Subsidiary, and any
Mortgage with respect to property acquired after October 1,
6
1994, in any amount (with respect to any Mortgage described in this clause (d))
not exceeding 75% of the cost of any property, including improvements thereon,
so acquired or constructed, (e) refundings or extensions of any permitted
Mortgage, and (f) any Mortgage created by the Company or any Subsidiary in
connection with a transaction intended by the Company or such Subsidiary to be
one or more sales of properties or assets of the Company or such Subsidiary;
provided that such Mortgage shall only apply to the properties or assets
involved in such sale or sales, the income therefrom and/or the proceeds
thereof. (Section 1009 of the Indenture) "Mortgage" means any mortgage, pledge,
lien, security interest, conditional sale or other title retention agreement or
other similar encumbrance. (Section 101 of the Indenture)
EVENTS OF DEFAULT, NOTICE AND WAIVER
If an Event of Default with respect to any Debt Securities of any series
Outstanding under the Indenture shall occur and be continuing, the Trustee or
the Holders of at least 25% in principal amount of the Debt Securities of that
series Outstanding may declare, by notice as provided in the Indenture, the
principal amount (or such lesser amount as may be provided for in the Debt
Securities of that series) of all the Debt Securities of that series
Outstanding to be due and payable immediately; provided, that in the case of
an Event of Default involving certain events in bankruptcy, insolvency or
reorganization, acceleration is automatic; and, provided further, that if all
Events of Default with respect to Debt Securities of that series shall have
been cured, or waived as hereinafter provided, and all amounts due otherwise
than on account of such acceleration shall have been paid or deposited with
the Trustee, the Holders of a majority in aggregate principal amount of the
Debt Securities of that series then Outstanding may rescind and annul such
acceleration and its consequences. (Section 502 of the Indenture) Upon
acceleration of the Maturity of Original Issue Discount Securities, an amount
less than the principal amount thereof will become due and payable. Reference
is made to the Prospectus Supplement relating to any Original Issue Discount
Securities for the particular provisions relating to acceleration of the
Maturity thereof. Any past default under the Indenture with respect to Debt
Securities of any series, and any Event of Default arising therefrom, may be
waived by the Holders of a majority in principal amount of all Debt Securities
of such series Outstanding under the Indenture, except in the case of (i)
default in the payment of the principal of or any premium or interest on any
Debt Securities of such series or (ii) default in respect of a covenant or
provision which may not be amended or modified without the consent of the
Holder of each Outstanding Debt Security of such series affected. (Section 513
of the Indenture)
An Event of Default with respect to any series of Debt Securities is
defined in the Indenture as being: (a) default in the payment of any interest
upon any Debt Security of such series when such interest becomes due and
payable, and continuance of such default for a period of 30 days; (b) default
in the payment of the principal of and any premium on any Debt Security of
such series when it becomes due and payable, whether at the Stated Maturity,
upon redemption or repayment, by declaration or otherwise; (c) default in the
making of any sinking fund payment on any Debt Security of such series; (d)
default in the performance or breach of any covenant or warranty of the
Company contained in the Indenture for the benefit of such series or in the
Debt Securities of such series, and the continuance of such default for 60
days after written notice has been given as provided in the Indenture; (e)
acceleration of the maturity of indebtedness for money borrowed of the Company
in a principal amount in excess of $25,000,000 if such acceleration is not
annulled or such indebtedness is not discharged within 10 days after written
notice as provided in the Indenture; (f) certain events in bankruptcy,
insolvency or reorganization; and (g) any other Event of Default provided with
respect to the Debt Securities of such series. (Section 501 of the Indenture)
The Trustee is required, within 90 days after the occurrence of a default
with respect to the Debt Securities of any series which is known to the
Trustee and is continuing (without regard to any grace period or notice
requirements), to give to the Holders of the Debt Securities of such series
notice of such default; provided, however, that, except in the case of a
default in the payment of the principal of or any premium or interest on any
Debt Securities of such series or in the payment of any sinking
7
fund installment with respect to the Debt Securities of such series, the Trustee
shall be protected in withholding such notice if it in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Debt Securities of such series; and provided further that, in the case of any
default referred to in clause (d) of the preceding paragraph with respect to the
Debt Securities of such series, no such notice to Holders shall be given until
at least 30 days after the occurrence thereof. (Section 602 of the Indenture)
The Trustee, subject to its duties during default to act with the required
standard of care, may require indemnification by the Holders of the Debt
Securities of any series with respect to which a default has occurred before
proceeding to exercise any right or power under the Indenture at the request
of the Holders of the Debt Securities of such series. (Sections 601 and 603 of
the Indenture) Subject to such right of indemnification and to certain other
limitations, the Holders of a majority in principal amount of the Outstanding
Debt Securities of any 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 the Trustee with respect to the
Debt Securities of such series. (Section 512 of the Indenture)
The Company is required to furnish annually to the Trustee statements as
to the Company's compliance with all conditions and covenants under the
Indenture. (Section 1007 of the Indenture)
MERGER AND CONSOLIDATION
The Company may consolidate or merge with or into any other corporation,
and the Company may sell or transfer all or substantially all of its assets to
another corporation, provided that (a) the corporation (if other than the
Company) formed by, resulting from or surviving any such consolidation or
merger or which shall have received the transfer of such assets shall be a
corporation organized and existing under the laws of The United States of
America or a state thereof and shall assume payment of the principal of and
any premium and interest on the Debt Securities and the performance and
observance of all of the covenants and conditions of the Indenture to be
performed or observed by the Company and (b) the Company or such successor
corporation, as the case may be, shall not immediately thereafter be in
default in the performance of any such covenant or condition under the
Indenture and shall not immediately thereafter have outstanding (or otherwise
be liable for) any Indebtedness secured by a Mortgage not permitted by the
provisions of Section 1009 of the Indenture or shall have secured the Debt
Securities equally and ratably with (or prior to) any Indebtedness secured by
any Mortgage not so permitted. (Section 801 of the Indenture)
MODIFICATION AND WAIVER
Modification and amendment of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than 66 2/3% in
principal amount of the Outstanding Debt Securities of each series affected
thereby, provided that no such modification or amendment may, without the
consent of the Holder of each Outstanding Debt Security affected thereby, (a)
change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Outstanding Debt Security; (b) reduce the
principal amount of or the rate of interest on or any premium payable with
respect to any Debt Security; (c) reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon
acceleration of the Maturity thereof or that would be provable in bankruptcy;
(d) adversely affect any right of repayment at the option of the Holder of any
Debt Security; (e) change the place or currency of payment of the principal of
or any premium or interest on any Debt Security; (f) impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity, or any date of redemption or repayment, thereof; (g) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the Indenture with respect to such series or reduce the
percentage of Outstanding Debt Securities of any series necessary to waive any
past default or compliance with certain restrictive provisions to less than a
majority of such series, or reduce the requirements of Section 1404 of the
Indenture for quorum or voting; or (h) modify the provisions of the Indenture
described in this
8
paragraph or those regarding waiver of compliance with certain provisions of, or
certain defaults and their consequences under, the Indenture, except to increase
the percentage of Outstanding Debt Securities necessary to modify and amend the
Indenture or to give any such waiver, and except to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Debt Security affected thereby. The Holders of at
least a majority in principal amount of the Outstanding Debt Securities of any
series may waive compliance by the Company with certain restrictive provisions
applicable to such series. (Sections 902 and 1010 of the Indenture)
Modification and amendment of the Indenture may be made by the Company and
the Trustee without the consent of any Holder of Outstanding Debt Securities,
for any of the following purposes: (a) to evidence the succession of another
corporation to the Company and the assumption of the covenants of the Company;
(b) to add to the covenants of the Company for the benefit of the Holders of
all or any series of Debt Securities or to surrender any right or power
conferred upon the Company; (c) to add any additional Events of Default with
respect to all or any series of Debt Securities; (d) to change or eliminate
any restrictions on the payment of the principal of or any premium or interest
on Debt Securities or to permit the issuance of Debt Securities in
uncertificated form, provided any such action does not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect; (e) to change or eliminate any provision of the Indenture, provided
that no Outstanding Debt Security of any series is entitled to the benefit of
such provision; (f) to secure the Debt Securities pursuant to the requirements
of Sections 801 or 1009 of the Indenture or otherwise; (g) to establish the
form or terms of the Debt Securities of any series; (h) to provide for the
acceptance of appointment by a successor Trustee with respect to the Debt
Securities of one or more series and to add to or change any of the provisions
as shall be necessary to provide for or facilitate the administration of the
trusts under the Indenture by more than one Trustee; (i) to change the
conditions, limitations and restrictions on the authorized amount, terms or
purposes of issuance, authentication and delivery of the Debt Securities as
set forth in the Indenture, the Debt Securities and the Prospectus Supplement
relating thereto; or (j) to cure any ambiguity, defect or inconsistency in the
Indenture, provided such action does not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect. (Section
901 of the Indenture)
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company and the Trustee, without the
consent of any Holder of Outstanding Debt Securities, may execute a
supplemental indenture to provide that the Company will be discharged from any
and all obligations in respect of the Debt Securities of any series (except
for certain obligations to register the transfer or exchange of Debt
Securities, to replace stolen, lost or mutilated Debt Securities, to maintain
paying agencies and hold moneys for payment in trust) upon the deposit with
the Trustee, in trust, of money or Government Obligations, or a combination
thereof, which through the payment of interest and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of, any premium and interest on, and any mandatory sinking fund
payments in respect of, the Debt Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the Indenture and
such Debt Securities. Such a supplemental indenture may only be executed if
the Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling, or if there has been a change in the
applicable federal income tax law, in either case, to the effect that such a
discharge will not cause the Holders of the Debt Securities of such series to
recognize income, gain or loss for federal income tax purposes; and the
provisions of such a supplemental indenture shall not be applicable to any
series of Debt Securities then listed on the New York Stock Exchange if the
provisions would cause the Outstanding Debt Securities of such series to be
delisted. (Section 901 of the Indenture)
The Indenture provides that, when the conditions set forth in Section 401
thereof have been satisfied, upon the request of the Company, the Indenture
will cease to be of further effect (except as to any surviving right of
registration of transfer or exchange of Debt Securities expressly provided for
9
therein). Such conditions include that (i) all Debt Securities issued under the
Indenture either shall have been delivered to the Trustee for cancellation or
shall be due, or are to be called for redemption, within one year and (ii) with
respect to all Debt Securities issued under the Indenture but not previously
delivered to the Trustee for cancellation, there shall have been delivered to
the Trustee, in trust, money or Government Obligations, or a combination
thereof, which through the payment of interest and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of, and any premium and interest on, all such Debt Securities on
the Stated Maturity of such payments in accordance with the Indenture. (Section
401 of the Indenture)
DEFEASANCE OF CERTAIN COVENANTS
The terms of the Debt Securities of any series may provide the Company
with the option to omit to comply with the covenants described under
"-- Limitations on Liens" above and any additional covenants not included in
the Indenture that may be specified as applicable to such series in the
Prospectus Supplement with respect thereto. If such terms make such option
available with respect to the Debt Securities of any series, the Company, in
order to exercise such option, will be required to deposit with the Trustee,
in trust, money or Government Obligations, or a combination thereof, which
through the payment of interest and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of, any
premium and interest on, and any mandatory sinking fund payments in respect
of, the Debt Securities of such series on the Stated Maturity of such payments
in accordance with the terms of the Indenture and such Debt Securities. The
Company will also be required to deliver to the Trustee an Opinion of Counsel
to the effect that the deposit and related covenant defeasance will not cause
the Holders of the Debt Securities of such series to recognize income, gain or
loss for federal income tax purposes. Such covenant defeasance would not be
available with respect to any series of Debt Securities then listed on the New
York Stock Exchange if such defeasance would cause the Outstanding Debt
Securities of such series to be delisted. (Section 1011 of the Indenture) The
Prospectus Supplement relating to a particular issuance of Debt Securities may
further describe the provisions, if any, permitting such an omission to
comply.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global Debt Securities that will be deposited with, or on
behalf of, a depositary (the "Depository") identified in the Prospectus
Supplement relating to such series. Unless and until it is exchanged in whole
or in part for the individual Debt Securities represented thereby, a global
Debt Security may not be transferred except as a whole among the Depository,
any successor Depository and their respective nominees.
The specific terms of the depository arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Unless otherwise indicated in the applicable Prospectus
Supplement, the following provisions will apply to all depository
arrangements.
Upon the issuance of a global Debt Security, the Depository for such
global Debt Security or its nominee will credit, on its book-entry
registration and transfer system, the respective principal amounts of the
individual Debt Securities represented by such global Debt Security to the
accounts of persons that have accounts with such Depository ("Participants").
Such accounts will be designated by the underwriters or agents with respect to
such Debt Securities or by the Company if such Debt Securities are offered and
sold directly by the Company. Ownership of beneficial interests in a global
Debt Security will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such
global Debt Security will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depository or
its nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons other than Participants).
The laws of some states may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limitation and
such laws may impair the ability to transfer beneficial interests in a global
Debt Security.
10
So long as the Depository for a global Debt Security, or its nominee, is
the registered owner of such global Debt Security, such Depository or such
nominee, as the case may be, will be considered the sole owner or Holder of
the Debt Securities represented by such global Debt Security for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in a global Debt Security will not be entitled to have any of the individual
Debt Securities of the series represented by such global Debt Security
registered in their names, will not receive or be entitled to receive physical
delivery of such Debt Securities in definitive form, and will not be
considered the owners or Holders thereof under the Indenture.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a global Debt Security registered in
the name of a Depository or its nominee will be made to the Depository or its
nominee, as the case may be, as the registered owner of the global Debt
Security representing such Debt Securities. Neither the Company, the Trustee,
any Paying Agent, nor the Security Registrar for such Debt Securities will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of the global
Debt Security for such Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depository for a series of Debt Securities,
or its nominee, upon receipt of any payment of principal, premium or interest
in respect of a global Debt Security representing any of such Debt Securities,
will immediately credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such global Debt Security for such Debt Securities as shown on the records
of such Depository or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such global Debt Security
held through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities registered in "street
name." Such payments will be the responsibility of such Participants.
If the Depository for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days or if the Company
executes and delivers to the Trustee a Company Order to the effect that a
global Debt Security shall be exchangeable for certificated Debt Securities or
if an Event of Default has occurred and is continuing with respect to a series
of Debt Securities, the Company will issue individual certificated Debt
Securities of such series in definitive form in exchange for the global Debt
Security or Debt Securities representing such series of Debt Securities.
Accordingly, the Company may at any time and in its sole discretion, subject
to any limitations described in the Prospectus Supplement relating to such
Debt Securities, determine not to have any Debt Securities of a series
represented by one or more global Debt Securities and, in such event, will
issue individual certificated Debt Securities of such series in definitive
form in exchange for the global Debt Security or Debt Securities representing
such series of Debt Securities. In any such instance, the individual
certificated Debt Securities of such series issued by the Company will be
issued to Participants, as directed by the Depository or its nominee, or to
the beneficial owners holding Debt Securities of such series through such
Participants, as directed by such Participants, all in accordance with
standing instructions and customary practices, as is now the case with
securities registered in "street name." Certificated 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.
MISCELLANEOUS
No Holder of a Debt Security of any series may institute any action
against the Company under the Indenture (except actions for payment of overdue
principal of, premium, if any, or interest on such Debt Securities) unless the
Holders of at least 25% of the principal amount of the Debt Securities of that
series then Outstanding under the Indenture shall have requested the Trustee
to institute such action and offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be
11
incurred in compliance with such request and the Trustee shall not have
instituted such action within 60 days of such request. (Sections 507 and 508 of
the Indenture)
THE TRUSTEE UNDER THE INDENTURE
The Company and certain of its affiliates maintain banking and borrowing
relations with The Chase Manhattan Bank (National Association).
The Indenture provides that an alternative Trustee may be appointed by the
Company with respect to any particular series of Debt Securities. Any such
appointment will be described in the Prospectus Supplement relating to such
series of Debt Securities.
DESCRIPTION OF WARRANTS
The Company may issue, together with Debt Securities or separately,
Warrants for the purchase of Debt Securities. Any Warrants are to be issued
under Warrant Agreements (each a "Warrant Agreement") to be entered into
between the Company and a bank or trust company, as Warrant Agent (the
"Warrant Agent"), all as shall be set forth in the Prospectus Supplement
relating to Warrants being offered thereby. A copy of the form of Warrant
Agreement, including the forms of Warrant Certificates representing the
Warrants (the "Warrant Certificates"), reflecting the alternative provisions
to be included in the Warrant Agreements that will be entered into with
respect to particular offerings of Warrants, is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Warrant Agreement and the Warrant Certificates do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
the provisions of the Warrant Agreement and the Warrant Certificates,
respectively, including the definitions therein of certain terms.
The form of Warrant Agreement allows for the issuance of Warrants in
foreign currencies and/or in bearer form. The Company does not intend to issue
any such Warrants pursuant to this Prospectus. Accordingly, certain provisions
of the form of Warrant Agreement relating to such Warrants are not described
herein.
GENERAL
The applicable Prospectus Supplement will describe the terms of Warrants
offered thereby, the Warrant Agreement relating to such Warrants and the
Warrant Certificates representing such Warrants, including the following: (1)
the designation, aggregate principal amount, denominations and terms of the
series of Debt Securities purchasable upon exercise of such Warrants and the
procedures and conditions relating to the exercise of such Warrants; (2) the
designation and terms of any related series of Debt Securities with which such
Warrants are issued and the number of such Warrants issued with each such Debt
Security; (3) the date, if any, on and after which such Warrants and the
related Debt Securities will be separately transferable; (4) the principal
amount of the series of Debt Securities purchasable upon exercise of each such
Warrant and the price at which such principal amount of Debt Securities may be
purchased upon such exercise and whether such Debt Securities may be purchased
for consideration other than cash; (5) the date on which the right to exercise
such Warrants shall commence and the date on which such right shall expire
(the "Expiration Date"); (6) if the series of Debt Securities purchasable upon
exercise of such Warrants are Original Issue Discount Securities, a discussion
of Federal income tax considerations applicable thereto; (7) where the Warrant
Certificates may be transferred and registered; and (8) any other terms of the
Warrants.
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations at the corporate trust office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement. Prior to
the exercise of Warrants, holders of such Warrants will not have any of the
rights of Holders of the Debt Securities purchasable upon such exercise and
will not be entitled to payments of principal of or any premium or interest on
the Debt Securities purchasable upon such exercise.
12
EXERCISE OF WARRANTS
Each Warrant will entitle the Holder to purchase for cash or specified
securities such principal amount of the related series of Debt Securities at
such exercise price as shall in each case be set forth in, or be determinable
as set forth in, the Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby and may be so exercised up to the
close of business on the Expiration Date set forth in such Prospectus
Supplement. After the close of business on the Expiration Date, unexercised
Warrants will become void.
Warrants may be exercised by delivery to the Warrant Agent of payment as
provided in the applicable Prospectus Supplement of the amount required to
purchase the Debt Securities purchasable upon such exercise together with
certain information set forth in the Warrant Certificate. Warrants will be
deemed to have been exercised upon receipt of the exercise price, subject to
the receipt within five business days of the Warrant Certificate representing
such Warrants. Upon receipt of the requisite payment and the Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, issue and
deliver pursuant to the Indenture the Debt Securities purchasable upon such
exercise. If less than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of Warrants.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities to or through underwriters or dealers;
directly to other purchasers; or through agents. Any such underwriter, dealer
or agent involved in the offer and sale of the Securities will be named in an
applicable Prospectus Supplement or Prospectus Supplements (including any
Pricing Supplement or Pricing Supplements).
The distribution of the Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they
may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agent. Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be underwriters, and any discounts
or commissions received by them from the Company and any profit on the resale
of Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any compensation paid by the Company to
underwriters, dealers or agents in connection with the offering of the
Securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be described in an applicable
Prospectus Supplement or Pricing Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against and/or contribution by the
Company toward certain liabilities, including liabilities under the Securities
Act.
The Company has reserved the right to sell the Securities through AGF
Investment Corp. ("AGFIC"), an affiliate of the Company which may, as an agent
acting on a best efforts basis, solicit offers to purchase the Securities in
those jurisdictions where it is authorized to do so. No commissions will be
payable to AGFIC. AGFIC's business is limited to the solicitation of offers to
purchase
13
securities of the Company and the Company's parent, American General Finance,
Inc. AGFIC utilizes as salespersons full-time employees of the Company and
American General Corporation, who continue to receive their regular salaries for
the continued performance of their regular duties. The Company intends to pay
all direct expenses associated with sales of Securities through AGFIC. The
offering of the Securities will be conducted in compliance with any applicable
requirements of Schedule E of the By-Laws of the National Association of
Securities Dealers, Inc. ("NASD") regarding the distribution by an NASD member
firm of the securities of an affiliate. In accordance with Section 12 of such
Schedule E, underwriters, dealers and agents who participate in the distribution
of Securities will not engage in transactions in Securities for any
discretionary account without the prior specific written approval of the
customer.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in a Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Securities shall not at the time of delivery be prohibited under the laws
of the jurisdiction to which such purchaser is subject. The underwriters and
such other agents will not have any responsibility in respect of the validity
or performance of such contracts.
LEGAL OPINIONS
Unless otherwise indicated in a Prospectus Supplement, the validity of
each issue of the Securities will be passed upon for the Company by Baker &
Daniels, Indianapolis, Indiana, and certain legal matters relating to the
Securities offered hereby will be passed upon for any underwriters or agents
by Brown & Wood, New York, New York. Brown & Wood may rely as to matters of
Indiana law on the opinion of Baker & Daniels.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. See "Incorporation by Reference." Such
financial statements are, and audited financial statements to be included in
subsequently filed documents will be, incorporated herein by reference in
reliance upon the reports of Ernst & Young LLP, pertaining to such financial
statements (to the extent covered by consents filed with the Commission) given
upon the authority of such firm as experts in accounting and auditing.
14
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND
PROSPECTUS AND ANY PRICING SUPPLEMENT ATTACHED HERETO IN CONNECTION WITH THE
OFFERING MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE
AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS AND
ANY PRICING SUPPLEMENT ATTACHED HERETO NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS AND ANY PRICING SUPPLEMENT ATTACHED HERETO
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 ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Description of Notes................. S-2
United States Tax Considerations..... S-12
Plan of Distribution of Notes........ S-15
PROSPECTUS
Available Information................ 2
Incorporation by Reference........... 2
The Company.......................... 3
Use of Proceeds...................... 3
Selected Financial Information....... 4
Ratio of Earnings to Fixed Charges... 4
Description of Debt Securities....... 5
Description of Warrants.............. 12
Plan of Distribution................. 13
Legal Opinions....................... 14
Experts.............................. 14
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AMERICAN GENERAL
FINANCE CORPORATION
$500,000,000
MEDIUM-TERM NOTES, SERIES D
---------------------
PROSPECTUS SUPPLEMENT
---------------------
AGF INVESTMENT CORP.
CS FIRST BOSTON
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SMITH BARNEY INC.
FEBRUARY 13, 1995
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