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Filed Pursuant to Rule 424(b)(3)
Registration File No.: 333-73405
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Prospectus Supplement
April 15, 1999
(To Prospectus dated March 12, 1999)
DONALDSON, LUFKIN & JENRETTE, INC.
$1,000,000,000
MEDIUM-TERM NOTES DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
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CERTAIN DATA ON THE COMPANY:
o We are a leading integrated investment and merchant bank that serves
institutional, corporate, governmental and individual clients.
o Donaldson, Lufkin & Jenrette, Inc. 277 Park Avenue New York, New York 10172
(212) 892-3000
TRADING FORMAT:
o The notes will be held in global form by The Depository Trust Company,
including on behalf of Euroclear and Cedel Bank, unless otherwise specified.
o The notes will not be listed on a securities exchange in the United States.
CERTAIN TERMS OF THE NOTES:
The specific terms of any note offered will be
included in a pricing supplement. Unless the
pricing supplement provides otherwise, the notes
will have the following general terms:
o The notes will bear interest at either a fixed or a floating rate. Floating
rate interest will be based on:
o CD Rate
o Commercial Paper Rate
o Federal Funds Rate
o LIBOR
o Prime Rate
o Treasury Rate
o Any other rate specified in the applicable pricing supplement
o Interest will be paid on the dates stated in the applicable pricing
supplement.
o The notes may be either callable by Donaldson, Lufkin & Jenrette, Inc. or
puttable by you, if specified in the applicable pricing supplement.
o The notes will be denominated in U.S. dollars and have minimum denominations
of $1,000, unless otherwise specified.
This investment involves risk. See "Foreign Currency Risks" on page S-22.
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Neither the SEC nor any State securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
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This Prospectus Supplement has been prepared for use by Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJSC") in connection with offers and sales
of the notes which may be made by it from time to time in market-making
transactions at negotiated prices relating to prevailing market prices at the
time of sale. The Company has been advised by DLJSC that it currently intends
to make a market in the notes; however, it is not obligated to do so. Any such
market-making may be discontinued at any time, and there is no assurance as to
the liquidity of, or trading market for, the Notes. DLJSC may act as principal
or agent in such transactions. See "Plan of Distribution" herein.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Description of Notes ................................................... S-3
Special Provisions Relating to Foreign Currency Notes .................. S-19
Foreign Currency Risks ................................................. S-22
United States Tax Considerations ....................................... S-23
Plan of Distribution ................................................... S-30
PROSPECTUS
About this Prospectus .................................................. 3
Where You Can Find More Information .................................... 3
Use of Proceeds ........................................................ 4
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends ................................. 4
Donaldson, Lufkin & Jenrette, Inc. ..................................... 5
Description of Preferred Stock ......................................... 6
Description of Debt Securities ......................................... 9
ERISA .................................................................. 16
Plan of Distribution ................................................... 16
Legal Matters .......................................................... 17
Experts ................................................................ 17
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DESCRIPTION OF NOTES
GENERAL
The notes will be direct, unsecured and unsubordinated obligations of DLJ.
The following description of the particular terms of the notes offered by this
Prospectus Supplement (referred to in the accompanying Prospectus as the debt
securities or the senior debt securities) supplements, and to the extent
inconsistent replaces, the description of the general terms and provisions of
the senior debt securities set forth in the Prospectus, which description you
should also read. Unless we specify otherwise in the applicable pricing
supplement, the notes will have the terms described below.
We will issue the notes under an indenture dated as of June 8, 1998
between DLJ and The Chase Manhattan Bank, as trustee. The following summaries
of certain provisions of the indenture do not purport to be complete, and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the indenture, including the definitions in the indenture of
certain terms.
We will use this Prospectus Supplement and any pricing supplement in
connection with the offer and sale from time to time of notes in an aggregate
initial public offering price of up to U.S. $1,000,000,000 or its equivalent in
other currencies, currency units or composite currencies (provided that, with
respect to original issue discount notes, we will use the initial offering
price of those notes in calculating the aggregate principal amount of notes
offered by this Prospectus Supplement). The aggregate principal amount of notes
we may offer with this Prospectus Supplement will be reduced as a result of the
sale by DLJ of other securities from time to time as described in the
accompanying Prospectus to the extent the aggregate offering prices of those
securities exceeds $1,000,000,000, including $650,000,000 of securities issued
prior to the date of this Prospectus Supplement. See "Plan of Distribution" in
this Prospectus Supplement and in the accompanying Prospectus.
The pricing supplement relating to a note will describe the following
terms:
o the currency or currency unit in which the note is denominated and, if
different, the currency or currency unit in which payments of principal and
interest on the note will be made (and, if the specified currency is other than
U.S. dollars, any other terms relating to that foreign currency note and the
specified currency)
o whether the note bears a fixed rate of interest or bears a floating rate
of interest (including whether the note is a regular floating rate note, a
floating rate/fixed rate note or an inverse floating rate note (each as defined
below))
o the issue price
o the issue date
o the maturity date
o if the note is a fixed rate note: the interest rate, if any, interest
payment dates, if any, and whether we can extend the maturity of the note
o if the note is a floating rate note: the interest rate basis, the
initial interest rate, the interest payment dates, the index maturity, the
spread and/or spread multiplier, if any (each as defined below), and any other
terms relating to the particular method of calculating the interest rate for
that note
o if the note is an indexed note (as defined below), the terms relating to
the particular note
o if the note is a dual currency note (as defined below), the terms
relating to the particular note
o if the note is an amortizing note (as defined below), the amortization
schedule and any other terms relating to the particular note
o whether the note is an original issue discount note
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o whether the note may be redeemed at the option of DLJ, or repaid at the
option of the holder, prior to its stated maturity as described under
"--Optional Redemption by DLJ" and "--Repayment at the Noteholders' Option;
Repurchase" below and, if so, the provisions relating to redemption or
repayment, including, in the case of any original issue discount notes, the
information necessary to determine the amount due upon redemption or repayment
o any relevant tax consequences associated with the terms of the notes
which have not been described under "United States Tax Considerations" below and
o any other terms not inconsistent with the provisions of the indenture.
Subject to the additional restrictions described under "Special Provisions
Relating to Foreign Currency Notes," each note will mature on a day, nine months
or more from the date of issue, as specified in the applicable pricing
supplement, selected by the initial purchaser and agreed to by DLJ. In the event
that the maturity date of any note or any date fixed for redemption or repayment
of any note is not a business day (as defined below), principal and interest
payable at maturity or upon redemption or repayment will be paid on the next
succeeding business day with the same effect as if that following business day
were the date on which the payment were due. We will not pay any additional
interest as a result of the delay in payment. Except as may be provided in the
applicable pricing supplement and except for indexed notes, all notes will
mature at par.
We are offering the notes on a continuing basis, in denominations of
$1,000 and any integral multiples of $1,000 unless otherwise specified in the
applicable pricing supplement; except that notes in specified currencies other
than U.S. dollars will be issued in the denominations set forth in the
applicable pricing supplement. See "Special Provisions Relating to Foreign
Currency Notes."
The interest rates we will offer to pay with respect to the notes may
differ depending upon, among other things, the aggregate principal amount of the
notes purchased in any single transaction.
INTEREST AND INTEREST RATES
Unless otherwise specified in the applicable pricing supplement, each note
will bear interest at either
o a fixed rate specified in the applicable pricing supplement or
o a floating rate specified in the applicable pricing supplement
determined by reference to an interest rate basis, which may be adjusted by a
spread and/or spread multiplier (each as defined below). Any floating rate note
may also have either or both of the following:
o a maximum interest rate limitation, or ceiling, on the rate at
which interest may accrue during any interest period; and
o a minimum interest rate limitation, or floor, on the rate at
which interest may accrue during any interest period. In addition, the
interest rate on floating rate notes will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by
United States law of general application.
Each note will bear interest from its date of issue or from the most
recent date to which interest on that note has been paid or duly provided for,
at the fixed or floating rate specified in the note, until the principal amount
has been paid or made available for payment. Interest will be payable on each
interest payment date (except for certain original issue discount notes and
except for notes originally issued between a regular record date and an interest
payment date) and at maturity or on redemption or repayment, if any. Unless
otherwise indicated in the applicable pricing supplement, interest payments in
respect of the notes will equal the amount of interest accrued from and
including the immediately preceding interest payment date in respect of which
interest has been paid or duly made available for payment (or from and including
the date of issue, if no interest has been paid with respect to the applicable
note) to but excluding the related interest payment date or the maturity date,
as the case may be.
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Interest will be payable to the person in whose name a note is registered
at the close of business on the regular record date next preceding the related
interest payment date; except that
o if we fail to pay the interest due on an interest payment date, the
defaulted interest will be paid to the person in whose name the note is
registered at the close of business on the record date we will establish for the
payment of defaulted interest and
o interest payable at maturity, redemption or repayment will be payable to
the person to whom principal shall be payable.
The first payment of interest on any note originally issued between a
regular record date and an interest payment date will be made on the interest
payment date following the next succeeding regular record date to the registered
owner on such next succeeding regular record date. Interest rates and interest
rate formulae are subject to change by DLJ from time to time but no such change
will affect any note previously issued or which DLJ has agreed to issue but has
not yet delivered.
Fixed Rate Notes
Each fixed rate note will bear interest at the annual rate specified in
the applicable pricing supplement. The interest payment dates for fixed rate
notes will be specified in the applicable pricing supplement and the regular
record dates will be the fifteenth calendar day (whether or not a business day)
prior to each interest payment date, unless otherwise specified in the
applicable pricing supplement. Unless otherwise specified in the applicable
pricing supplement, interest on fixed rate notes will be computed and paid on
the basis of a 360-day year of twelve 30-day months. In the event that any date
for any payment on any fixed rate note is not a business day, payment of
interest, premium, if any, or principal otherwise payable on such fixed rate
note will be made on the next succeeding business day and no interest on such
payment shall accrue as a result of the delay in payment.
Floating Rate Notes
Unless otherwise specified in an applicable pricing supplement, floating
rate notes will be issued as described below. Each applicable pricing supplement
will specify certain terms with respect to which such floating rate note is
being delivered, including: whether the floating rate note is a regular floating
rate note, an inverse floating rate note or a floating rate/fixed rate note; the
interest rate basis or bases, initial interest rate, interest reset dates,
interest reset period, interest payment dates, index maturity, maximum interest
rate and minimum interest rate, if any, and the spread and/or spread multiplier,
if any, and if one or more of the specified interest rate bases is LIBOR, the
index currency, if any, as described below. Unless otherwise specified in the
applicable pricing supplement, each regular record date for a floating rate note
will be the fifteenth calendar day (whether or not a business day) prior to each
interest payment date.
The interest rate borne by the floating rate notes will be determined as
follows:
o Unless a floating rate note is designated as a "floating rate/fixed rate
note" or an "inverse floating rate note," the floating rate note will be
designated a "regular floating rate note" and, except as described below or in
an applicable pricing supplement, will bear interest at the rate determined by
reference to the applicable interest rate basis or bases
o plus or minus the applicable spread, if any, and/or
o multiplied by the applicable spread multiplier, if any.
Unless otherwise specified in the applicable pricing supplement,
commencing on the initial interest reset date, the rate at which interest on
such regular floating rate note shall be payable shall be reset as of each
interest reset date; provided, however, that the interest rate in effect for the
period from the original issue date to the initial interest reset date will be
the initial interest rate.
o If a floating rate note is designated as a "floating rate/fixed rate
note," then, except as described below or in an applicable pricing supplement,
the note will initially bear interest at the rate determined by reference to the
applicable interest rate basis or bases
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o plus or minus the applicable spread, if any, and/or
o multiplied by the applicable spread multiplier, if any.
Commencing on the initial interest reset date, the rate at which interest
on the floating rate/fixed rate note shall be payable shall be reset as of each
interest reset date; except that
o the interest rate in effect for the period from the original issue
date to the initial interest reset date will be the initial interest rate;
and
o the interest rate in effect commencing on, and including, the fixed
rate commencement date (as specified in the applicable pricing supplement)
to the maturity date shall be the fixed interest rate specified in the
applicable pricing supplement, or if no fixed interest rate is so specified
and the floating rate/fixed rate note is still outstanding on the fixed
rate commencement date, the interest rate in effect on the floating
rate/fixed rate note on the day immediately preceding the fixed rate
commencement date.
o If a floating rate note is designated as an "inverse floating rate
note," then, except as described below or in an applicable pricing supplement,
the note will bear interest equal to the fixed interest rate specified in the
related pricing supplement minus the rate determined by reference to the
interest rate basis or bases
o plus or minus the applicable spread, if any, and/or
o multiplied by the applicable spread multiplier.
Unless otherwise specified in the applicable pricing supplement, the
interest rate on an inverse floating rate note will not be less than zero.
Commencing on the initial interest reset date, the rate at which interest on
such inverse floating rate note is payable shall be reset as of each interest
reset date; provided, however, that the interest rate in effect for the period
from the original issue date to the initial interest reset date will be the
initial interest rate.
Notwithstanding the foregoing, if a floating rate note is designated as
having an addendum attached, the floating rate note shall bear interest in
accordance with the terms described in the addendum and the applicable pricing
supplement. See "--Other Provisions, Addenda" below.
Unless otherwise provided in the applicable pricing supplement, each
interest rate basis shall be the rate determined in accordance with the
applicable provisions below. Except as set forth above or in a pricing
supplement, the interest rate in effect on each day shall be
o if such day is an interest reset date, the interest rate as determined
on the interest determination date (as defined below) immediately preceding such
interest reset date or
o if such day is not an interest reset date, the interest rate determined
on the interest determination date immediately preceding the next preceding
interest reset date.
Except for the fixed rate period described above for floating rate/fixed
rate notes, interest on floating rate notes will be determined by reference to
an interest rate basis, which may be one or more of
o the CD rate
o the Commercial Paper rate
o the Federal Funds rate
o LIBOR
o the Prime rate
o the Treasury rate or
o any other interest rate basis or interest rate formula described in the
applicable pricing supplement.
The "spread" is the number of basis points to be added to or subtracted
from the related interest rate basis or bases applicable to a floating rate
note. The "spread multiplier" is the percentage of the related
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interest rate basis or bases applicable to a floating rate note by which such
interest rate basis or bases will be multiplied to determine the applicable
interest rate on such floating rate note. The "index maturity" is the period to
maturity of the instrument or obligation with respect to which the interest
rate basis or bases will be calculated. The spread, spread multiplier, index
maturity and other variable terms of the floating rate notes are subject to
change by DLJ from time to time, but no such change will affect any floating
rate note previously issued or as to which an offer has been accepted by DLJ.
Each applicable pricing supplement will specify whether the rate of
interest on the related floating rate note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other specified interest reset period
and the dates on which such interest rate will be reset. Unless otherwise
specified in the applicable pricing supplement, the interest reset date will be,
in the case of floating rate notes which reset:
o daily, each business day
o weekly, a business day that occurs in each week as specified in the
applicable pricing supplement (with the exception of weekly reset Treasury rate
notes, which will reset the Tuesday of each week except as specified below)
o monthly, a business day that occurs in each month as specified in the
applicable pricing supplement
o quarterly, a business day that occurs in each third month as specified
in the applicable pricing supplement
o semiannually, a business day that occurs in each of two months of each
year as specified in the applicable pricing supplement and
o annually, a business day that occurs in one month of each year as
specified in the applicable pricing supplement.
If any interest reset date for any floating rate note would otherwise be a
day that is not a business day, that interest reset date will be postponed to
the next succeeding day that is a business day, except that in the case of a
floating rate note as to which LIBOR is an applicable interest rate basis, if
that business day falls in the next succeeding calendar month, the interest
reset date will be the immediately preceding business day.
"Business day" means, unless otherwise specified in the applicable pricing
supplement, any day that is not a Saturday or Sunday and that is not a day on
which banking institutions are generally authorized or obligated by law,
regulation or executive order to close in The City of New York and any other
place of payment with respect to the applicable notes and
o with respect to LIBOR notes, "business day" shall also include a day on
which dealings in U.S. dollars are transacted in the London interbank market
o with respect to notes denominated in a specified currency other than
U.S. dollars or euro, "business day" shall not include a day on which banking
institutions are generally authorized or obligated by law, regulation or
executive order to close in the principal financial center of the country of the
specified currency and
o with respect to notes denominated in euro, "business day" shall also
include any day on which the TransEuropean Real-Time Gross Settlement Express
Transfer (TARGET) System is in place.
Except as provided below or in an applicable pricing supplement, interest
will be payable on the maturity date and in the case of floating rate notes
which reset:
o daily, weekly or monthly, on a business day that occurs in each month,
as specified in the applicable pricing supplement
o quarterly, on a business day that occurs in each third month, as
specified in the applicable pricing supplement
o semi-annually, on a business day that occurs in each of two months of
each year as specified in the applicable pricing supplement and
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o annually, on a business day that occurs in one month of each year, as
specified in the applicable pricing supplement.
If any interest payment date for any floating rate note would otherwise be
a day that is not a business day, that interest payment date will be the next
succeeding day that is a business day and no interest shall accrue as a result
of the delay in payment, except that if a note is a LIBOR note and if the next
business day falls in the next succeeding calendar month, the interest payment
date will be the immediately preceding business day. If the maturity date of a
floating rate note falls on a day that is not a business day, the payment of
principal, premium, if any, and interest, if any, will be made on the next
succeeding business day, and no interest shall accrue for the period from and
after the maturity date.
All percentages resulting from any calculation on floating rate notes will
be to the nearest one hundred-thousandth of a percentage point, with five one
millionths of a percentage point rounded upwards (e.g., 5.876545% (or .05876545)
would be rounded to 5.87655% (or .0587655)), and all dollar amounts used in or
resulting from such calculation will be rounded to the nearest cent (with
one-half cent being rounded upward).
With respect to each floating rate note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. The accrued interest
factor is computed by adding the interest factor calculated for each day from
and including the later of (i) the date of issue and (ii) the last day to which
interest has been paid or duly provided for to and including the last date for
which accrued interest is being calculated as described in the immediately
preceding paragraph. Unless otherwise specified in the applicable pricing
supplement, the interest factor for each such day will be computed by dividing
the interest rate applicable to such day by 360, in the case of notes for which
the interest rate basis is the CD rate, the Commercial Paper rate, the Federal
Funds rate, LIBOR or the Prime rate, or by the actual number of days in the year
in the case of notes for which the interest rate basis is the Treasury rate. The
accrued interest factor for notes for which the interest rate may be calculated
with reference to two or more interest rate bases will be calculated in each
period by selecting one such interest rate basis for such period in accordance
with the provisions of the applicable pricing supplement.
The interest rate applicable to each interest reset period commencing on
the interest reset date with respect to that interest reset period will be the
rate determined as of the "interest determination date." Unless otherwise
specified in the applicable pricing supplement, the interest determination date
with respect to the CD rate, the Commercial Paper rate, the Federal Funds rate
and the Prime rate will be the second business day preceding each interest reset
date for the related note; and the interest determination date with respect to
LIBOR will be the second London business day preceding each interest reset date.
With respect to the Treasury rate, unless otherwise specified in an applicable
pricing supplement, the interest determination date will be the day in the week
in which the related interest reset date falls on which day Treasury bills (as
defined below) are normally auctioned (Treasury bills are normally sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday, except that such
auction may be held on the preceding Friday); provided, however, that if an
auction is held on the Friday on the week preceding the related interest reset
date, the related interest determination date will be such preceding Friday; and
provided, further, that if an auction falls on any interest reset date then the
related interest reset date will instead be the first business day following
such auction. Unless otherwise specified in the applicable pricing supplement,
the interest determination date pertaining to a floating rate note, the interest
rate of which is determined with reference to two or more interest rate bases,
will be the latest business day which is at least two business days prior to
each interest reset date for such floating rate note. Each interest rate basis
will be determined and compared on such date, and the applicable interest rate
will take effect on the related interest reset date, as specified in the
applicable pricing supplement.
Unless otherwise provided for in the applicable pricing supplement, The
Chase Manhattan Bank will be the calculation agent and for each interest reset
date will determine the interest rate with respect to any floating rate note as
described below. The calculation agent will notify DLJ, the paying agent and the
trustee of each determination of the interest rate applicable to a floating rate
note promptly after such determination is made. The trustee will, upon the
request of the holder of any floating rate note, provide
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the interest rate then in effect and, if determined, the interest rate which
will become effective as a result of a determination made with respect to the
most recent interest determination date relating to such note. Unless otherwise
specified in the applicable pricing supplement, the "calculation date," where
applicable, pertaining to any interest determination date will be the earlier
of (i) the tenth calendar day after that interest determination date or, if
such day is not a business day, the next succeeding business day or (ii) the
business day preceding the applicable interest payment date or maturity date,
as the case may be.
Unless otherwise specified in the applicable pricing supplement, the
interest rate basis with respect to floating rate notes will be determined by
the calculation agent as follows:
CD Rate Notes. CD rate notes will bear interest at the interest rate
(calculated with reference to the CD rate and the spread and/or spread
multiplier, if any) specified in the CD rate notes and in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, "CD rate"
means, with respect to any interest determination date relating to a CD rate
note, the rate on the date for negotiable certificates of deposit having the
index maturity designated in the applicable pricing supplement as published by
the Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates," or any successor publication 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 interest determination
date, the CD rate will be the rate on such 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 update of H.15(519) available through the world-wide web site
of the Board of Governors of the Federal Reserve System at
"http:/www.bog.frb.fed.us/releases/H15/update" or any successor site or
publication of the Board of Governors under the heading "Certificates of
Deposit." If such rate is not yet published in either H.15(519) or H.15 daily
update by 3:00 p.m., New York City time, on the calculation date pertaining to
an interest determination date, the CD Rate on that interest determination date
will be calculated by the calculation agent and will be the arithmetic mean of
the secondary market offered rates as of 10:00 a.m., New York City time, on that
interest determination date, for negotiable certificates of deposit of major
United States money market banks with a remaining maturity closest to the index
maturity designated in the applicable pricing supplement in an amount that is
representative for a single transaction in that market at that time as quoted by
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the calculation agent; provided, however,
that if the dealers selected as aforesaid by the calculation agent are not
quoting as set forth above, the CD rate with respect to such Interest
Determination Date shall be the same as the CD rate in effect for the
immediately preceding interest reset period (or, if there was no preceding
interest reset period, the rate of interest shall be the initial interest rate).
Commercial Paper Rate Notes. Commercial Paper rate notes will bear
interest at the interest rate (calculated with reference to the Commercial Paper
rate and the spread and/or spread multiplier, if any) specified in the
Commercial Paper Rate notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement,
"Commercial Paper rate" means, with respect to any interest determination date
relating to a Commercial Paper rate note, the money market yield (as defined
below) of the rate on that date for commercial paper having the index maturity
designated in the applicable pricing supplement, as published in H.15(519),
under the heading "Commercial Paper--Non-Financial." In the event that the rate
is not published prior to 3:00 p.m., New York City time, on the calculation date
pertaining to such interest determination date, then the Commercial Paper rate
shall be the money market yield of the rate on the interest determination date
for commercial paper of the specified index maturity as published in H.15 daily
update 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 by 3:00 p.m., New York City time, on that calculation
date the rate is not yet available in either H.15(519) or H.15 daily update,
then the Commercial Paper Rate on that interest determination date shall be
calculated by the calculation agent and shall be the money market yield
corresponding to the arithmetic mean of the offered rates as of approximately
11:00 a.m., New York City time, on that interest determination date for
commercial paper of the specified index
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maturity placed for a non-financial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized rating agency as quoted by three
leading dealers of commercial paper in The City of New York selected by the
calculation agent; provided, however, that if the dealers selected as aforesaid
by the calculation agent are not quoting offered rates as set forth above, the
Commercial Paper rate with respect to such interest determination date shall be
the same as the Commercial Paper rate for the immediately preceding interest
reset period (or, if there was no preceding interest reset period, the rate of
interest shall be the initial interest rate).
"Money market yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D \x 360 360 - (D \x M) \x 100
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the period for which interest is being calculated.
Federal Funds Rate Notes. Federal Funds rate notes will bear interest at
the interest rate (calculated with reference to the Federal Funds rate and the
spread and/or spread multiplier, if any) specified in the Federal Funds rate
notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the
"Federal Funds rate" means, with respect to any interest determination date
relating to a Federal Funds rate note, the rate on such date for Federal Funds
as 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 an Interest Determination Date, the Federal Funds rate will be the
rate on that interest determination date as published in H.15 daily update under
the heading "Federal Funds (effective)." If that rate is not published in either
H.15(519) or H.15 daily update by 3:00 p.m., New York City time, on the
calculation date pertaining to such interest determination date, the Federal
Funds rate for that interest determination date will be calculated by the
calculation agent and will be the arithmetic mean of the rates for the last
transaction in overnight United States dollar Federal Funds as of 9:00 a.m., New
York City time, on such interest determination date arranged by three leading
brokers of Federal Funds transactions in The City of New York selected by the
calculation agent; provided, however, that if the brokers selected as aforesaid
by the calculation agent are not quoting as set forth above, the Federal Funds
rate with respect to such interest determination date shall be the same as the
Federal Funds rate in effect for the immediately preceding interest reset period
(or, if there was no preceding interest reset period, the rate of interest shall
be the initial interest rate).
LIBOR Notes. LIBOR notes will bear interest at the interest rate
(calculated with reference to LIBOR and the spread and/or spread multiplier, if
any) specified in the LIBOR notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, "LIBOR"
for each interest reset date will be determined by the calculation agent as
follows:
o With respect to an interest determination date relating to a
LIBOR note, LIBOR will be the rate for deposits in the London interbank
market in the index currency (as defined below) having the index maturity
designated in the applicable pricing supplement commencing on the second
London business day immediately following such interest determination date
that appears on the Designated LIBOR Page (as defined below) as of 11:00
a.m., London time, on such interest determination date. If no rate appears
on the Designated LIBOR Page, LIBOR in respect of such interest
determination date will be determined as if the parties had specified the
rate described in the following paragraph.
o With respect to an interest determination date relating to a
LIBOR note to which the last sentence of the previous paragraph applies,
the calculation agent will request the principal London offices of each of
four major reference banks in the London interbank market selected by the
calculation agent, to provide the calculation agent with its offered
quotation for deposits in the index currency for the period of the index
maturity designated in the applicable pricing supplement
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commencing on the second London business day immediately following
such interest determination date to prime banks in the London interbank
market at approximately 11:00 a.m., London time on such interest
determination date and in a principal amount that is representative for a
single transaction in such index currency in such market at such time. If
at least two such quotations are provided, LIBOR determined on such
interest determination date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR determined on
such interest determination date will be the arithmetic mean of the rates
quoted at approximately 11:00 a.m. (or such other time specified in the
applicable pricing supplement), in the principal financial center of
country of the specified index currency, on that interest determination
date for loans made in the index currency to leading European banks having
the index maturity designated in the applicable pricing supplement
commencing on the second London business day immediately following such
interest determination date and in a principal amount that is
representative for a single transaction in that index currency in that
market at such time by three major banks in such principal financial
center selected by the Calculation Agent; provided, however, that if the
banks so selected by the calculation agent are not quoting as mentioned in
this sentence, LIBOR with respect to such interest determination date will
be the same as LIBOR in effect for the immediately preceding interest
reset period (or, if there was no preceding interest reset period, the
rate of interest shall be the Initial Interest Rate).
"Index currency" means the currency (including currency units and
composite currencies) specified in the applicable pricing supplement as the
currency with respect to which LIBOR shall be calculated. If no currency is
specified in the applicable pricing supplement, the index currency shall be U.S.
dollars.
"Designated LIBOR Page" means the display on Page 3750 (or any other page
specified in the applicable pricing supplement) of the Dow Jones Telerate
Service for the purpose of displaying the London interbank offered rates of
major banks for the applicable index currency (or such other page as may replace
that page on that service for the purpose of displaying such rates).
Prime Rate Notes. Prime rate notes will bear interest at the interest rate
(calculated with reference to the Prime rate and the spread and/or spread
multiplier, if any) specified in the Prime rate notes and in the applicable
pricing supplement.
Unless otherwise specified in the applicable pricing supplement, "Prime
rate" means, with respect to any interest determination date, the rate set forth
in H.15(519) for that date opposite the caption "Bank Prime Loan." If that rate
is not yet published by 9:00 a.m., New York City time, on the calculation date
pertaining to that interest determination date, the Prime rate for that interest
determination date will be the arithmetic mean of the rates of interest publicly
announced by each bank named on the Reuters Screen USPRIME1 Page (as defined
below) as that bank's prime rate or base lending rate as in effect for that
interest determination date as quoted on the Reuters Screen USPRIME1 Page on
that interest determination date, or, if fewer than four of these rates appear
on the Reuters Screen USPRIME1 Page for that interest determination date, the
rate shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
that interest determination date by at least two of the three major money center
banks in The City of New York selected by the calculation agent from which
quotations are requested. If fewer than two quotations are provided, the Prime
rate shall be calculated by the calculation agent and shall be determined as the
arithmetic mean of the prime rates in The City of New York by the appropriate
number of substitute banks or trust companies organized and doing business under
the laws of the United States, or any State thereof, in each case having total
equity capital of at least $500 million and being subject to supervision or
examination by federal or state authority, selected by the calculation agent to
quote prime rates. "Reuters Screen USPRIME1 Page" means the display designated
as Page "USPRIME1" on the Reuters Monitor Money Rates Service (or such other
page as may replace the USPRIME1 Page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks).
Treasury Rate Notes. Treasury rate notes will bear interest at the
interest rate (calculated with reference to the Treasury rate and the spread
and/or spread multiplier, if any) specified in the Treasury rate notes and in
the applicable pricing supplement.
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Unless otherwise specified in the applicable pricing supplement, the
"Treasury rate" means, with respect to any interest determination date relating
to a Treasury rate note, the rate applicable to the most recent auction of
direct obligations of the United States ("Treasury bills") having the index
maturity designated in the applicable pricing supplement, as published in
H.15(519) under the heading "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 interest determination date, the auction average rate on such
interest determination date (expressed as a bond equivalent, on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury bills having the index
maturity designated in the applicable pricing supplement are not published or
reported as provided above by 3:00 p.m., New York City time, on such calculation
date or if no such auction is held in a particular week, then the Treasury rate
shall be the rate as published in H.15(519) under the heading "Treasury Bills--
secondary market," or any successor publication or heading. In the event such
rate is not published by 3:00 p.m., New York City time, on such calculation
date, 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) calculated
using the arithmetic mean of the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on such interest determination date, of three
leading primary United States government securities dealers (which may include
one or more of the Agents) selected by the calculation agent for the issue of
Treasury bills with a remaining maturity closest to the index maturity
designated in the applicable pricing supplement; provided, however, that if the
dealers selected by the calculation agent are not quoting bid rates as mentioned
in this sentence, the Treasury rate with respect to the 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 preceding interest reset
period, the rate of interest shall be the initial interest rate).
INDEXED NOTES
Notes also may be issued with the principal amount payable at maturity or
interest to be paid on the notes, or both, to be determined with reference to
the price or prices of specified commodities or stocks, the exchange rate of a
specified currency relative to one or more other currencies, currency units or
composite currencies specified in the Prospectus Supplement, or such other price
or exchange rate as may be specified in such note, as set forth in a pricing
supplement relating to those indexed notes. In certain cases, holders of indexed
notes may receive a principal amount on the maturity date that is greater than
or less than the face amount of the indexed notes, or an interest rate that is
greater than or less than the stated interest rate on the indexed notes, or
both, depending upon the structure of the indexed note and the relative value on
the maturity date or at the relevant interest payment date, as the case may be,
of the specified indexed item. However, in no event will the amount of interest
or principal payable with respect to an indexed note be less than zero.
Information as to the method for determining the principal amount payable on the
maturity date, the manner of determining the interest rate, certain historical
information with respect to the specified indexed item and tax considerations
associated with an investment in indexed notes will be set forth in the
applicable pricing supplement.
An investment in indexed notes may be much riskier than a similar
investment in a conventional fixed-rate debt security. If the interest rate of
an indexed note is indexed, it may result in an interest rate that is less than
that payable on a conventional fixed-rate debt security issued by DLJ at the
same time, including the possibility that no interest will be paid. If the
principal amount of an indexed note is indexed, the principal amount payable at
maturity may be less than the original purchase price of such indexed note,
including the possibility that no principal will be paid. Additionally, if the
formula used to determine the principal amount or interest payable with respect
to such indexed notes contains a multiple or leverage factor, the effect of any
change in the applicable currency, commodity or interest rate index may be
increased. See "Foreign Currency Risks."
OPTIONAL REDEMPTION BY DLJ
Unless otherwise provided in the applicable pricing supplement, DLJ cannot
redeem the notes prior to maturity. We may redeem the notes at our option prior
to the maturity date only if an "initial
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redemption date" is specified in the applicable pricing supplement. If so
specified, we can redeem the notes at our option on any date on and after the
applicable initial redemption date in whole or from time to time in part in
increments of $1,000 or such other minimum denomination specified in such
pricing supplement (provided that any remaining principal amount of notes shall
be at least $1,000 or other minimum denomination), at the applicable redemption
price, together with unpaid interest accrued to the date of redemption, on
notice given not more than 60 nor less than 30 calendar days prior to the date
of redemption and in accordance with the provisions of the indenture. By
redemption price for a note, we mean an amount equal to the initial redemption
percentage specified in the applicable pricing supplement (as adjusted by the
annual redemption percentage reduction specified in the pricing supplement, if
applicable) multiplied by the unpaid principal amount of the note to be
redeemed. The initial redemption percentage, if any, applicable to a note shall
decline on each anniversary of the initial redemption date by an amount equal
to the applicable annual redemption percentage reduction, if any, until the
redemption price is equal to 100% of the unpaid principal amount to be
redeemed. The redemption price of original issue discount notes is described
below under "--Original Issue Discount Notes."
Foreign currency notes may be subject to different restrictions on
redemption. See "Special Provisions Relating to Foreign Currency Notes--Minimum
Denominations, Restrictions on Maturities, Repayment and Redemption."
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASE
Holders may require us to repay notes prior to maturity only if one or
more "optional repayment dates" are specified in the applicable pricing
supplement. If so specified, we will repay notes at the option of the holders on
any optional repayment date in whole or in part from time to time in increments
of $1,000 or other minimum denomination specified in the applicable pricing
supplement (provided that any remaining principal amount thereof shall be at
least $1,000 or that other minimum denomination), at a repayment price equal to
100% of the unpaid principal amount to be repaid, together with unpaid interest
accrued to the date of repayment. A holder who wants us to repay a note prior to
maturity must deliver the note, together with the form "Option to Elect
Repayment" properly completed, to the trustee at its corporate trust office (or
any other address that we specify in the pricing supplement or notify holders of
from time to time) no more than 60 nor less than 30 calendar days prior to the
date of repayment. Exercise of a repayment option by the holder will be
irrevocable. The repayment price of original issue discount notes is described
below under "--Original Issue Discount Notes." Notwithstanding the foregoing, we
will comply with Section 14(e) under the Exchange Act, to the extent applicable,
and any other tender offer rules under the Exchange Act which may then be
applicable, in connection with any obligation of ours to repurchase notes.
Only the depositary may exercise the repayment option in respect of global
securities representing book-entry notes. Accordingly, beneficial owners of
global securities that desire to have all or any portion of book-entry notes
represented by global securities repaid must direct the participant of the
depositary through which they own their interest to direct the depositary to
exercise the repayment option on their behalf by delivering the related global
security and duly completed election form to the trustee as aforesaid. In order
to ensure that the global security and election form are received by the trustee
on a particular day, the applicable beneficial owner must so direct the
participant through which it owns its interest before that participant's
deadline for accepting instructions for that day. Different firms may have
different deadlines for accepting instructions from their customers.
Accordingly, beneficial owners should consult the participants through which
they own their interest for the respective deadlines of those participants. All
instructions given to participants from beneficial owners of global securities
relating to the option to elect repayment shall be irrevocable. In addition, at
the time instructions are given by a beneficial owner, the beneficial owner must
cause the participant through which it owns its interest to transfer that
beneficial owner's interest in the global security or securities representing
the related book-entry notes, on the depositary's records, to the trustee. See
"Description of Debt Securities--Book-Entry System" in the accompanying
Prospectus.
Foreign currency notes may be subject to different restrictions on
repayment. See "Special Provisions Relating to Foreign Currency Notes--Minimum
Denominations, Restrictions on Maturities, Repayment and Redemption."
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DLJ may at any time purchase notes at any price in the open market or
otherwise. Notes purchased by DLJ may, at its discretion, be held, resold or
surrendered to the trustee for cancellation.
DUAL CURRENCY NOTES
Dual currency notes are notes as to which DLJ has a one time option,
exercisable on a specified date in whole, but not in part, with respect to all
dual currency notes issued on the same day and having the same terms, of making
all payments of principal, premium, if any, and interest after the exercise of
such option, whether at maturity or otherwise (which payments would otherwise be
made in the face amount currency of such notes specified in the applicable
pricing supplement), in the optional payment currency specified in the
applicable pricing supplement. The terms of the dual currency notes together
with information as to the relative value of the face amount currency compared
to the optional payment currency and as to tax considerations associated with an
investment in dual currency notes will also be set forth in the applicable
pricing supplement.
If DLJ elects on any option election date specified in the applicable
pricing supplement to pay in the optional payment currency instead of the face
amount currency, payments of interest, premium, if any, and principal made after
such option election date may be worth less, at the then-current exchange rate,
than if DLJ had made such payments in the face amount currency. See "Foreign
Currency Risks."
RENEWABLE NOTES
DLJ may also issue from time to time variable rate renewable notes which
will mature on an interest payment date specified in the applicable Prospectus
Supplement unless the maturity of all or a portion of the principal amount of
the notes is extended in accordance with the procedures set forth in the
applicable pricing supplement.
EXTENSION OF MATURITY
The pricing supplement relating to each fixed rate note (other than an
amortizing note) will indicate whether DLJ has the option to extend the maturity
of that fixed rate note for one or more periods of one or more whole years up to
but not beyond the final maturity date set forth in the pricing supplement. If
DLJ has that option with respect to any fixed rate note, we will describe the
procedures in the applicable pricing supplement.
AMORTIZING NOTES
Amortizing notes are notes for which payments combining principal and
interest are made in installments over the life of the note. Payments with
respect to amortizing notes will be applied first to interest due and payable on
the notes and then to the reduction of the unpaid principal amount of the notes.
We will provide further information on the additional terms and conditions of
any issue of amortizing notes in the applicable pricing supplement. A table
setting forth repayment information in respect of each amortizing note will be
included in the applicable pricing supplement and set forth on the notes.
ORIGINAL ISSUE DISCOUNT NOTES
DLJ may offer notes from time to time at an issue price (as specified in
the applicable pricing supplement) that is less than 100% of the principal
amount of the note (i.e., par). Original issue discount notes may not bear any
interest currently or may bear interest at a rate that is below market rates at
the time of issuance. The difference between the issue price of an original
discount note and par is referred to herein as the "discount." In the event of
redemption, repayment or acceleration of maturity of an original issue discount
note, the amount payable to the holder of an original issue discount note will
be equal to the sum of (i) the issue price (increased by any accruals of
discount) and, in the event of any redemption by the Company of such original
issue discount note (if applicable), multiplied by the initial
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redemption percentage specified in the applicable pricing supplement (as
adjusted by the initial redemption percentage reduction, if applicable) and
(ii) any unpaid interest on such original issue discount note accrued from the
date of issue to the date of such redemption, repayment or acceleration of
maturity.
Unless otherwise specified in the applicable pricing supplement, for
purposes of determining the amount of discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for an
original issue discount note, the discount will be accrued using a constant
yield method. The constant yield will be calculated using a 30-day month,
360-day year convention, a compounding period that, except for the initial
period (as defined below), corresponds to the shortest period between interest
payment dates for the applicable original issue discount note (with ratable
accruals within a compounding period), a coupon rate equal to the initial coupon
rate applicable to such original issue discount note and an assumption that the
maturity of such original issue discount note will not be accelerated. If the
period from the date of issue to the initial interest payment date for an
original issue discount note is shorter than the compounding period for such
original issue discount note, a proportionate amount of the yield for an entire
compounding period will be accrued. If the initial period is longer than the
compounding period, then such period will be divided into a regular compounding
period and a short period with the short period being treated as provided in the
preceding sentence. The accrual of the applicable discount may differ from the
accrual of original issue discount for purposes of the Internal Revenue Code of
1986, as amended.
Certain original issue discount notes may not be treated as having
original issue discount for federal income tax purposes, and notes other than
original issue discount notes may be treated as issued with original issue
discount for federal income tax purposes. See "United States Tax
Considerations."
OTHER PROVISIONS, ADDENDA
Any provisions with respect to notes, including the determination of an
interest rate basis, the specification of interest rates bases, calculation of
the interest rate applicable to a floating rate note, interest payment dates or
any other matter relating thereto may be modified by the terms specified under
"Other Provisions" on the face of the note in an addendum relating thereto, if
so specified on the face thereof and in the applicable pricing supplement.
BOOK-ENTRY, DELIVERY AND FORM
The notes will be issued in the form of (i) one or more fully registered
global securities which will be deposited with, or on behalf of DTC as the
depositary, and registered in the name of Cede & Co., DTC's nominee or (ii)
certificates in definitive form (certificated notes), as specified in the
applicable pricing supplement. Beneficial interests in the global securities
will be represented through book-entry accounts of financial institutions acting
on behalf of beneficial owners as direct and indirect participants in DTC ("DTC
Participants"). Investors may elect to hold interests in the global securities
through either DTC (in the United States) or Cedelbank or Morgan Guaranty Trust
Company of New York, Brussels Office, as operator of Euroclear (in Europe) if
they are participants of such systems, or indirectly through organizations which
are participants in such systems. Cedelbank and Euroclear will hold interests on
behalf of their participants through customers' securities accounts in
Cedelbank's and Euroclear's names on the books of their respective depositaries,
which in turn will hold such interests in customers' securities accounts in the
names of their respective depositaries (the "U.S. Depositaries") on the books of
DTC. Except as set forth below, the global securities may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee, in each case as specified in the applicable pricing supplement.
See "Description of Debt Securities--Book-Entry System" in the Prospectus.
Certificated notes will not be exchangeable for book-entry notes and, except
under the circumstances described in the Prospectus under the caption
"Description of Debt Securities--Book-Entry System," book-entry notes will not
be exchangeable for certificated notes and will not otherwise be issuable as
certificated notes.
DTC has advised DLJ as follows: DTC 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
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member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities deposited with it by its
participants and facilitates the settlement of transactions among its
participants in such securities through electronic computerized book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. DTC's participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other other organizations, some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly.
DTC has also advised DLJ that the DTC's management is aware that some
computer applications, systems, and the like for processing data ("Systems")
that are dependent upon calendar dates, including dates before, on and after
January 1, 2000, may encounter "Year 2000 problems." DTC has informed
participants and other members of the financial community that it has developed
and is implementing a program so that its Systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC
("DTC Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, the DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames. However, the DTC's ability to perform
its services properly is also dependent upon other parties, including but not
limited to issuers and their agents, as well as third party vendors from whom
DTC licenses software and hardware, and third party vendors on whom DTC relies
for information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
financial community that it is contacting, and will continue to contact, third
party vendors from whom DTC acquires services to impress upon them the
importance of such services being Year 2000 compliant, and to determine the
extent of their efforts for Year 2000 remediation and, as appropriate, testing
of their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of any
kind.
Cedelbank advises that it is incorporated under the laws of Luxembourg as
a professional depositary. Cedelbank holds securities for its customers and
facilitates the clearance and settlement of securities transactions between
Cedelbank customers through electronic book-entry changes in accounts of
Cedelbank customers, thereby eliminating the need for physical movement of
certificates. Cedelbank provides to Cedelbank customers, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Cedelbank interfaces with domestic markets in several countries. As a bank,
Cedelbank is subject to regulation by the Luxembourg Commission for the
Supervision of the Financial Sector (Commission de Surveillance du Secteur
Financier). Cedelbank customers are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations and may include
the Agents. Cedelbank's U.S. customers are limited to securities brokers and
dealers and banks. Indirect access to Cedelbank is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Cedelbank customers either directly or
indirectly. Payments of principal and interest with respect to the notes held
beneficially through Cedelbank will be credited to cash accounts of Cedelbank
customers in accordance with its rules and procedures, to the extent received by
the U.S. Depositary for Cedelbank.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of certificates and
any risk from lack of simultaneous transfers of securities and cash. Euroclear
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries. Euroclear is operated by
the Brussels, Belgium office of Morgan Guaranty Trust Company of New York
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(the "Euroclear Operator"), under contract with Euroclear Clearance Systems
S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear participants. Euroclear participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries and may include the Agents. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear participants, and has no record of or relationship with persons
holding through Euroclear participants.
Payments of principal and interest with respect to notes held beneficially
through Euroclear will be credited to the cash accounts of Euroclear
participants in accordance with the Terms and Conditions, to the extent received
by the U.S. depositary for Euroclear.
Euroclear further advises that investors that acquire, hold and transfer
interests in the notes by book-entry through accounts with the Euroclear
Operator or any other securities intermediary are subject to the laws and
contractual provisions governing their relationship with their intermediary, as
well as the laws and contractual provisions governing the relationship between
such an intermediary and each other intermediary, if any, standing between
themselves and the global notes.
The Euroclear Operator advises as follows: Under Belgian law, investors
that are credited with securities on the records of the Euroclear Operator have
a co-property right in the fungible pool of interests in securities on deposit
with the Euroclear Operator in an amount equal to the amount of interests in
securities credited to their accounts. In the event of the insolvency of the
Euroclear Operator, Euroclear participants would have a right under Belgian law
to the return of the amount and type of interests in securities credited to
their accounts with the Euroclear Operator. If the Euroclear Operator did not
have a sufficient amount of interests in securities on deposit of a particular
type to cover the claims of all participants credited with such interests in
securities on the Euroclear Operator's records, all participants having an
amount of interests in securities of such type credited to their accounts with
the Euroclear Operator would have the right under Belgian law to the return of
their pro-rata share of the amount of interests in securities actually on
deposit.
Under Belgian law, the Euroclear Operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it (such as
dividends, voting rights and other entitlements) to any person credited with
such interests in securities on its records.
Principal of, premium, if any, and interest, if any, on any notes payable
in U.S. dollars will be payable in the manner described in this Prospectus
Supplement, the transfer of the notes will be registrable, and notes will be
exchangeable for notes bearing identical terms and provisions at the office of
The Chase Manhattan Bank, the Company's paying agent and registrar for the
Notes, currently located at 450 West 33rd Street, New York, New York 10001, any
successor paying agent or registrar, or any other person or persons specified in
the applicable pricing supplement; provided, that payment of interest, other
than interest at maturity or upon redemption or repayment, may be made by check
mailed to the address of
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the person entitled thereto as it appears on the security register at the close
of business on the regular record date corresponding to the relevant interest
payment date; provided, further, that book-entry notes will be exchangeable
only in the manner and to the extent set forth under "Description of Debt
Securities--Book-Entry System" in the accompanying Prospectus. Notwithstanding
the foregoing, (i) a depositary, as holder of book-entry notes, shall be
entitled to receive payments of interest by wire transfer of immediately
available funds and (ii) a holder of $5,000,000 (or, if the notes are
denominated in a specified currency other than U.S. dollars, the equivalent
thereof in such specified currency) or more in aggregate principal amount of
certificated notes having identical terms and provisions shall be entitled to
receive payments of interest, other than interest due at maturity or upon
redemption or repayment, if any, by wire transfer of immediately available
funds into an account maintained by the holder, if appropriate wire transfer
instructions have been received by the paying agent not less than ten days
prior to the applicable interest payment date. Certain additional payment
provisions with respect to foreign currency notes are described under "Special
Provisions Relating to Foreign Currency Notes" below.
The principal and interest payable in U.S. dollars on a certificated note
at maturity or upon redemption or repayment will be paid by wire transfer of
immediately available funds against presentation of such certificated note at
the office of the paying agent, unless otherwise provided in the applicable
pricing supplement.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Cedelbank customers and/or Euroclear participants will occur in
the ordinary way in accordance with the applicable rules and operating
procedures of Cedelbank and Euroclear and will be settled using the procedures
applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC on the one hand, and directly or indirectly through Cedelbank
customers or Euroclear participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the U.S. depositary; however, such cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to the U.S. depositary to take
action to effect final settlement on its behalf by delivering or receiving notes
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedelbank customers and Euroclear
participants may not deliver instructions directly to their respective U.S.
depositaries.
Because of time-zone differences, credits of notes received in Cedelbank
or Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following DTC settlement date. Such credits or any transactions in such notes
settled during such processing will be reported to the relevant Cedelbank
customers or Euroclear participants on such business day. Cash received in
Cedelbank or Euroclear as a result of sales of notes by or through a Cedelbank
customer or a Euroclear participant to a DTC Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedelbank
or Euroclear cash account only as of the business day following settlement in
DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of notes among participants of DTC,
Cedelbank and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
GOVERNING LAW
The indenture and the notes will be governed by and construed in
accordance with the laws of the State of New York.
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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
Unless otherwise specified in the applicable pricing supplement, the
following additional provisions shall apply to foreign currency notes.
PAYMENT CURRENCY
Unless otherwise indicated in the applicable pricing supplement,
purchasers are required to pay for foreign currency notes in the specified
currency. Currently, there are limited facilities in the United States for the
conversion of U.S. dollars into foreign currencies. Therefore, unless otherwise
indicated in the applicable pricing supplement, the exchange rate agent
appointed by DLJ and identified in the applicable pricing supplement will
arrange for the conversion of U.S. dollars into the specified currency on behalf
of any purchaser of a foreign currency note to enable a prospective purchaser to
deliver the specified currency in payment for a foreign currency note. The
exchange rate agent must receive a request for any conversion on or prior to the
third business day preceding the date of delivery of the foreign currency note.
All costs of currency exchange will be borne by the purchaser.
Unless otherwise specified on the applicable pricing supplement or unless
the holder of a foreign currency note elects to receive payments in the
specified currency, payments made by DLJ of principal of, premium, if any, and
interest, if any, on a foreign currency note will be made in U.S. dollars. The
U.S. dollar amount to be received by a holder will be based on the highest bid
quotation in The City of New York received by the exchange rate agent at
approximately 11:00 a.m., New York City time, on the second business day
preceding the applicable payment date from three recognized foreign exchange
dealers (one of which may be the exchange rate agent) for the purchase by the
quoting dealer of the specified currency for U.S. dollars for settlement on the
payment date in the aggregate amount of the specified currency payable to the
holders of notes scheduled to receive U.S. dollar payments and at which the
applicable dealer commits to execute a contract. If these bid quotations are not
available, payments to holders will be made in the specified currency.
Unless otherwise specified in the applicable pricing supplement, a holder
of a foreign currency note may elect to receive payment in the specified
currency for all payments and need not file a separate election for each
payment, and such election shall remain in effect until revoked by written
notice to the paying agent at its corporate trust office in The City of New York
received on a date prior to the record date for the relevant interest payment
date or at least 10 calendar days prior to the maturity date (or any redemption
date or repayment date), as the case may be; provided, that such election is
irrevocable as to the next succeeding payment to which it relates; if such
election is made as to full payment on a note, the election may thereafter be
revoked so long as the paying agent is notified of the revocation within the
time period set forth above.
Banks in the United States offer non-U.S. dollar denominated checking or
savings account facilities in the United States only on a limited basis.
Accordingly, unless otherwise indicated in the applicable pricing supplement,
payments of principal of, premium, if any, and interest, if any, on, foreign
currency notes to be made in a specified currency other than U.S. dollars will
be made to an account at a bank outside the United States, unless alternative
arrangements are made.
Except as set forth below with respect to notes denominated or payable in
currencies of European Community member states participating in the third stage
of European monetary union, if a specified currency (other than the U.S. dollar)
in which a note is denominated or payable: (i) ceases to be recognized by the
government of the country which issued such currency or for the settlement of
transactions by public institutions of or within the international banking
community, (ii) is a currency unit and such currency unit ceases to be used for
the purposes for which it was established, or (iii) is not available to DLJ for
making payments due to the imposition of exchange controls or other
circumstances beyond the control of DLJ, in each such case as determined in good
faith by DLJ, then with respect to each date for the payment of principal of and
interest, if any, on a note denominated or payable in such specified currency
occurring after the last date on which such specified currency was so used (the
"Conversion Date"), the U.S. dollar or such foreign currency or currency unit as
may be specified by DLJ (the "substitute currency") shall become the currency of
payment for use on each such payment date (but
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such specified currency shall, at DLJ's election, resume being the currency of
payment on the first such payment date preceded by 15 business days during
which the circumstances which gave rise to the change of currency no longer
prevail, in each case as determined in good faith by DLJ). The substitute
currency amount to be paid by DLJ to the trustee and by the trustee or any
paying agent to the holder of a note with respect to such payment date shall be
the currency equivalent or currency unit equivalent (each as defined below) of
the specified currency as determined by the exchange rate agent (which
determination shall be delivered in writing to the trustee not later than the
fifth business day prior to the applicable payment date) as of the conversion
date or, if later, the date most recently preceding the payment date in
question on which such determination is possible of performance, but not more
than 15 days before such payment date (such conversion date or date preceding a
payment date as aforesaid being called the "valuation date"). Any payment in a
substitute currency under the circumstances described above will not constitute
an event of default under the indenture or the notes.
The "currency equivalent" shall be determined by the exchange rate agent
as of each valuation date and shall be obtained by converting the specified
currency (unless the specified currency is a currency unit) into the substitute
currency at the market exchange rate (as defined below) on the valuation date.
The "currency unit equivalent" shall be determined by the exchange rate
agent as of each valuation date and shall be the sum obtained by adding together
the results obtained by converting the specified amount of each initial
component currency into the substitute currency at the market exchange rate on
the valuation date for such component currency.
The following terms have the following meanings:
(a) "component currency" means any currency which, on the
conversion date, was a component currency of the relevant currency unit;
(b) "market exchange rate" means, as of any date, for any currency
or currency unit the noon U.S. dollar buying rate for that currency or
currency unit, as the case may be, for cable transfers quoted in New York
City on such date as certified for customs purposes by the Federal Reserve
Bank of New York. If such rates are not available for any reason with
respect to one or more currencies or currency units for which an exchange
rate is required, the exchange rate agent will use, in its sole discretion
and without liability on its part, such quotation of the Federal Reserve
Bank of New York as of the most recent available date, or quotations from
one or more major banks in New York City or in the country of issue of the
currency or currency unit in question, or such other quotations as the
exchange rate agent shall deem appropriate. Unless otherwise specified by
the exchange rate agent if there is more than one market for dealing in
any currency or currency unit by reason of foreign exchange regulations or
otherwise, the market to be used in respect of such currency or currency
unit will be that upon which a nonresident issuer of securities designated
in such currency or currency unit would, as determined in its sole
discretion and without liability on the part of the exchange rate agent,
purchase such currency or currency unit in order to make payments in
respect of such securities;
(c) "specified amount" of a component currency means the number of
units (including decimals) which such component currency represented in
the relevant currency unit, on the conversion date or the valuation date
or the last date the currency unit was so used, whichever is later. If
after such date the official unit of any component currency is altered by
way of combination or subdivision, the specified amount of such component
currency shall be divided or multiplied in the same proportion. If after
such date two or more component currencies are consolidated into a single
currency, the respective specified amounts of such component currencies
shall be replaced by an amount in such single currency equal to the sum of
the respective specified amounts of such consolidated component currencies
expressed in such single currency, and such amount shall thereafter be a
specified amount and such single currency shall thereafter be a component
currency. If after such date any component currency shall be divided into
two or more currencies, the specified amount of such component currency
shall be replaced by specified amounts of such two or more currencies, the
sum of which, at the market exchange rate of such two or more currencies
on the date of such replacement, shall be equal to the specified amount of
such former component currency and such amounts shall thereafter be
specified amounts and such currencies shall thereafter be component
currencies.
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All determinations referred to above made by DLJ or its agents shall be at
its sole discretion and shall, in the absence of manifest error, be conclusive
for all purposes and binding on holders of notes.
Specific information about the currency, currency unit or composite
currency in which a particular foreign currency note is denominated, including
historical exchange rates and a description of the currency and any exchange
controls, will be set forth in the applicable pricing supplement. The
information therein concerning exchange rates is furnished as a matter of
information only and should not be regarded as indicative of the range of or
trends in fluctuations in currency exchange rates that may occur in the future.
Notes Denominated in the Currencies of EC Member Countries
If one or more of the Danish krone, Greek drachma, Pound sterling or
Swedish krona is replaced by the euro, then all payments in respect of Notes
denominated in such currencies shall be effected in euro in conformity with
legally applicable measures taken pursuant to, or by virtue of, applicable law
and such payment will not constitute an event of default under the indenture or
the notes.
MINIMUM DENOMINATIONS, RESTRICTIONS ON MATURITIES, REPAYMENT AND REDEMPTION
Notes denominated in specified currencies other than U.S. dollars will
have the minimum denominations and will be subject to the restrictions on
maturities, repayment and redemption that are set forth in the applicable
pricing supplement. Any other restrictions applicable to notes denominated in
specified currencies other than U.S. dollars, including restrictions related to
the distribution of such notes, will be set forth in the related pricing
supplement.
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FOREIGN CURRENCY RISKS
This Prospectus Supplement and any applicable Pricing Supplement do not
describe all of the possible risks of an investment in notes whose payment will
be made in, or affected by the value of, a foreign currency or a composite
currency. You should not invest in those notes if you are not knowledgeable
about foreign currency and indexed transactions. You should consult your own
financial and legal advisors about such risks as such risks may change from time
to time.
We are providing the following information for the benefit of U.S.
residents. If you are not a U.S. resident, you should consult your own financial
and legal advisors before investing in any Notes.
EXCHANGE RATES AND EXCHANGE CONTROLS
A note denominated in, or affected by the value of, a currency other than
U.S. dollars has additional risks that don't exist for U.S. dollar denominated
notes. The most important risks are (i) possible changes in exchange rates
between the U.S. dollar and the other currency after the issuance of the note
and (ii) imposition or modification of foreign exchange controls by either the
U.S. government or foreign governments. Such risks generally depend on economic
and political events over which we have no control.
Exchange rates have fluctuated greatly in recent years and are likely to
continue to fluctuate. These fluctuations are caused by economic forces as well
as political factors. However, you cannot predict future fluctuations based on
past exchange rates. If the foreign currency decreases in value relative to the
U.S. dollar, the yield on a foreign currency note or currency-linked indexed
note for a U.S. investor will be less than the coupon rate and you may lose
money at maturity or if you sell the note. In addition, you may lose all or most
of your investment in a currency-linked indexed note as a result of changes in
exchange rates.
Governments often impose exchange controls which can affect exchange rates
or the availability of the foreign currency to make payments of principal and
interest on the notes. If the specified foreign currency is not available, we
will make the required payments in U.S. dollars on the basis of the market
exchange rate on the date of such payment, or if such rate of exchange is not
then available, on the basis of the market exchange rate as of a recent date.
See "Special Provisions Relating to Foreign Currency Notes--Payment Currency".
FOREIGN CURRENCY JUDGEMENTS
The indenture and the notes are governed by New York State law. If you
bring a lawsuit in a New York State court or in a Federal court located in New
York State for payment of a foreign currency note, the court would award a
judgment in the foreign currency and convert the judgment into U.S. dollars on
the date of the judgment. U.S. courts located outside New York State would
probably award a judgment in U.S. dollars but it is unclear what rate of
exchange they would use.
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UNITED STATES TAX CONSIDERATIONS
The following is a summary of the material United States federal income
tax considerations that may be relevant to you. The summary is based upon the
advice of Davis Polk & Wardwell, our special tax counsel. This summary is based
on the Internal Revenue Code of 1986, administrative pronouncements, judicial
decisions and existing and proposed Treasury regulations, including regulations
issued by the IRS now in effect, all of which may change after the date of this
prospectus supplement. This summary assumes that you will acquire the notes on
original issuance at the notes' issue price and will hold the notes as capital
assets. It does not discuss all of the tax considerations that may be relevant
to holders that may be subject to special tax rules, such as certain financial
institutions, insurance companies, dealers in securities or foreign currencies,
United States holders whose "functional currency" is not the U.S. dollar,
persons holding notes in connection with a hedging transaction, a "straddle"
transaction, conversion transaction or other integrated transaction, traders in
securities that elect to mark to market, holders liable for alternative minimum
tax or persons who have ceased to be United States citizens or to be taxed as
resident aliens.
You should consult your tax advisor about the tax consequences of holding
notes, including the application of the United States federal income tax laws to
your particular situation as well as any tax considerations arising under any
State, local or other tax law.
As used below, a United States holder is (for United States federal income
tax purposes) (i) an individual who is a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision thereof,
or (iii) an estate or trust the income of which is subject to United States
federal income taxation regardless of its source. The term also includes certain
former citizens and long-term residents of the United States.
As used below a Non-U.S. holder is (for United States federal income tax
purposes), (i) a nonresident alien individual, (ii) a foreign corporation, (iii)
a nonresident alien fiduciary of a foreign estate or trust or (iv) a foreign
partnership one or more of the members of which is, for United States federal
income tax purposes, a nonresident alien individual, a foreign corporation or a
nonresident alien fiduciary of a foreign estate or trust.
As used below, the term original issue discount note has the meaning
described under "--Original Issue Discount Notes." Certain notes that constitute
original issue discount notes for purposes of other portions of this Prospectus
Supplement may not be treated as original issue discount notes for purposes of
this summary, and notes other than those constituting original issue discount
notes for purposes of other portions of this Prospectus Supplement may be
treated as original issue discount notes for purposes of this summary. See
"Description of Notes--Original Issue Discount Notes" above.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
PAYMENTS OF INTEREST
Interest paid on a note will generally be taxable to a United States
holder as ordinary interest income at the time it accrues or is received in
accordance with the United States holder's method of accounting for federal
income tax purposes. All payments of interest on a note that matures one year or
less from its date of issuance will be included in the stated redemption price
at maturity of the note and will be taxed in the manner described below under
"--Original Issue Discount Notes." Special rules governing the treatment of
interest paid with respect to original issue discount notes (including certain
floating rate notes and indexed notes), foreign currency notes, notes (other
than foreign currency notes) the principal of which or the interest on which (or
both) is determined using a formula based on the exchange rate of one or more
foreign currencies, currency units or composite currencies ("currency indexed
notes"), and dual currency notes are described under "--Original Issue Discount
Notes," "--Foreign Currency Notes" and "--Currency Indexed Notes and Dual
Currency Notes" below.
ORIGINAL ISSUE DISCOUNT NOTES
For purposes of the summary under "United States Tax Considerations," a
note that is issued for an amount less than its stated redemption price at
maturity will generally be considered to have been issued
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at an original issue discount for federal income tax purposes (an "original
issue discount note"). The "issue price" of a note will equal the first price
to the public (not including bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers) at which a substantial amount of the notes is sold for money. The
stated redemption price at maturity of a note will equal the sum of all
payments required under the note other than payments of "qualified stated
interest." "Qualified stated interest" is stated interest unconditionally
payable as a series of payments in cash or property (other than our debt
instruments) at least annually during the entire term of the note and equal to
the outstanding principal balance of the note multiplied by a single fixed rate
of interest. In addition, interest unconditionally payable at least annually
with respect to floating rate notes may in certain circumstances be treated as
qualified stated interest. Ordinarily, interest payable at least annually at a
single interest rate basis that can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds, such as the CD
rate, Commercial Paper rate, Federal Funds rate, LIBOR, Prime rate, and the
Treasury rate, plus or minus a fixed spread (or a fixed rate minus one of the
above interest rate bases) will generally be treated as qualified stated
interest. However, special tax considerations (including possible original
issue discount and contingent debt treatment (see below)) may arise with
respect to floating rate notes providing for (i) interest not unconditionally
payable at least annually, (ii) interest payable at more than one interest rate
basis, (iii) interest payable at a fixed rate followed or preceded by interest
payable at an interest rate basis or bases, (iv) a spread multiplier, (v) a
cap, floor, governor or similar restriction that is not fixed throughout the
term of the note, or (vi) an interest rate, the average value of which during
the first half of the note's term is reasonably expected to be either
significantly less than or significantly greater than the average value of the
rate during the final half of the note's term. Purchasers of floating rate
notes should consult their tax advisors since the tax consequences will depend,
in part, on the particular terms of the purchased note.
Prospective holders of indexed notes or floating rate notes providing for
contingent payments should refer to the discussion regarding taxation in the
applicable Pricing Supplement and should consult their tax advisers regarding
the federal income tax consequences of ownership and disposition of those notes.
If the difference between a note's stated redemption price at maturity and
its issue price is less than a de minimis amount, i.e., 1/4 of 1% of the stated
redemption price at maturity multiplied by the number of complete years to
maturity, the note will not be considered to have original issue discount.
Holders of notes with a de minimis amount of original issue discount will
generally include such original issue discount in income, as capital gain, on a
pro rata basis as principal payments are made on the note.
A United States holder of original issue discount notes will be required
to include any qualified stated interest payments in income in accordance with
the United States holder's method of accounting for federal income tax purposes.
United States holders of original issue discount notes that mature more than one
year from their date of issuance will be required to include original issue
discount in income for federal income tax purposes as it accrues, in accordance
with a constant yield method based on a compounding of interest, before the
receipt of cash payments attributable to the original issue discount.
A note that matures one year or less from its date of issuance will be
treated as a "short-term original issue discount note." In general, a cash
method United States holder of a short-term original issue discount note is not
required to accrue original issue discount for United States federal income tax
purposes unless it elects to do so. United States holders who make such an
election, United States holders who report income for federal income tax
purposes on the accrual method and certain other United States holders,
including banks and dealers in securities, are required to include original
issue discount in income on such short-term original issue discount notes as it
accrues on a straight-line basis, unless an election is made to accrue the
original issue discount according to a constant yield method based on daily
compounding. In the case of a United States holder who is not required and who
does not elect to include original issue discount in income currently, any gain
realized on the sale, exchange or retirement of the short-term original issue
discount note will be ordinary income to the extent of the original issue
discount accrued on a straight-line basis (or, if elected, according to a
constant yield method based on daily compounding), reduced by any interest
received, through the date of sale, exchange or retirement. In addition, the
United States holder will be required to defer deductions for any interest paid
on indebtedness incurred to purchase or carry short-term original issue discount
notes in an amount not exceeding the deferred interest income, until the
deferred interest income is recognized.
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Under the OID Regulations, a United States holder may make an election
(the "constant yield election") to include in gross income all interest that
accrues on a note (including stated interest, acquisition discount, original
issue discount, de minimis original issue discount, and unstated interest, as
adjusted by any amortizable bond premium) in accordance with a constant yield
method based on the compounding of interest.
Original issue discount notes that are redeemable by us or repayable at
the option of the United States holder prior to maturity may be subject to rules
that differ from the general rules discussed above. Purchasers of original issue
discount notes that are redeemable or repayable prior to maturity should
carefully examine the applicable Pricing Supplement and should consult their tax
advisors since the tax consequences will depend, in part, on the particular
terms and the particular features of the purchased note.
The OID Regulations contain aggregation rules stating that in certain
circumstances if more than one type of note is issued as part of the same
issuance of securities to a single holder, some or all of the notes may be
treated together as a single debt instrument with a single issue price, maturity
date, yield to maturity and stated redemption price at maturity for purposes of
calculating and accruing any original issue discount. Unless otherwise provided
in the related Pricing Supplement, we do not expect to treat any of the notes as
being subject to the aggregation rules for purposes of computing original issue
discount.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a note, a United States holder
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and the United States holder's
adjusted tax basis in the note. For these purposes, the amount realized does not
include any amount attributable to accrued interest on the note. Amounts
attributable to accrued interest are treated as interest as described under
"--Payments of Interest" above. A United States holder's adjusted tax basis in a
note will equal the cost of the note to the United States holder, increased by
the amounts of any original issue discount previously includible in income by
the United States holder with respect to the note and reduced by any amortizable
bond premium used to offset qualified stated interest and certain bond premium
allowed as a deduction and any principal payments received by the United States
holder and, in the case of an original issue discount note, by the amounts of
any other payments that do not constitute qualified stated interest (as defined
above).
Subject to the discussion under "--Foreign Currency-Denominated Notes"
below, gain or loss realized on the sale, exchange or retirement of a note will
be capital gain or loss (except, in the case of a short-term original issue
discount note, to the extent of any original issue discount not previously
included in the United States holder's taxable income), and will be long-term
capital gain or loss if at the time of sale, exchange or retirement the note has
been held for more than one year. See "--Original Issue Discount Notes" above.
The excess of net long-term capital gains over net short-term capital losses is
taxed at a lower rate than ordinary income for certain non-corporate taxpayers.
The distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
If a United States holder purchases a note for an amount that is greater
than the amount payable at maturity, the United States holder will be considered
to have purchased the note with "amortizable bond premium" equal in amount to
the excess, and may elect to amortize the premium over the remaining term of the
note, based on the United States, holder's yield to maturity with respect to the
note as determined under the bond premium rules. A United States holder may
generally use the amortizable bond premium allocable to an accrual period to
offset qualified stated interest required to be included in the United States
holder's income with respect to the note in that accrual period. Under recently
promulgated regulations, if the amortizable bond premium allocable to an accrual
period exceeds the amount of qualified stated interest allocable to such accrual
period, such excess would be allowed as a deduction for such accrual period, but
only to the extent of the United States holder's prior interest inclusions on
the note. Any excess is generally carried forward and allocable to the next
accrual period. A holder who elects to amortize bond premium must reduce his tax
basis in the note as described above under "Sale, Exchange or Retirement of the
Notes". An election to amortize bond premium applies to all taxable debt
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obligations held by the United States holder at the beginning of the first
taxable year to which the election applies or thereafter acquired and may be
revoked only with the consent of the Internal Revenue Service. The recent
regulations provide limited automatic consent for a United States holder to
change its method of accounting for bond premium to the constant yield method
if the change is made for the first taxable year (by a statement on the
relevant return) for which the United States holder must account for a bond
under the recent regulations.
If a United States holder makes a constant yield election for a note with
amortizable bond premium, such election will result in a deemed election to
amortize bond premium for all of the United States holder's debt instruments
with amortizable bond premium acquired in the same or a later taxable year and
may be revoked only with the permission of the Internal Revenue Service with
respect to debt instruments acquired after revocation.
FOREIGN CURRENCY NOTES
A United States holder who uses the cash method of accounting and who
receives a payment of interest in a foreign currency with respect to a foreign
currency note (other than an original issue discount note on which original
issue discount is accrued on a current basis (except to the extent any qualified
stated interest is received)) will be required to include in income the U.S.
dollar value of the foreign currency payment (determined on the date such
payment is received) regardless of whether the payment is in fact converted to
U.S. dollars at that time, and such U.S. dollar value will be the United States
holder's tax basis in the foreign currency. A cash method United States holder
who receives such a payment in U.S. dollars pursuant to an option available
under such a foreign currency note will be required to include the amount of the
payment in income upon receipt.
To the extent the above paragraph is not applicable, a United States
holder will be required to include in income the U.S. dollar value of the amount
of interest income (including original issue discount, but reduced by
amortizable bond premium to the extent applicable) that is required to be
accrued with respect to a foreign currency note during an accrual period. The
U.S. dollar value of the accrued income will be determined by translating such
income at the average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the average rate for the
partial period within the taxable year. Such United States holder will recognize
ordinary income or loss with respect to accrued interest income on the date such
income is actually received. The amount of ordinary income or loss recognized
will equal the difference between the U.S. dollar value of the foreign currency
payment received (determined on the date such payment is received) in respect of
such accrual period (or, where a United States holder receives U.S. dollars, the
amount of such payment in respect of such accrual period) and the U.S. dollar
value of interest income that has accrued during such accrual period (as
determined above). A United States holder may elect to translate interest income
(including original issue discount) into U.S. dollars at the spot rate on the
last day of the interest accrual period (or, in the case of a partial accrual
period, the spot rate on the last day of the taxable year) or, if the date of
receipt is within five business days of the last day of the interest accrual
period, the spot rate on the date of receipt. A United States holder that makes
such an election must apply it consistently to all debt instruments from year to
year and cannot change the election without the consent of the Internal Revenue
Service. Original issue discount and amortizable bond premium on a foreign
currency note are to be determined in the relevant foreign currency.
Any loss realized on the sale, exchange or retirement of a foreign
currency note with amortizable bond premium by a United States holder who has
not elected to amortize the premium will be a capital loss to the extent of the
bond premium. If such an election is made, amortizable bond premium taken into
account under the applicable rules described above will reduce interest income
in units of the relevant foreign currency. Exchange gain or loss is realized on
the amortized bond premium with respect to any period by treating the bond
premium amortized in the period as a return of principal.
A United States holder's tax basis in a foreign currency note, and the
amount of any subsequent adjustment to the United States holder's tax basis,
will be the U.S. dollar value of the foreign currency amount paid for such
foreign currency note, or of the foreign currency amount of the adjustment,
determined on the date of such purchase or adjustment. A United States holder
who purchases a foreign
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<PAGE>
currency note with previously owned foreign currency will recognize ordinary
income or loss in an amount equal to the difference, if any, between the United
States holder's tax basis in the foreign currency and the U.S. dollar fair
market value of the foreign currency note on the date of purchase.
Gain or loss realized upon the sale, exchange or retirement of a foreign
currency note that is attributable to fluctuations in currency exchange rates
will be ordinary income or loss which will not be treated as interest income or
expense. Gain or loss attributable to fluctuations in exchange rates will equal
the difference between (i) the U.S. dollar value of the foreign currency
principal amount of the note, and any payment with respect to accrued interest,
determined on the date such payment is received or the note is disposed of, and
(ii) the U.S. dollar value of the foreign currency principal amount of the note,
determined on the date the United States holder acquired the note, and the U.S.
dollar value of the accrued interest received, determined by translating the
interest at the average exchange rate for the accrual period. Such foreign
currency gain or loss will be recognized only to the extent of the total gain or
loss realized by a United States holder on the sale, exchange or retirement of
the foreign currency note. The source of the foreign currency gain or loss will
be determined by reference to the residence of the United States holder or the
"qualified business unit" of the United States holder on whose books the note is
properly reflected. Any gain or loss realized by the a United States holder in
excess of such foreign currency gain or loss will be capital gain or loss
(except, in the case of a short-term original issue discount note, to the extent
of any original issue discount not previously included in the United States
holder's income).
A United States holder will have a tax basis in any foreign currency
received on the sale, exchange or retirement of a foreign currency note equal to
the U.S. dollar value of the foreign currency, determined at the time of the
sale, exchange or retirement. Treasury regulations provide a special rule for
purchases and sales of publicly traded foreign currency notes by a cash method
taxpayer under which units of foreign currency paid or received are translated
into U.S. dollars at the spot rate on the settlement date of the purchase or
sale. Accordingly, no exchange gain or loss will result from currency
fluctuations between the trade date and the settlement of such a purchase or
sale. An accrual method taxpayer may elect the same treatment required of
cash-method taxpayers with respect to the purchase and sale of publicly traded
foreign currency notes provided the election is applied consistently. The
election cannot be changed without the consent of the Internal Revenue Service.
Any gain or loss realized by a United States holder on a sale or other
disposition of foreign currency (including its exchange for U.S. dollars or its
use to purchase foreign currency notes) will be ordinary income or loss.
CURRENCY INDEXED NOTES AND DUAL CURRENCY NOTES
The federal income tax considerations associated with an investment in
indexed notes and dual currency notes will be set forth in the applicable
Pricing Supplement with respect to the notes.
EXTENSION OF MATURITY AND RESET OF INTEREST RATE
While it is not free from doubt, under Treasury regulations promulgated by
the Internal Revenue Service the reset of the interest rate on, or the extension
of the maturity of, a Note pursuant to its original terms generally should not
be viewed as a taxable exchange. United States holders should consult with their
own tax advisors as to the federal income tax consequences of such a reset or
extension.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Certain noncorporate United States holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium and interest
(including original issue discount, if any) on, and the proceeds of disposition
of, a note. Backup withholding will apply only if the United States holder (i)
fails to furnish its taxpayer identification number which, for an individual,
would be his Social Security number, (ii) furnishes an incorrect taxpayer
identification number, (iii) is notified by the Internal Revenue Service that it
has failed to properly report payments of interest and dividends or (iv) under
certain circumstances, fails to certify, under penalties of perjury, that it has
furnished a correct taxpayer identification number
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<PAGE>
and has not been notified by the Internal Revenue Service that it is subject to
backup withholding for failure to report interest and dividend payments. United
States holders should consult their tax advisors regarding their qualification
for exemption from backup withholding and the procedure for obtaining the
exemption if applicable.
The amount of any backup withholding from a payment to a United States
holder will be allowed as a credit against such United States holder's United
States federal income tax liability and may entitle such United States holder to
a refund, provided that the required information is furnished to the Internal
Revenue Service.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
Under present United States federal tax law, and subject to the discussion
below concerning indexed notes and backup withholding:
(a) payments of principal, interest (including original issue
discount, if any) and premium on the notes by us or any paying agent to
any Non-U.S. holder will not be subject to United States federal
withholding tax, provided that, in the case of interest, (i) the Non-U.S.
holder does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of our stock entitled to vote, is not
a controlled foreign corporation related, directly or indirectly, to us
through stock ownership, and is not a bank receiving interest described in
Section 881(c)(3)(A) of the Code and (ii) the statement requirement set
forth in Section 871(h) or Section 881(c) of the Code has been fulfilled
with respect to the beneficial owner, as discussed below;
(b) a Non-U.S. holder of a note will not be subject to United
States federal income tax on gain realized on the sale, exchange or other
disposition of such note, unless (i) the Non-U.S. Holder is an individual
who is present in the United States for 183 days or more in the taxable
year of disposition, and either (a) the individual has a "tax home" in the
United States (unless such gain is attributable to a fixed place of
business in a foreign country maintained by such individual and has been
subject to foreign tax of at least 10%) or (b) the gain is attributable to
an office or other fixed place of business maintained by the individual in
the United States or (ii) such gain is effectively connected with the
conduct by the Non-U.S. holder of a trade or business in the United
States.
(c) a note held by an individual who is not, for United States
estate tax purposes, a resident or citizen of the United States at the
time of his death generally will not be subject to United States federal
estate tax as a result of the individual's death, provided that the
individual does not own, actually or constructively, 10% or more of the
total combined voting power of all classes of our stock entitled to vote
and, at the time of such individual's death, payments with respect to such
note would not have been effectively connected to the conduct by such
individual of a trade or business in the United States.
The rules described in subparagraphs (a) and (c) above will not apply to
contingent interest if the amount of such interest is contingent interest
described in Section 871(h)(4) of the Code (generally, interest determined with
reference to the profitability or similar indicia of our financial performance
or the financial performance of a related person).
The certification requirement referred to in subparagraph (a) will be
fulfilled if the beneficial owner of a note certifies on Internal Revenue
Service Form W-8, under penalties of perjury, that it is not a United States
person and provides its name and address, and (i) the beneficial owner files
such Form W-8 with the withholding agent or (ii) in the case of a note held on
behalf of the beneficial owners by a securities clearing organization, bank or
other financial institution holding customers' securities in the ordinary course
of its trade or business, the financial institution files with the withholding
agent a statement that it has received the Form W-8 from the Non-U.S. holder and
furnishes the withholding agent with a copy thereof. With respect to notes held
by a foreign partnership, under current law, the Form W-8 may be provided by the
foreign partnership. However, unless a foreign partnership has entered into a
withholding agreement with the Internal Revenue Service, for interest (including
original issue discount) and disposition proceeds paid with respect to a note
after December 31, 1999, the foreign partnership will be required (and may be
permitted earlier), in addition to providing an intermediary
S-28
<PAGE>
Form W-8, to attach an appropriate certification by each partner. Prospective
investors, including foreign partnerships and their partners, should consult
their tax advisers regarding possible additional reporting requirements.
If a Non-U.S. holder of a note is engaged in a trade or business in the
United States, and if interest (including original issue discount) on the note
(or gain realized on its sale, exchange or other disposition) is effectively
connected with the conduct of such trade or business, the Non-U.S. holder,
although exempt from the withholding tax discussed in the preceding paragraph,
will generally be subject to regular United States income tax on such
effectively connected income in the same manner as if it were a United States
holder. See "--Tax Consequences to United States Holders" above. In lieu of the
certificate described in the preceding paragraph, such Non-U.S. holder will be
required to provide to the withholding agent a properly executed Internal
Revenue Service Form 4224 (or, by January 1, 2000, a Form W-8) to claim an
exemption from withholding tax. In addition, if such Non-U.S. holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% (or
such lower rate provided by an applicable treaty) of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest (including original issue discount)
on and any gain recognized on the sale, exchange or other disposition of a note
will be included in the effectively connected earnings and profits of such
Non-U.S. holder if such interest or gain, as the case may be, is effectively
connected with the conduct by the Non-U.S. holder of a trade or business in the
United States.
Under current United States federal income tax law, a 31% backup
withholding tax and information reporting requirements apply to certain payments
of principal, premium and interest (including original issue discount) made to,
and to the proceeds of sale before maturity by, certain noncorporate United
States persons. Under current Treasury regulations, backup withholding will not
apply to payments made by us or our paying agent on a note if the certifications
required by Sections 871(h) and 881(c) are received and we or our paying agent,
as the case may be, does not have actual knowledge that the payee is a United
States person.
Under current Treasury regulations, payments on the sale, exchange or
other disposition of a note made to or through a foreign office of a broker
generally will not be subject to backup withholding. However, if such broker is
a United States person, a controlled foreign corporation for United States tax
purposes, a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period or, in the case of payments made after December 31, 1999, a foreign
partnership with certain connections to the United States, information reporting
will be required unless the broker has in its records documentary evidence that
the beneficial owner is not a United States person and certain other conditions
are met or the beneficial owner otherwise establishes an exemption. Backup
withholding may apply to any payment which such broker is required to report if
such broker has actual knowledge that the payee is a United States person.
Payments to or through the United States office of a broker will be subject to
backup withholding and information reporting unless the Non-U.S. holder
certifies, under penalties of perjury, that it is not a United States person or
otherwise establishes an exemption.
Non-U.S. holders of notes should consult their tax advisors regarding the
application of information reporting and backup withholding in their particular
situations, the availability of an exemption therefrom, and the procedure for
obtaining such an exemption, if available. Any amounts withheld from a payment
to a Non-U.S. holder under the backup withholding rules will be allowed as a
credit against such Non-U.S. holder's United States federal income tax liability
and may entitle such Non-U.S. holder to a refund, provided that the required
information is furnished to the United States Internal Revenue Service.
THE FEDERAL INCOME TAX SUMMARY SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. PROSPECTIVE UNITED STATES HOLDERS AND NON-U.S. HOLDERS OF THE NOTES
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES
TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING
THE TAX CONSEQUENCES UNDER FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND
THE EFFECTS OF CHANGES IN SUCH LAWS.
S-29
<PAGE>
PLAN OF DISTRIBUTION
This Prospectus Supplement has been prepared for use by DLJSC in
connection with offers and sales of the Notes in market-making transactions at
negotiated prices related to prevailing market prices at the time of the sale.
DLJSC may act as principal or agent in such transactions. DLJSC and certain
other Agents have advised the Company that they currently intend to make a
market in the Notes, but they are not obligated to do so and may discontinued
any such market-making at any time without notice. Accordingly, no assurance
can be given as to the liquidity of, or the trading market for, the Notes.
S-30
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
MARCH 12, 1999
DONALDSON, LUFKIN & JENRETTE, INC.
$2,000,000,000
DEBT SECURITIES AND PREFERRED STOCK
----------------
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
We will not use this prospectus to confirm sales of any securities unless
it is attached to a prospectus supplement.
Unless we state otherwise in a prospectus supplement, we will not list any
of these securities on any securities exchange.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
---------------------
TABLE OF CONTENTS
---------------------
PAGE
----
About this Prospectus ...................................................... 3
Where You can Find More Information ........................................ 3
Use of Proceeds ............................................................ 4
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends ..................................... 4
Donaldson, Lufkin & Jenrette, Inc. ......................................... 5
Description of Preferred Stock ............................................. 6
Description of Debt Securities ............................................. 9
ERISA ...................................................................... 16
Plan of Distribution ....................................................... 16
Legal Matters .............................................................. 17
Experts .................................................................... 17
2
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may sell any combination of the securities
described in this prospectus in one or more offerings up to a total dollar
amount of $2,000,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with the additional
information described under the heading "Where You Can Find More Information".
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934 until we sell all of the securities:
o Annual Report on Form 10-K for the year ended December 31, 1997;
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998; and
o Current Reports on Form 8-K filed on April 14, 1998, June 25, 1998,
July 16, 1998, July 17, 1998, September 2, 1998, October 15, 1998,
October 16, 1998, November 12, 1998, January 12, 1999 and January 25,
1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at our principal executive offices at the following address:
Donaldson Lufkin & Jenrette, Inc.
277 Park Avenue
New York, New York 10172
Attention: Corporate Secretary
Tel: (212) 892-3000
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of these
documents.
We have filed or incorporated by reference exhibits with this registration
statement that include the form of proposed underwriting agreement and
indenture. You should read the exhibits carefully for provisions that may be
important to you.
3
<PAGE>
USE OF PROCEEDS
Unless we tell you otherwise in a prospectus supplement, we will use the
proceeds from the sale of these securities for general corporate purposes,
including refinancing existing indebtedness. We may also invest the proceeds
temporarily in short-term securities.
RATIOS OF EARNINGS
TO FIXED CHARGES AND EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth DLJ's ratios of earnings to fixed charges
and earnings to combined fixed charges and preferred stock dividends for the
periods indicated.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges ............ 1.10 1.11 1.16 1.16 1.13
Ratio of earnings to combined fixed charges and
preferred stock dividends .................... 1.09 1.10 1.16 1.16 1.13
</TABLE>
For the purpose of calculating the above ratios:
o earnings consist of income before provision for income taxes and fixed
charges and
o fixed charges consist of interest expense and one-third of rental
expense which we deem representative of an interest factor.
4
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC.
DLJ is a leading integrated investment and merchant bank that serves
institutional, corporate, governmental and individual clients both domestically
and internationally. DLJ is a holding company which conducts its business
through various subsidiaries including its principal broker-dealer subsidiary,
Donaldson, Lufkin & Jenrette Securities Corporation. DLJ's business includes
securities underwriting, sales and trading, merchant banking, financial advisory
services, investment research, correspondent brokerage services and asset
management.
Founded in 1959, DLJ initially focused on providing in-depth investment
research to institutional investors. In 1970, DLJ became the first member firm
of the New York Stock Exchange to be owned publicly. Fifteen years later,
Equitable Life Assurance Society of the United States purchased DLJ. Until our
initial public offering in October 1995, we were an independently operated
indirect wholly-owned subsidiary of The Equitable Companies Incorporated. At
March 1, 1999, Equitable owned 71.3% of our outstanding common stock. Equitable
is a diversified financial services organization and one of the world's largest
investment management organizations. AXA, a French holding company for an
international group of insurance and related financial services companies, is
Equitable's largest stockholder, beneficially owning, at March 1, 1999,
approximately 59.6% of Equitable's outstanding common stock. In addition, at
March 1, 1999, AXA directly owned an additional 1.5% of our outstanding common
stock.
We currently employ approximately 8,500 people worldwide and maintain
offices in 14 cities in the United States and 11 cities in Europe, Latin America
and Asia.
Our principal executive offices are located at 277 Park Avenue, New York,
NY 10172 and our telephone number is (212) 892-3000.
All references to "us" or "DLJ" in this prospectus are to Donaldson,
Lufkin & Jenrette, Inc.
5
<PAGE>
DESCRIPTION OF PREFERRED STOCK
DLJ's authorized capital stock consists of 300,000,000 shares of common
stock, par value $0.10 per share, and 50,000,000 shares of preferred stock, par
value $0.01 per share. As of March 1, 1999, DLJ had 124,320,184 shares of common
stock, 4,000,000 shares of Series A Fixed Adjustable Rate Preferred Stock and
3,500,000 shares of Series B Fixed Adjustable Rate Preferred Stock outstanding.
In addition to the summary description of our capital stock below, you should
refer to DLJ's Certificate of Incorporation and Bylaws for provisions which may
be important to you. We have filed copies of our Certificate of Incorporation
and Bylaws with the SEC.
PREFERRED STOCK
DLJ's Board of Directors have the authority to issue the preferred stock
in one or more series and to fix the terms of any series without any further
vote or action by the holders of DLJ's Common Stock. In addition, we do not need
the approval of the holders of the Series A or Series B preferred stock to issue
any preferred stock that ranks equal or junior to the Series A and Series B
preferred stock.
We will describe the terms of any series of preferred stock that we issue
in a prospectus supplement. These terms may include:
o The number of shares, purchase price and ranking in comparison to other
series of preferred stock that DLJ has issued
o The liquidation preference payable on each share in the event of DLJ's
voluntary or involuntary liquidation, dissolution or winding up
o The dividend rate, if any, and the dividend payment dates. We may
determine the dividend rate through a formula, which we will describe
in the prospectus supplement for that preferred stock.
o The date or dates, if any, on which DLJ can redeem the shares (and
whether DLJ has agreed to set aside any money for the redemption of the
shares) and the date or dates, if any, on which a holder can ask DLJ
for repayment. We may determine the redemption or repayment price
through a formula, which we will describe in the prospectus supplement
for that preferred stock.
o Any voting rights
o Whether the preferred stock has any preemptive rights. By preemptive
rights we mean a first right to buy any new issuances of any of our
securities.
o The currency, if other than U.S. dollars, in which we will pay
dividends or any redemption or repayment price
o Whether the preferred stock is exchangeable or convertible into other
securities (including securities of an issuer other than DLJ or DLJ's
affiliates)
o The transfer agent and registrar for the preferred stock
o Any other terms
All of DLJ's preferred stock will be fully paid and non-assessable when
issued, which means that the holders have paid their purchase price in full and
that DLJ does not have the right to ask them to pay any more money. DLJ will pay
dividends on all shares of its preferred stock before it pays dividends on its
Common Stock. In addition, if DLJ is liquidated, DLJ will be required to pay the
liquidation preference on all of its shares of preferred stock before holders of
its Common Stock would be entitled to any of DLJ's assets. Unless we state
otherwise in a prospectus supplement, DLJ will not be permitted to pay dividends
or liquidation preference on any series of preferred stock in preference to
payments on any other series of preferred stock.
SERIES A AND SERIES B FIXED ADJUSTABLE RATE PREFERRED STOCK
o We have issued 4,000,000 shares of Series A preferred stock and
3,500,000 shares of Series B preferred stock.
6
<PAGE>
o Liquidation Preference: Both series of preferred stock have liquidation
preferences of $50 per share.
o Preemptive Rights: None.
o Conversion or Exchange Rights: None.
o Fully Paid and Non-assessable: Our Series A and Series B preferred
stock is fully paid and non-assessable.
o Series A Dividend Rates:
o Through November 30, 2001, we must pay dividends to the holders of
our Series A preferred stock at the annual rate of 5.94% or $2.97
per share.
o After November 30, 2001, the dividends that we will pay to holders
of the Series A preferred stock will vary, as described in the terms
of the Series A preferred stock. We will calculate the annual rate
that we will pay by adding 0.50% to the highest of three different
interest rates. One of these rates is the United States 3 month
treasury bill rate and the other two rates are based on the rates
for ten year and thirty year United States treasury bonds. We define
these rates as the Treasury Bill Rate, the Ten Year Constant
Maturity Rate, and the Thirty Year Constant Maturity Rate, and you
can find a detailed description of each of these rates in the terms
of the Series A preferred stock.
o Unless the United States government amends the Internal Revenue Code
as described below under "Changes in Dividends Received Percentage,"
we will never pay the holders of our Series A preferred stock an
annual rate of less than 6.44% or greater than 12.44% after November
30, 2001.
o Series B Dividend Rates:
o Through January 15, 2003, we must pay dividends to the holders of
our Series B preferred stock at the annual rate of 5.30% or $2.65
per share.
o After January 15, 2003, we will calculate the annual rate that we
will pay by adding 0.40% to the highest of the three different
interest rates we described above for the Series A preferred stock.
o Unless the United States government changes the Internal Revenue
Code as described below under "Changes in Dividends Received
Percentage," we will never pay the holders of our Series B preferred
stock an annual rate of less than 5.70% or greater than 11.30% after
January 15, 2003.
o Changes in the Dividends Received Percentage
o The Internal Revenue Code provides that corporations are entitled to
deduct from their net income 70% of the dividend payments that they
receive. Therefore, corporations are taxed on only 30% of the
dividends that they receive.
o If the United States government changes the Internal Revenue Code to
reduce the percentage of dividends received that a corporation can
deduct below 70%, we will have to increase the dividend that we pay
to holders of the Series A preferred stock based on a formula so
that the holders of the Series A preferred stock receive the same
effective dividend. If the United States government reduces the
percentage of dividends received that a corporation can deduct below
50%, we can redeem all of the Series A preferred stock but not just
a portion.
o If, before July 9, 1999, the United States government changes the
Internal Revenue Code to reduce the percentage of dividends received
that a corporation can deduct, we will have to increase the dividend
that we pay to holders of the Series B preferred stock based on a
formula so that the holders of the Series B preferred stock receive
the same effective
7
<PAGE>
dividend. However, if the United States government reduces the
percentage of dividends received that a corporation can deduct below
50%, we will pay dividends on the Series B preferred shares as
though the percentage of dividends received that a corporation can
deduct were 50%.
o Voting Rights
o Preferred shareholders do not have the right to vote, except where
required by law and in the special cases listed below.
o If we do not pay six quarterly dividends on either the Series A or
Series B preferred stock, we will increase the number of our
directors by two. The holders of our Series A or Series B preferred
stock (together with any other series of preferred stock ranking
equally with the Series A and Series B preferred stock and entitled
to the same special voting rights) will have the right to elect two
directors to fill the newly created directorships.
o At least 66 2/3% of the outstanding shares of the Series A or Series
B preferred stock must approve any amendment to our certificate of
incorporation which will adversely affect the powers, preferences,
privileges or rights of that series.
o At least 66 2/3% of the outstanding shares of the Series A and
Series B preferred stock (voting as a single class) must approve any
issuance, authorization or increase in the authorized amount of any
preferred stock, or obligation or security convertible into or
evidencing the right to buy preferred stock, that ranks prior to the
Series A and Series B preferred stock. We need to get the same
approval to reclassify any of our authorized stock into shares which
rank prior to the Series A and Series B preferred stock.
o We do not need the approval of the holders of the Series A or Series
B preferred stock to take any of the actions discussed above with
respect to our any stock ranking equally or junior to our preferred
stock.
o Redemption
o Prior to November 30, 2001, we may not redeem the Series A preferred
stock unless the United States government reduces the percentage of
dividends received that a corporation can deduct below 50%. If the
United States government reduces the percentage of dividends
received that a corporation can deduct below 50%, we may redeem all
of the Series A preferred stock, but we may not redeem only a
portion of the Series A preferred stock. The redemption price will
vary between $51.50 and $50 per share, depending on the redemption
date, plus accrued and unpaid dividends. On or after November 30,
2001, we may redeem any amount of Series A preferred stock by paying
the holder of the shares $50 per share plus accrued and unpaid
dividends.
o Prior to January 15, 2003, we may not redeem the Series B preferred
stock. On or after January 15, 2003, we may redeem any amount of
Series B preferred stock by paying the holder of the shares $50 per
share plus accrued and unpaid dividends.
o In cases of merger or consolidation, we may offer to purchase the
Series A or Series B preferred shares for $50 per share plus any
unpaid and accrued dividends to the time set for redemption.
However, we are not obligated to offer to purchase any preferred
stock in the event of a merger or consolidation.
o Listing
o We listed the Series A preferred stock on the New York Stock
Exchange under the symbol "DLJpfA."
o We listed the Series B preferred stock on the New York Stock
Exchange under the symbol "DLJpfB."
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DESCRIPTION OF DEBT SECURITIES
We may issue either senior debt securities or subordinated debt
securities. Senior debt securities and subordinated debt securities will be
issued in one or more series under either the senior indenture or the
subordinated indenture between us and The Chase Manhattan Bank, as Trustee. In
the following discussion, we sometimes refer to the two indentures as the
"indentures".
This prospectus briefly outlines the provisions of the indentures. The
indentures have been filed as exhibits to the registration statement and you
should read the indentures for provisions that may be important to you. The
indentures are substantially identical except for the subordination and negative
pledge provisions described below.
DLJ is a holding company and depends upon the earnings and cash flow of
its subsidiaries to meet its obligations under the debt securities. Since the
creditors of any of DLJ's subsidiaries would generally have a right to receive
payment that is superior to DLJ's right to receive payment from the assets of
that subsidiary, holders of DLJ's debt securities will be effectively
subordinated to creditors of DLJ's subsidiaries. In addition, the Securities
Exchange Act and the New York Stock Exchange impose net capital requirements on
some of our subsidiaries which limit their ability to pay dividends and make
loans and advances to DLJ.
In the summary below, we have included references to section numbers of
the indentures so that you can easily locate these provisions.
ISSUANCES IN SERIES
The indentures do not limit the amount of debt we may issue. We may issue
the debt securities in one or more series with the same or various maturities,
at a price of 100% of their principal amount or at a premium or a discount. The
debt securities will not be secured by any of DLJ's property or assets.
The prospectus supplement relating to any series of debt securities being
offered will contain the specific terms relating to the offering. These terms
will include some or all of the following:
o Whether the debt securities are senior or subordinated
o The total principal amount of the debt securities
o The percentage of the principal amount at which the debt securities
will be issued and whether the debt securities will be "original issue
discount" securities for U.S. federal income tax purposes. If we issue
original issue discount debt securities (securities that are issued at
a substantial discount below their principal amount because they pay no
interest or pay interest that is below market rates at the time of
issuance), we will describe the special United States federal income
tax and other considerations of a purchase of original issue discount
debt securities in the prospectus supplement.
o The date or dates on which principal will be payable and whether the
debt securities will be payable on demand by the holders on any date
o The manner in which we will calculate payments of principal, premium or
interest and whether any payment will be fixed or based on an index or
formula
o The interest payment dates
o Optional or mandatory redemption terms
o Authorized denominations, if other than $1,000 and integral multiples
of $1,000
o The currency in which the debt securities will be denominated or
principal, premium or interest will be payable, if other than U.S.
dollars
o Whether the debt securities are to be issued as individual certificates
to each holder or in the form of global securities held by a depositary
on behalf of holders
o Information describing any book-entry features
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o Whether and under what circumstances we will pay additional amounts on
any debt securities held by a person who is not a United States person
for tax purposes and whether we can redeem the debt securities if we
have to pay additional amounts
o The names and duties of any co-trustees, depositories, authenticating
agents, paying agents, transfer agents or registrars for any series
o Any other terms
PAYMENT AND TRANSFER
We will issue debt securities only as registered securities, which means
that the name of the holder will be entered in a register which will be kept by
the Trustee or another agent of DLJ. Unless we state otherwise in a prospectus
supplement, we will make principal and interest payments at the office of the
paying agent or agents we name in the prospectus supplement or by mailing a
check to you at the address we have for you in the register.
Unless we describe other procedures in a prospectus supplement, you will
be able to transfer registered debt securities at the office of the transfer
agent or agents we name in the prospectus supplement. You may also exchange
registered debt securities at the office of the transfer agent for an equal
aggregate principal amount of registered debt securities of the same series
having the same maturity date, interest rate and other terms as long as the debt
securities are issued in authorized denominations.
Neither DLJ nor the Trustee will impose any service charge for any
transfer or exchange of a debt security, however, we may ask you to pay any
taxes or other governmental charges in connection with a transfer or exchange of
debt securities.
BOOK ENTRY SYSTEM
We may issue debt securities under a book-entry system in the form of one
or more global securities. We will register the global securities in the name of
a depositary or its nominee and deposit the global securities with that
depositary. Unless we state otherwise in the prospectus supplement, The
Depository Trust Company, New York, New York will be the depositary if we use a
depositary.
DTC has advised us as follows:
o DTC is
o a limited purpose trust company organized under the laws of the
State of New York
o a "banking organization" within the meaning of the New York banking
law
o a member of the Federal Reserve System
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
o DTC was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions
among its participants through electronic book entry changes in
accounts of its participants, eliminating the need for physical
movements of securities certificates
o DTC's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and others, some of whom own DTC.
o Access to DTC's book-entry system is also available to others that
clear through or maintain a custodial relationship with a participant,
either directly or indirectly.
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Following the issuance of a global security in registered form, the
depositary will credit the accounts of its participants with the debt securities
upon our instructions. Only persons who hold directly or indirectly through
financial institutions that are participants in the depositary can hold
beneficial interests in the global securities. Since the laws of some
jurisdictions require certain types of purchasers to take physical delivery of
such securities in definitive form, you may encounter difficulties in your
ability to own, transfer or pledge beneficial interests in a global security.
So long as the depositary or its nominee is the registered owner of a
global security, DLJ and the trustee will treat the depositary as the sole owner
or holder of the debt securities for purposes of the applicable indenture.
Therefore, except as set forth below, you will not be entitled to have debt
securities registered in your name or to receive physical delivery of
certificates representing the debt securities. Accordingly, you will have to
rely on the procedures of the depositary and the participant in the depositary
through whom you hold your beneficial interest in order to exercise any rights
of a holder under the indenture. DLJ understands that under existing practices,
the depositary would act upon the instructions of a participant or authorize
that participant to take any action that a holder is entitled to take.
DLJ will make all payments of principal, premium and interest on the debt
securities to the depositary. DLJ expects that the depositary will then credit
participants' accounts proportionately with these payments on the payment date
and that the participants will in turn credit their customers in accordance with
their customary practices. Neither DLJ nor the trustee will be responsible for
making any payments to participants or customers of participants or for
maintaining any records relating to the holdings of participants and their
customers and you will have to rely on the procedures of the depositary and its
participants.
Global securities are generally not transferrable. DLJ will issue
physical certificates to beneficial owners of a global security if:
o The depositary notifies DLJ that it is unwilling or unable to continue
as depositary and DLJ does not appoint a successor within 90 days
o The depositary ceases to be a clearing agency registered under the
Exchange Act and DLJ does not appoint a successor within 90 days
o DLJ decides in its sole discretion that it does not want to have the
debt securities of that series represented by global securities.
SUBORDINATION
The subordinated indenture provides that DLJ cannot:
o make any payments of principal, premium or interest on the subordinated
debt securities
o acquire any subordinated debt securities or
o defease any subordinated debt securities
if
o any Designated Senior Indebtedness or other Senior Indebtedness in an
aggregate principal amount of more than $10.0 million has become due
either on maturity or as a result of acceleration or otherwise and the
principal, premium and interest on that Designated Senior Indebtedness
or other Senior Indebtedness has not yet been paid in full by DLJ or
o DLJ has defaulted in the payment of any principal, premium or interest
on any Designated Senior Indebtedness or other Senior Indebtedness in
an aggregate principal amount of more than $10.0 million at the time
the payment was due, unless and until the payment default is cured by
DLJ or waived by the holders of the Designated Senior Indebtedness or
other Senior Indebtedness.
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In addition, if there is a default on any Senior Indebtedness other than
a default by DLJ in the payment of principal, premium or interest and that
default would allow the holders of the Senior Indebtedness to accelerate the
Senior Indebtedness so that it would become immediately due and payable at that
time or in the future, then we may not be allowed to make any payments of
principal, premium or interest on the subordinated debt securities. This will
happen automatically if the default on the Senior Indebtedness is due to the
acceleration of any of the subordinated debt securities issued under the
subordinated indenture, otherwise in order for this to happen
o the holders of a majority in principal amount of the Designated Senior
Indebtedness have to notify us or the trustee for the subordinated debt
securities that the default has occurred or
o the holders of a majority in principal amount of all the Senior
Indebtedness (if there is no Designated Senior Indebtedness
outstanding) have to so notify us or the trustee
However, if the Senior Indebtedness is not accelerated within 180 days
after notice was given, then we will have to pay the holders of the subordinated
debt securities all of the money that they would have been paid during the 180
day payment blockage period and resume making regular payments on the
subordinated debt securities. Only one payment blockage period can commence in
any 360 day period, even if we or the trustee receive more than one notice. A
default that existed upon the commencement of one payment blockage period cannot
be the reason for starting a second payment blockage period unless we cured (or
the holders of the Senior Indebtedness waived) the original default for a period
of at least 90 days.
If we make any payment to the trustee or the holders of the subordinated
debt securities when we weren't supposed to make the payment because of a
payment blockage period, then the trustee or the holders will have to repay that
money to the holders of the Senior Indebtedness.
If DLJ is liquidated, the holders of the Senior Indebtedness will be
entitled to receive payment in full for principal, premium and interest on the
Senior Indebtedness before the holders of subordinated debt securities receive
any assets of DLJ. As a result, holders of subordinated debt securities may
receive a smaller proportion of DLJ's assets in bankruptcy or liquidation than
holders of Senior Indebtedness.
Even if the subordination provisions prevent DLJ from making any payment
when due on the subordinated debt securities, DLJ will be in default on its
obligations under the subordinated indenture if it does not make the payment
when due. This means that the trustee and the holders of subordinated debt
securities can take action against DLJ, but they won't receive any money until
the claims of the Senior Indebtedness have been fully satisfied.
The subordinated indenture allows the holders of Senior Indebtedness to
obtain specific performance of the subordination provisions from DLJ or any
holder of subordinated debt securities.
When we use the term "Designated Senior Indebtedness" we mean any Senior
Indebtedness which we specifically designated as "Designated Senior
Indebtedness" in the instrument or agreement under which that Senior
Indebtedness was issued and which has an outstanding balance greater than $50
million.
When we use the term "Senior Indebtedness" we mean
o any money we have borrowed (other than money we owe to any of our
subsidiaries)
o any money borrowed by someone else where we have assumed or guaranteed
their obligations, directly or indirectly
o any letters of credit and acceptances made by banks on our behalf
o indebtedness that we have incurred or assumed in connection with the
acquisition of any property
NEGATIVE PLEDGE
DLJ has agreed in the senior indenture for the benefit of the holders of
the senior debt securities that DLJ and any successor to DLJ will not create,
assume, incur or guarantee any indebtedness which is secured by any pledge, lien
or other encumbrance (except as permitted below) on the voting stock of
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Donaldson, Lufkin & Jenrette Securities Corporation (or any successor to all or
substantially all of its business) unless we secure the senior debt securities
to the same extent as that indebtedness. Any subsidiary of ours in which we
have an interest, directly or indirectly, of more than 50% is also prohibited
from pledging any voting stock of DLJSC. However, the senior indenture permits
liens on the voting stock of DLJSC (or any successor to all or substantially
all of its business) without securing the senior debt securities if the liens
arise because of
o claims against DLJ for taxes or other governmental charges that we are
contesting in good faith or which are for less than $2 million
o legal proceedings which we are contesting in good faith or which
involve claims against us for less than $2 million
o deposits to secure (or in place of any) surety, appeals or customs
bonds or
o any other reason if DLJ's Board of Directors determines that the lien
will not materially detract from or interfere with the present value or
control by DLJ of the voting stock subject to the lien
CONSOLIDATION, MERGER OR SALE
We have agreed not to consolidate with or merge into any other person or
convey or transfer substantially all of our properties and assets to any person,
unless
o we are the continuing person or
o the successor is a corporation organized under the laws of the United
States or any U.S. jurisdiction and that successor corporation
expressly assumes by a supplemental indenture the due and punctual
payment of the principal of and any premium and interest on all the
debt securities and the performance of every covenant in the indenture
that we would otherwise have to perform.
In either case, we will also have to deliver a certificate to the trustee
stating that after giving effect to the merger there will not be any defaults
under the applicable indenture and an opinion of counsel stating that the merger
and the supplemental indenture comply with these provisions and that the
supplemental indenture is a legal, valid and binding obligation of the successor
corporation. (Section 5.01)
MODIFICATION OF THE INDENTURE
In general, our rights and obligations and the rights of the holders
under the indenture may be modified if the holders of a majority in aggregate
principal amount of the outstanding debt securities of each series affected by
the modification consent to it. However, Section 9.2 of each indenture provides
that, unless each affected holder agrees, we cannot
o make any adverse change to any payment term of a debt security such as
o extending the maturity date
o extending the date on which we have to pay interest or make a
sinking fund payment
o reducing the interest rate
o reducing the amount of principal we have to repay
o changing the currency in which we have to make any payment of
principal, premium or interest
o modifying any redemption or repurchase right to the detriment of the
holder
o modifying any right to convert or exchange the debt securities for
another security to the detriment of the holder
o impairing any right of a holder to bring suit for payment
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o reduce the percentage of the aggregate principal amount of debt
securities needed to make any amendment to the indenture or to waive
any covenant or default
o waive any payment default
o make any change to Section 9.2 of either indenture
However, if DLJ and the trustee agree, we can amend the indenture without
notifying any holders or seeking their consent if the amendment does not
materially and adversely affect any holder.
EVENTS OF DEFAULT
When we use the term "Event of Default" in the indenture, here are some
examples of what we mean.
Unless otherwise specified in a prospectus supplement, an Event of
Default with respect to a series of debt securities occurs if:
o we fail to pay the principal or any premium on any debt security of
that series when due
o we fail to pay interest when due on any debt security of that series
for 30 days
o we fail to perform any other covenant in the indenture and this failure
continues for 60 days after we receive written notice of it from the
Trustee or from the holders of 25% in principal amount of the
outstanding debt securities of such series
o a creditor commences involuntary bankruptcy, insolvency or similar
proceedings against DLJ or Donaldson, Lufkin & Jenrette Securities
Corporation and we are unable to obtain a stay or a dismissal of that
proceeding within 60 days
o we or DLJSC voluntarily seek relief under bankruptcy, insolvency or
similar laws or a court enters an order for relief against DLJ or DLJSC
under these laws
o an event of default occurs under any of DLJ's indentures or debt
agreements under which we owe more than $25 million and the amount that
we owe is accelerated if that acceleration is not rescinded within 10
days after we get notice from the trustee or 25% in principal amount of
the outstanding debt securities under the indenture
o we default on any payment at maturity (after taking into account any
grace period) on any of our outstanding debt of more than $25 million
and that default continues for more than 10 days after we get notice
from the trustee or the holders of 25% in principal amount of the
outstanding debt securities under the indenture.
The supplemental indenture or the form of security for a particular
series of debt securities may include additional Events of Default or changes to
the Events of Default described above. For any additional or different Events of
Default applicable to a particular series of debt securities, see the prospectus
supplement relating to such series.
The Trustee may withhold notice to the holders of debt securities of any
default (except in the payment of principal or interest) if it considers such
withholding of notice to be in the best interests of the holders. By default we
mean any event which is an Event of Default described above or would be an Event
of Default but for the giving of notice or the passage of time. (Section 7.05)
If an Event of Default occurs and continues, the Trustee or the holders
of the aggregate principal amount of the debt securities specified below may
require us to repay immediately (or "accelerate"):
o the entire principal of the debt securities of such series or
o if the debt securities are original issue discount securities, such
portion of the principal as may be described in the applicable
prospectus supplement. (Section 6.01)
If the Event of Default occurs because we defaulted in a payment of
principal or interest on the debt securities, then the Trustee or the holders of
at least 25% of the aggregate principal amount of debt
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securities of that series can accelerate that series of debt securities. If the
Event of Default occurs because we failed to perform any other covenant in the
Indenture or any covenant that we agreed to for the benefit of one or more
series of debt securities, then the Trustee or the holders of at least 25% of
the aggregate principal amount of debt securities of all series affected,
voting as one class, can accelerate all of the affected series of debt
securities. If the Event of Default occurs because we become involved in
bankruptcy proceedings then all of the debt securities under the indenture will
be accelerated automatically. If the Event of Default occurs because we
defaulted on some of our other indebtedness or because that indebtedness
becomes accelerated as described above, then the Trustee or the holders of at
least 25% of the aggregate principal amount of the debt securities outstanding
under the indenture, voting as one class, can accelerate all of the debt
securities outstanding under the indenture. Therefore, except in the case of a
default by us on a payment of principal or interest on the debt securities of
your series or a default due to our bankruptcy or insolvency, it is possible
that you may not be able to accelerate the debt securities of your series
because of the failure of holders of other series to take action.
The holders of a majority of the aggregate principal amount of the debt
securities of all affected series, voting as one class, can rescind this
accelerated payment requirement or waive any past default or Event of Default or
allow us to not comply with any provision of the indenture. However, they cannot
waive a default in payment of principal of, premium, if any, or interest on, any
of the debt securities. (Section 6.4)
Other than its duties in case of a default, the Trustee is not obligated
to exercise any of its rights or powers under the indenture at the request,
order or direction of any holders, unless the holders offer the Trustee
reasonable indemnity. (Section 7.2) If they provide this reasonable indemnity,
the holders of a majority in principal amount of all affected series of debt
securities, voting as one class, may direct the time, method and place of
conducting any proceeding or any remedy available to the Trustee, or exercising
any power conferred upon the Trustee, for any series of debt securities.
(Section 6.5)
We are not required to provide the Trustee with any certificate or other
document saying that we are in compliance with the indenture or that there are
no defaults.
DEFEASANCE
When we use the term defeasance, we mean discharge from some or all of
our obligations under the indenture. If we deposit with the Trustee sufficient
cash or U.S. government securities to pay the principal, interest, any premium
and any other sums due to the stated maturity date or a redemption date of the
debt securities of a particular series, then at our option:
o we will be discharged from our obligations with respect to the debt
securities of such series or
o we will no longer be under any obligation to comply with the
restrictive covenants contained in the indenture, and the Events of
Default relating to failures to comply with covenants will no longer
apply to us.
If this happens, the holders of the debt securities of the affected
series will not be entitled to the benefits of the indenture except for
registration of transfer and exchange of debt securities and replacement of
lost, stolen or mutilated debt securities. Instead the holders will only be able
to rely on the deposited funds or obligations for payment.
We must deliver to the Trustee an opinion of counsel to the effect that
the deposit and related defeasance would not cause the holders of the debt
securities to recognize income, gain or loss for Federal income tax purposes. We
must also deliver a ruling to such effect received from or published by the
United States Internal Revenue Service if we are discharged from our obligations
with respect to the debt securities.
CONCERNING THE TRUSTEE
The Chase Manhattan Bank has loaned money to us and provided other
services to us in the past and may do so in the future as a part of its regular
business.
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GOVERNING LAW
The laws of the State of New York will govern the indentures and the debt
securities.
ERISA
DLJ and certain of its subsidiaries, controlling shareholders and other
affiliates may each be considered a "party in interest" within the meaning of
the Employee Retirement Income Security Act of 1974, as amended, or a
"disqualified person" within the meaning of the Code with respect to many
employee benefit plans. Prohibited transactions within the meaning of ERISA or
the Code may arise, for example, if these securities are acquired by or with the
assets of a pension or other employee benefit plan with respect to which one of
these entities is a service provider, unless the securities are acquired
pursuant to an exemption from the prohibited transaction rules.
The acquisition of the securities may be eligible for one of the
exemptions noted below if the acquisition:
o is made solely with the assets of a bank collective investment fund and
satisfies the requirements and conditions of Prohibited Transaction
Class Exemption (PTCE) 91-38 issued by the Department of Labor
o is made solely with assets of an insurance company pooled separate
account and satisfies the requirements and conditions of PTCE 90-1
issued by the DOL
o is made solely with assets managed by a qualified professional asset
manager and satisfies the requirements and conditions of PTCE 84-14
issued by the DOL
o is made solely with assets of a governmental plan (as defined in
Section 3(32) of ERISA) which is not subject to the provisions of
Section 401 of the Code
o is made solely with assets of an insurance company general account and
satisfies the requirements and conditions of PTCE 95-60 issued by the
DOL or
o is made solely with assets managed by an in-house asset manager and
satisfies the requirements and conditions of PTCE 96-23 issued by the
DOL.
Under ERISA, the assets of a pension or other employee benefit plan may
include assets held in the general account of an insurance company which has
issued an insurance policy to that plan or assets of an entity in which the plan
has invested. Thus, any insurance company, pension or employee benefit plan or
entity holding assets of such a plan proposing to invest in the securities
should consult with its legal counsel prior to such investment.
PLAN OF DISTRIBUTION
We may sell our securities through agents, underwriters, dealers or
directly to purchasers.
Agents who we designate may solicit offers to purchase our securities.
o We will name any agent involved in offering or selling our securities,
and any commissions that we will pay to the agent, in our Prospectus
Supplement.
o Unless we indicate otherwise in our Prospectus Supplement, our agents
will act on a best efforts basis for the period of their appointment.
o Our agents may be deemed to be underwriters under the Securities Act of
any of our securities that they offer or sell.
We may use an underwriter or underwriters in the offer or sale of our
securities.
o If we use an underwriter or underwriters, we will execute an
underwriting agreement with the underwriter or underwriters at the time
that we reach an agreement for the sale of our securities.
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o We will include the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transactions, including the compensation the underwriters and dealers
will receive, in our Prospectus Supplement.
o The underwriters will use our Prospectus Supplement to sell our
securities.
We may use a dealer to sell our securities.
o If we use a dealer, we, as principal, will sell our securities to the
dealer.
o The dealer will then sell our securities to the public at varying
prices that the dealer will determine at the time it sells our
securities.
o We will include the name of the dealer and the terms of our
transactions with the dealer in our Prospectus Supplement.
If DLJSC, one of our subsidiaries, participates in the distribution of
our securities, we will conduct the offering in accordance with Section 2720 of
the NASD Conduct Rules.
We may solicit directly offers to purchase our securities, and we may
directly sell our securities to institutional or other investors. We will
describe the terms of our direct sales in our Prospectus Supplement.
We may indemnify agents, underwriters, and dealers against certain
liabilities, including liabilities under the 1933 Act. Our agents, underwriters,
and dealers, or their affiliates, may be customers of, engage in transactions
with or perform services for us, in the ordinary course of business.
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase our securities at the public offering price under
delayed delivery contracts.
o If we use delayed delivery contracts, we will disclose that we are
using them in the Prospectus Supplement and will tell you when we will
demand payment and delivery of the securities under the delayed
delivery contracts.
o These delayed delivery contracts will be subject only to the conditions
that we set forth in the Prospectus Supplement.
o We will indicate in our Prospectus Supplement, the commission that
underwriters and agents soliciting purchases of our securities under
delayed contracts will be entitled to receive.
DLJSC may use this prospectus and our Prospectus Supplement in connection
with offers and sales of our securities in connection with market-making
transactions by and through DLJSC, at prices that relate to the prevailing
market prices of our securities at the time of the sale or otherwise. DLJSC may
act as principal or agent in these transactions.
LEGAL MATTERS
Michael A. Boyd, our Senior Vice President and General Counsel, and Davis
Polk & Wardwell will pass upon the validity of our securities and certain other
legal matters in connection with our offering of our securities, unless we
indicate otherwise in our Prospectus Supplement.
o Mr. Boyd owns 40,065 shares of common stock, 4,267 restricted stock
units and options to purchase 79,544 shares of common stock.
o Davis Polk & Wardwell provides legal services to us and our
subsidiaries from time to time.
EXPERTS
We incorporate by reference into this prospectus and our registration
statement our consolidated financial statements and financial statement schedule
as of December 31, 1997 and 1996 and for each of the years in the three-year
period ended December 31, 1997. We have relied on the report of KPMG LLP,
independent certified public accountants, also incorporated by reference into
this prospectus and our registration statement, and upon their authority as
experts in accounting and auditing.
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================================================================================
April 15, 1999
DONALDSON, LUFKIN & JENRETTE, INC.
$1,000,000,000
MEDIUM-TERM NOTES DUE NINE MONTHS
OR MORE FROM DATE OF ISSUE
-----------------------------
PROSPECTUS SUPPLEMENT
-----------------------------
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We have not authorized any dealer, salesperson or other person to give you any
written information other than this prospectus or to make any oral
representations as to matters that are not stated in this prospectus. You must
not rely on unauthorized information. This prospectus is not an offer to sell
or a solicitation of your offer to buy the securities in any jurisdiction in
which that is not authorized, or in which the person making the offer or
solicitation is not permitted to do so, or to any person to whom such offer or
solicitation would be unlawful. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create any
implication that the information contained herein or the affairs of the company
have not changed since the date hereof.
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