XEROX CREDIT CORP, S-3/A, 1994-05-09

XEROX CREDIT CORP
S-3/A, 1994-05-09
SHORT-TERM BUSINESS CREDIT INSTITUTIONS

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As filed with the Securities and Exchange Commission on May 9, 1994
Registration No. 33-53533
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

-------------------

XEROX CREDIT CORPORATION
(Exact Name of Registrant as specified in its charter)

DELAWARE 06-1024525
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

100 FIRST STAMFORD PLACE
P.O. BOX 10347
STAMFORD, CONNECTICUT 06904-2347
(203) 325-6600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

-------------------

MARTIN S. WAGNER
SECRETARY
C/O XEROX CORPORATION
P.O. BOX 1600
STAMFORD, CONNECTICUT 06904
(203) 968-3000
(Name, address, including zip code, and
telephone number, including area code, of agent for service)

-------------------

Copy to:
JOHN W. WHITE
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019

-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================
<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION
DATE: MAY 6, 1994

Prospectus Supplement
(To Prospectus Dated )

U.S. $1,000,000,000

XEROX CREDIT CORPORATION

Medium-Term Notes, Series D

Due Nine Months or More from Date of Issue

Xerox Credit Corporation (the "Company") may offer from time to time its
Medium-Term Notes, Series D (the "Notes") initially limited in aggregate
principal amount (or, if any Notes are to be issued as Discount Notes or Indexed
Notes (each as defined below), aggregate initial offering price) to U.S.
$1,000,000,000 or the equivalent in foreign currencies or currency units. Each
Note will mature nine months or more from the date of issue, as selected by the
purchaser and agreed to by the Company, and may be subject to redemption and/or
repayment prior to the Maturity Date (as defined below). The Notes may be
denominated in U.S. dollars or in such foreign currencies or currency units (the
"Specified Currency") as may be described in a pricing supplement to this
Prospectus Supplement (a "Pricing Supplement"). Unless otherwise specified in
the applicable Pricing Supplement, Notes denominated in a Specified Currency
other than U.S. dollars or European Currency Units ("ECU") will not be sold in
or to residents of the country issuing such Specified Currency. See "Important
Currency Exchange Information" and "Foreign Currency Risks". Each Note will bear
interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case of
certain Notes issued at a price representing a substantial discount from the
principal amount payable upon the Maturity Date, or at a floating rate (a
"Floating Rate Note") determined by reference to the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate, the J.J. Kenny Rate, LIBOR, the
Treasury Rate, the Prime Rate, the 11th District Cost of Funds Rate or any other
Base Rate set forth in the applicable Pricing Supplement, as adjusted by the
Spread and/or Spread Multiplier, if any, applicable to such Note. See
"Description of Notes". A Fixed Rate Note may pay a level amount in respect of
both interest and principal amortized over the life of such Note (an "Amortizing
Note"). See "Description of Notes--Fixed Rate Notes". The principal amount
payable at maturity of, or the interest on, each Note, or both, may be
determined by reference to the relationship between two or more Specified
Currencies (a "Currency Indexed Note"), or by reference to the price of one or
more specified securities or commodities or to one or more securities or
commodities exchange indices or other indices or by other similar methods (an
"Indexed Note", such term to include Currency Indexed Notes) as described in the
applicable Pricing Supplement. See "Description of Notes--Currency Indexed
Notes" and "Description of Notes--Other Indexed Notes and Certain Terms
Applicable to All Indexed Notes".

Unless otherwise specified in the applicable Pricing Supplement, the dates on
which interest, if any, will be payable for each Fixed Rate Note (other than an
Amortizing Note) will be April 15 and October 15 of each year and at Maturity
(as defined below). The dates on which interest will be payable for each
Floating Rate Note will be established on the date of issue of such Note and
will be set forth in the applicable Pricing Supplement. Each Amortizing Note
will pay principal and interest (i) semi-annually each April 15 and October 15,
or (ii) quarterly each January 15, April 15, July 15 and October 15 and (iii) at
Maturity, all as specified in the applicable Pricing Supplement. Interest rates
and interest rate formulas are subject to change by the Company, but no change
will affect any Note already issued or as to which an offer to purchase has been
accepted by the Company. See "Description of Notes--Payment of Principal and
Interest".

Unless otherwise specified in the applicable Pricing Supplement, the Notes will
be issued only in registered form in minimum denominations of U.S. $1,000 and
any amount in excess thereof that is an integral multiple thereof or, in the
case of Notes denominated in Specified Currency other than U.S. dollars, the
authorized denominations set forth in the applicable Pricing Supplement. See
"Description of Notes--General". Each Note will be represented by either a
Global Security registered in the name of a nominee of The Depository Trust
Company, as Depositary, or other depositary (a "Book-Entry Note"), or a
certificate issued in definitive form (a "Certificated Note"), as set forth in
the applicable Pricing Supplement. Beneficial Interests in Book-Entry Notes will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. See "Description of
Notes--Global Securities and Book-Entry System".

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Price to Agents' Discounts and Proceeds to
Public(1)(2) Commissions(2)(3) Company(2)(3)(4)
<S> <C> <C> <C>
Per Note .......... 100.000% .125%-.750% U.S. 99.875%-99.250%
Total ............. U.S. $1,000,000,000 U.S. $1,250,000-U.S. $7,500,000 U.S. $998,750,000-U.S.$992,500,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Unless otherwise specified in the applicable Pricing Supplement, the Price
to Public will be 100% of the principal amount.
(2) Or the equivalent thereof in foreign denominated currencies or units
consisting of multiple currencies.
(3) Unless otherwise specified in the applicable Pricing Supplement, with
respect to Notes with Maturity Dates of 30 years or less from the date of
issue, the Company will pay a commission (or grant a discount) to CS First
Boston Corporation, Goldman, Sachs & Co., Lehman Brothers Inc. (including
its affiliate Lehman Special Securities Inc.), Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. or
Salomon Brothers Inc, or to any other person subsequently appointed by the
Company (each an "Agent", and collectively the "Agents"), ranging from
.125% to .750% of the principal amount of each Note, depending upon its
Maturity Date, sold through such Agent, and may sell Notes to any Agent, as
principal, at a discount for resale to purchasers at varying prices related
to prevailing market prices at the time of resale, or, if set forth in the
applicable Pricing Supplement, at a fixed public offering price, to be
determined by such Agent. With respect to Notes with a Maturity Date that
is longer than 30 years from the date of issue sold through any Agent, the
rate of Commission (or discount) will be negotiated at the time of sale and
will be specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, any Note purchased by an
Agent as principal will be purchased at 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency
sale of a Note of identical maturity. No commission will be payable on any
sales made directly by the Company. See "Plan of Distribution".
(4) Before deducting expenses payable by the Company estimated at $744,830,
including reimbursement of Agents' expenses.

The Notes are offered on a continuous basis by the Company through the Agents,
each of which has agreed to use its reasonable best efforts to solicit purchases
of the Notes. The Company reserves the right to appoint additional agents for
the purpose of soliciting offers to purchase the Notes and the Company further
reserves the right to sell, and may accept offers to purchase, the Notes
directly on its own behalf in those jurisdictions where it is authorized to do
so. The Notes will not be listed on any securities exchange, and there can be no
assurance that the Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Notes. The Company reserves the
right to withdraw, cancel or modify the offer made hereby without notice. The
Company, any Agent or any other agent who solicits any offer may reject such
offer in whole or in part. See "Plan of Distribution".

CS First Boston
Goldman, Sachs & Co.
Lehman Brothers
Merrill Lynch & Co.
J.P. Morgan Securities Inc.
Salomon Brothers Inc

The date of this Prospectus Supplement is .
<PAGE>

SELECTED FINANCIAL DATA OF THE COMPANY

Recent Financial Statement Information

The following table presents selected financial information which has been
derived from the unaudited consolidated financial statements of the Company as
of March 31, 1994 and the audited consolidated financial statements of the
Company for the year ended December 31, 1993 and is qualified in its entirety
by, and should be read in conjunction with, the consolidated financial
statements, including notes thereto, and other detailed financial information
included in the documents incorporated by reference in the accompanying
Prospectus.

Three Months Ended March 31,
----------------------------
1994 1993
---- ----
(Dollars in Millions)

Selected Income Statement Information:

Total earned income ................................. $ 93 $102
Interest expense .................................... 52 56
Income before income taxes .......................... 37 42
Income taxes ........................................ 15 17
Net income .......................................... 22 25

March 31, December 31,
1994 1993
---- ----
(Dollars in Millions)

Selected Balance Sheet Information:

Total investments ................................. $3,807 $3,703
Net assets of discontinued operations ............. 333 357
Total assets ...................................... 4,143 4,063
Notes payable within one year ..................... 2,113 2,207
Notes payable after one year ...................... 1,266 1,079
Total liabilities ................................. 3,597 3,519
Total shareholder's equity ........................ 508 506

Ratio of Earnings to Fixed Charges

The following table shows the ratio of earnings to fixed charges for the
periods indicated.

<TABLE>
Three Months Years Ended December 31,
Ended ------------------------------------------------
March 31, 1994 1993 1992 1991 1990 1989
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1) ... 1.71 1.74 1.75 1.82 1.88 1.69

</TABLE>

- ---------------

(1) The ratio of earnings to fixed charges has been computed based on the
Company's continuing operations by dividing total earnings available for
fixed charges by total fixed charges. Interest expense has been allocated
to discontinued operations principally on the basis of the relative amount
of gross assets of the discontinued operations. Management believes that
this allocation method is reasonable in light of the amount of debt
specifically assigned to discontinued operations. The discontinued
operations consist of the Company's real-estate development and related
financing operations and its third-party financing and leasing businesses.

S-2
<PAGE>

INFORMATION CONCERNING XEROX CORPORATION

Capitalization

The following table sets forth the consolidated capitalization of Xerox
Corporation ("Xerox") as of March 31, 1994:

March 31, 1994
--------------
(Dollars in Millions)

Short-Term Debt and Current Portion of Long-Term Debt ...... $ 2,741
Long-Term Debt ............................................. 7,770
Deferred ESOP Benefits ..................................... (641)
Minorities' Interests in Equity of Subsidiaries ............ 852
Preferred Stock ............................................ 1,065
Common Shareholders' Equity ................................ 3,820
--------
Total Capitalization ..................................... $ 15,607
========

Five Year Operating Results

The following summary of consolidated operating results has been derived
from the audited consolidated financial statements of Xerox for the years ended
December 31,1989 through 1993. The summary is qualified in its entirety by, and
should be read in conjunction with, the consolidated financial statements and
other information contained, and incorporated, in the Xerox Annual Report on
Form 10-K for the year ended December 31, 1993 (certain reclassifications have
been made to conform to the current year's presentation).

<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------
1993(1) 1992(2) 1991(3) 1990(4) 1989
------- ------- ------- ------- ----
(Dollars in Millions)

<S> <C> <C> <C> <C> <C>
Revenues ................................. $ 17,038 $ 17,176 $16,737 $ 17,100 $16,128
Income (Loss) from Continuing Operations . (189) (217) 438 610 642
Discontinued Operations .................. 63 (39) 16 (367) 62
Cumulative Effect of Changes in Accounting
Principles .............................. -- (764) -- -- --
Net Income (Loss) ........................ (126) (1,020) 454 243 704
</TABLE>
- ---------
(1) The results in 1993 include the effect of the $1,373 million before-tax
($813 million after-tax) charge incurred in connection with the
restructuring provision and litigation settlements.

(2) The results in 1992 include the effect of the $936 million before-tax ($778
million after-tax) charge incurred in connection with the decision to
disengage from Xerox' Insurance and Other Financial Services ("IOFS")
businesses.

(3) The results in 1991 include the effect of the $175 million pre-tax charge
to cover the costs associated with a Document Processing work-force
reduction announced in December 1991. This charge reduced net income by
$101 million.

(4) Includes the effect of the first quarter 1990 $375 million (after-tax)
charge, in discontinued operations, for estimated losses on XCC Investment
Corporation's ("XCCIC") equity investment in, and the Company's and XCCIC's
unsecured loans to, VMS Realty Partners and affiliated companies.

S-3
<PAGE>

Recent Operating Results

The following is a summary of unaudited consolidated operating results of
Xerox for the three-month periods ended March 31, 1994 and March 31, 1993.

Three Months Ended March 31,
----------------------------
1994 1993
------- -------
(Dollars in Millions)
Revenues
Document Processing ................. $ 3,271 $ 3,225
Insurance ........................... 683 678
Total Revenues ....................... 3,954 3,903
Net Income
Document Processing ................. $ 131 $ 125
Insurance ........................... (2) (13)
Discontinued Operations ............. -- 77
Net Income ........................... 129 189

The Xerox' discontinued operations had no income in the 1994 first quarter.
In the 1993 first quarter, income from discontinued operations was $77 million,
including a $62 million gain from the sale of The Van Kampen Merritt Companies,
Inc.

Ratio of Earnings to Fixed Charges

The following table shows the ratio of earnings to fixed charges for the
periods indicated.

<TABLE>
<CAPTION>
Three Months Years Ended December 31,
Ended ----------------------------------------
March 31, 1994 1993* 1992** 1991*** 1990 1989
-------------- ----- ------ ------- ---- ----

<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)(2) ......... 2.10 0.71 1.12 1.90 2.07 2.33
</TABLE>

- -----------------

(1) The ratio of earnings to fixed charges has been computed based on Xerox'
continuing operations by dividing total earnings available for fixed
charges, excluding capitalized interest, by total fixed charges. Fixed
charges consist of interest, including capitalized interest, and one-third
of rent expense as representative of the interest portion of rentals.
Interest expense has been allocated to discontinued operations principally
on the basis of the relative amount of gross assets of the discontinued
operations. Xerox management believes that this allocation method is
reasonable in light of the debt specifically assigned to discontinued
operations. The discontinued operations consist of Xerox' real-estate
development and related financing operations, third-party financing and
leasing businesses, and other financial services businesses.

(2) Xerox' ratio of earnings to fixed charges includes the effect of Xerox'
finance subsidiaries which primarily finance Xerox equipment. Financing
businesses, due to their nature, traditionally operate at lower earnings to
fixed charges ratio levels than do non-financial companies.

* In 1993, the ratio of earnings to fixed charges includes the effect of the
$1,373 million before-tax ($813 million after-tax) charge incurred in
connection with the restructuring provision and litigation settlements.
Excluding this charge, the ratio was 2.13. 1993 earnings were inadequate to
cover fixed charges. The coverage deficiency was $283 million.

** In 1992, the ratio of earnings to fixed charges includes the effect of the
$936 million before-tax ($778 million after-tax) charge incurred in
connection with the decision to disengage from Xerox' IOFS businesses.
Excluding this charge, the ratio was 2.05.

*** In 1991, the ratio of earnings to fixed charges includes the effect of the
$175 million before-tax ($101 million after-tax) charge incurred in
connection with the Document Processing work-force reduction. Excluding
this charge, the ratio was 2.08.

S-4
<PAGE>
DESCRIPTION OF NOTES

The Notes are a series of Debt Securities described in the accompanying
Prospectus. Reference should be made to the accompanying Prospectus for a
detailed summary of additional provisions of the Notes and of the Indenture
under which the Notes are issued. Unless otherwise specified in a Pricing
Supplement, the following description of the Notes will apply.

General

The Notes are to be issued as a series of Debt Securities initially limited
to U.S. $1,000,000,000 aggregate principal amount (or, if any Notes are to be
issued as Discount Notes or Indexed Notes (each as defined below), aggregate
initial offering price), or the equivalent in foreign currencies or currency
units, under an indenture dated as of May 1, 1994, between the Company and The
First National Bank of Boston, as trustee (the "Trustee") (as may be amended,
supplemented or modified from time to time, the "Indenture"), which Indenture is
described more fully under "Description of the Debt Securities" in the
accompanying Prospectus. The Company may, however, subject to the approval of
the Board of Directors of the Company, increase the foregoing limit if it
determines in the future that it wishes to sell additional Notes. The U.S.
dollar equivalent of Notes denominated in a Specified Currency other than U.S.
dollars will be determined upon issuance by the Exchange Rate Agent (as defined
below), on the basis of the Market Exchange Rate (as defined below) for such
Specified Currency on the applicable trade dates. The statements herein
concerning the Notes and the Indenture do not purport to be complete. They are
qualified in their entirety by reference to the provisions of the Indenture,
including the definitions of certain terms used herein without definition. The
Notes constitute a single series for purposes of the Indenture.

The Notes will be offered on a continuous basis and will mature on any day
nine months or more from the date of issue, as selected by the purchaser and
agreed to by the Company, and may be subject to redemption and/or repayment
prior to their Maturity Date. Each Note will bear interest from the Original
Issue Date (as defined below) at either (a) a fixed rate, which may be zero in
the case of a Note issued at an Issue Price (as defined below) representing a
substantial discount from the principal amount payable upon the Maturity Date (a
"Zero-Coupon Note"), or (b) a floating rate or rates determined by reference to
one or more Base Rates which may be adjusted by a Spread and/or Spread
Multiplier, if any (each as defined below).

The Notes will be issued initially as either Book-Entry Notes or
Certificated Notes in fully registered form without coupons. Except as set forth
in the Prospectus under "Description of the Debt Securities--Global Securities"
and under "Global Securities and Book-Entry System" below, Book-Entry Notes will
not be issuable as Certificated Notes.

Unless otherwise specified in the applicable Pricing Supplement, the
authorized denominations of Notes denominated in U.S. dollars will be U.S.
$1,000 and any integral multiple in excess thereof. The authorized denominations
of Notes denominated in a Specified Currency other than U.S. dollars will be as
set forth in the applicable Pricing Supplement.

The Notes will constitute unsecured and unsubordinated indebtedness of the
Company. See "Description of the Debt Securities--General" in the Prospectus.
The Pricing Supplement will indicate either that the Notes cannot be redeemed
prior to their Maturity Date or that the Notes will be redeemable at the option
of the Company on or after a specified date prior to their Maturity Date at par
or at prices declining from a specified premium to par after a later date,
together with accrued interest to the date of redemption. The Pricing Supplement
will also indicate either that the Notes cannot be repaid prior to their
Maturity Date or that the Notes will be repayable at the option of the Holder
thereof on a date or dates specified prior to their Maturity Date at the price
or prices set forth in the applicable Pricing Supplement, together with accrued
interest to the date of repayment. The Notes will not be subject to any sinking
fund. See "Redemption and Repurchase" below.

As used herein:

(i) "Business Day" with respect to any Note means any day, other than
a Saturday or Sunday, that meets each of the following applicable
requirements: the day is (a) not a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of New
York, (b) if the Note is denominated in a Specified Currency other than

S-5
<PAGE>

U.S. dollars, (1) not a day on which banking institutions are authorized or
required by law or regulation to close in the principal financial center of
the country issuing the Specified Currency (which, in the case of ECU,
shall be both London and Luxembourg City, Luxembourg) and (2) a day on
which banking institutions in such financial centers are carrying out
transactions in such Specified Currency and (c) if such Note is a LIBOR
Note (as defined below), is also a London Banking Day. "London Banking Day"
means any day on which dealings in deposits in U.S. dollars are transacted
in the London interbank market;

(ii) "Discount Note" means (a) a Note, including any Zero-Coupon Note,
that has been issued at an issue price lower than the principal amount
thereof and which provides that upon redemption, repayment or acceleration
of the maturity thereof an amount less than the principal amount thereof
will become due and payable and (b) any Note that for United States Federal
income tax purposes would be considered an original issue discount note;
and

(iii) "Maturity Date" with respect to any Note means the date on which
such Note will mature, as specified therein, and "Maturity" means the date
on which the principal of a Note becomes due and payable in accordance with
its terms, whether at its Maturity Date or by declaration of acceleration,
call for redemption, put for repayment or otherwise.

The Pricing Supplement relating to each Note will describe the following
terms: (1) the Specified Currency with respect to such Note (and, if such
Specified Currency is other than U.S. dollars, certain other terms relating to
such Note); (2) whether such Note is a Fixed Rate Note, an Amortizing Note, a
Floating Rate Note, a Discount Note or a Zero-Coupon Note; (3) whether such Note
is a Currency Indexed Note or other Indexed Note, and if so the special terms
thereof; (4) if other than 100%, the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Note will be issued (the
"Issue Price"); (5) the date on which such Note will be issued (the "Original
Issue Date"); (6) the Maturity Date of such Note and whether such Maturity Date
may be extended by the Company; (7) if such Note is a Fixed Rate Note, the rate
per annum at which such Note will bear interest, if any; (8) if such Note is a
Floating Rate Note, the Base Rate, the Initial Interest Rate, the Interest Reset
Period, the Interest Reset Dates, the Interest Payment Dates, the Index
Maturity, the Maximum Interest Rate and Minimum Interest Rate, if any, and the
Spread and/or Spread Multiplier, if any (all as defined herein), and any other
terms relating to the particular method of calculating the interest rate for
such Note; (9) if such Note is an Amortizing Note, whether payments of principal
thereof and interest thereon will be made quarterly or semiannually, and the
repayment information in respect thereof; (10) whether such Note may be redeemed
or repaid prior to its Maturity Date, and if so, the provisions relating to such
redemption or repayment; (11) whether such Note will be issued initially as a
Book-Entry Note or a Certificated Note; (12) original issue discount provisions,
if any, and (13) any other terms of such Note not inconsistent with the
provisions of the Indenture.

Payment of Principal and Interest

Unless otherwise specified in the applicable Pricing Supplement and except
as otherwise provided with respect to Currency Indexed Notes, the principal of
(and premium, if any) and interest, if any, on the Notes will be paid by the
Company in U.S. dollars in the manner described in the following paragraphs,
even if a Note is denominated in a Specified Currency other than U.S. dollars;
provided, however, that the Holder of a Note may (if such Note is denominated in
a Specified Currency other than U.S. dollars and if the applicable Pricing
Supplement and the Note so indicate) elect to receive all such payments in such
Specified Currency (subject to certain conditions, see "Foreign Currency
Risks--Payment Currency") by delivery of a written request to the Company's
paying agent (the "Paying Agent") in The City of New York, which must be
received by the Paying Agent on or prior to the applicable record date or at
least fifteen calendar days prior to Maturity, as the case may be. Such election
shall remain in effect unless and until changed by written notice to the Paying
Agent, but the Paying Agent must receive written notice of any such change on or
prior to the applicable record date or at least fifteen calendar days prior to
Maturity, as the case may be. Until the Notes are paid or payment thereof is
provided for, the Company will, at all times, maintain a Paying Agent in The
City of New York capable of performing the duties described herein to be
performed by the Paying Agent. The Company has initially appointed The First
National Bank of Boston, New York, New York (c/o BankBoston Trust Company of New

S-6
<PAGE>

York) as Paying Agent. The Company will notify the Holders of the Notes in
accordance with the indenture of any change in the Paying Agent or its address.

All currency exchange costs, if any, will be borne by the Company unless
any Holder of a Note has made the election referred to in the preceding
paragraph. In that case, each electing Holder shall bear its pro-rata portion of
currency exchange costs, if any, by deductions from payments otherwise due to
such Holder.

Unless otherwise specified in the applicable Pricing Supplement, in the
case of a Note denominated in a Specified Currency other than U.S. dollars,
unless the Holder thereof has elected otherwise, the amount of U.S. dollar
payments in respect of such Note will be determined by an agent appointed by the
Company (the "Exchange Rate Agent"), which shall initially be The First National
Bank of Boston, based on the highest firm bid quotation received by such
Exchange Rate Agent at approximately 11:00 a.m., New York City time, on the
second Business Day preceding the applicable payment date, from three recognized
foreign exchange dealers selected by the Exchange Rate Agent and approved by the
Company (one of which may be the Exchange Rate Agent) for the purchase by the
quoting dealer, for settlement on such payment date, of the aggregate amount of
the Specified Currency payable on such payment date in respect of all Notes
denominated in such Specified Currency on which payments are to be made in U.S.
dollars. If three such bid quotations are not available, payments will be made
in the Specified Currency which will yield the largest number of U.S. dollars
when the Company is receiving U.S. dollars in lieu of the Specified Currency and
will require the smallest number of U.S. dollars when the Company is paying U.S.
dollars in lieu of the Specified Currency. Unless otherwise specified in the
applicable Pricing Supplement, such selection shall be made from among the
quotations appearing on the display "page" within the Reuters or Telerate
Monitor Foreign Exchange Service, as may be agreed to by the Company and such
Exchange Rate Agent (or, if such display "page" is not available or such
Specified Currency is a composite currency for which separate current composite
currency quotations are not available, such other comparable display or other
comparable manner of obtaining quotations as may be agreed to by the Company and
such Exchange Rate Agent), used to determine the U.S. dollar equivalent of such
Specified Currency (the "Exchange Rate"). If no such indicative quotations are
available, payments will be made in the Specified Currency unless such Specified
Currency is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Company's control, in which case the Company will be
entitled to make payments as described under "Foreign Currency Risks--Payment
Currency" below.

In the event of an official redenomination of a Specified Currency, the
obligations of the Company with respect to payments on Notes denominated in such
Specified Currency shall, in all cases, be deemed immediately following such
redenomination to provide for payment of that amount of redenominated currency
representing the amount of such obligations immediately before such
redenomination. In no event, however, shall any adjustment be made to any amount
payable under the Notes as a result of any change in the value of such Specified
Currency relative to any other currency due solely to fluctuations in exchange
rates. See "Foreign Currency Risks--Exchange Rates and Exchange Controls".

Unless otherwise specified in the applicable Pricing Supplement, interest
on Certificated Notes and principal of Amortizing Notes (issued in certificated
form) (in each case, other than interest or, in the case of Amortizing Notes,
principal paid at Maturity) will be paid by mailing a check (from an account at
a bank outside the United States if such interest is payable in a currency other
than U.S. dollars) to the Holder at the address of such Holder appearing on the
security register of the Company on the applicable record date; provided,
however, that in the case of a Note issued between a Regular Record Date and the
initial Interest Payment Date relating to such Regular Record Date, interest for
the period beginning on the Original Issue Date and ending on such initial
Interest Payment Date shall be paid on the next succeeding Interest Payment Date
to the registered Holder of such Note on the related Regular Record Date.
Notwithstanding the foregoing, a Holder of U.S. $10,000,000 or more in aggregate
principal amount of Notes of like tenor and terms (or a Holder of the equivalent
thereof in a Specified Currency other than U.S. dollars) shall be entitled to
receive such interest payments by wire transfer in immediately available funds,
but only if appropriate instructions have been received in writing by the Paying
Agent on or prior to the applicable Record Date. Simultaneously with the
election by any Holder to receive payments in a Specified Currency other than
U.S. dollars (as provided above), such Holder may, if applicable, provide
appropriate instructions to the Paying Agent, and all such payments will be made
in immediately available funds to an account maintained by the payee with a bank

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located outside the United States. Unless otherwise specified in the applicable
Pricing Supplement, payments of principal (and premium, if any) and interest at
Maturity will be made to the Holder on the date of Maturity in immediately
available funds (payable to an account maintained by the payee with a bank
located outside the United States if payable in a Specified Currency other than
U.S. dollars) upon surrender of the Notes at the Corporate Trust Division of The
First National Bank of Boston (c/o BankBoston Trust Company of New York) in the
Borough of Manhattan, The City of New York (or at such other location as may be
specified in the applicable Pricing Supplement), provided that the Note is
presented to the Paying Agent in time for the Paying Agent to make such payments
in such funds in accordance with its customary procedures. See "Important
Currency Exchange Information" below. The Company will pay any administrative
costs imposed by banks in connection with making payments in immediately
available funds, but any tax, assessment or governmental charge imposed upon
payments will be borne by the Holders of the Notes in respect of which such
payments are made.

Each date on which interest is payable on a Note (other than at Maturity)
is referred to herein as an "Interest Payment Date". The Interest Payment Dates
and the Regular Record Dates for Fixed Rate Notes shall be as described below
under "Fixed Rate Notes". The Interest Payment Dates for Floating Rate Notes
shall be as indicated in the applicable Pricing Supplement, and, unless
otherwise specified in the applicable Pricing Supplement, each "Regular Record
Date" for a Floating Rate Note will be the fifteenth day (whether or not a
Business Day) next preceding each Interest Payment Date. If any Interest Payment
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, such Interest Payment Date for such Floating Rate Note shall be postponed
to the next succeeding Business Day, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest
Payment Date shall be the immediately preceding Business Day.

Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Note
will be rounded, if necessary, to the nearest one one-hundred-thousandth of a
percent (with five one-millionths of a percentage point being rounded upwards)
and all currency amounts used in or resulting from any calculation on a Note
will be rounded to the nearest one one-hundredth of a unit (with five
one-thousandths of a unit being rounded upwards).

Fixed Rate Notes

Each Fixed Rate Note will bear interest from its Original Issue Date at the
rate per annum set forth therein and in the applicable Pricing Supplement until
the principal amount thereof is paid or made available for payment. Unless
otherwise specified in the applicable Pricing Supplement, interest on each Fixed
Rate Note (other than a Zero-Coupon Note or an Amortizing Note) will be payable
at Maturity and semi-annually each April 15 and October 15, and the "Regular
Record Dates" will be March 31 and September 30 (whether or not a Business Day),
respectively. Unless otherwise specified in the applicable Pricing Supplement,
principal of and interest on each Amortizing Note will be payable at Maturity
and either semi-annually each April 15 and October 15, or quarterly each January
15, April 15, July 15 and October 15, and the "Regular Record Dates" will be
March 31 and September 30 (whether or not a Business Day), in the case where the
principal of and interest on such Amortizing Note are payable semi-annually, and
December 31, March 31, June 30 and September 30 (whether or not a Business Day),
in the case where the principal of and interest on such Amortizing Note are
payable quarterly. Payments with respect to Amortizing Notes will be applied
first to interest due and payable thereon and then to the reduction of the
unpaid principal amount thereof. A table setting forth repayment information in
respect of each Amortizing Note will be set forth in the applicable Pricing
Supplement. Each payment of interest on a Fixed Rate Note shall include interest
accrued through the day before the Interest Payment Date or Maturity, as the
case may be. Any payment of principal (and premium, if any) or interest required
to be made on a Fixed Rate Note on a day which is not a Business Day need not be
made on such day, but may be made on the next succeeding Business Day with the
same force and effect as if made on such day, and no additional interest shall
accrue as a result of such delayed payment. Interest on Fixed Rate Notes, if
any, will, unless otherwise specified in the applicable Pricing Supplement, be
computed on the basis of a 360-day year of twelve 30-day months.

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Floating Rate Notes

Except for the period from the Original Issue Date to the first Interest
Reset Date set forth in the applicable Pricing Supplement, each Floating Rate
Note will bear interest at a rate determined by reference to an interest rate
base (the "Base Rate"), which may be adjusted by a Spread and/or Spread
Multiplier, if any (each as defined below). The applicable Pricing Supplement
will designate one or more of the following Base Rates as applicable to each
Floating Rate Note: (a) the CD Rate (a "CD Rate Note"), (b) the CMT Rate (a "CMT
Rate Note"), (c) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (d)
the Federal Funds Rate (a "Federal Funds Rate Note"), (e) the J.J. Kenny Rate (a
"J.J. Kenny Rate Note"), (f) LIBOR (a "LIBOR Note"), (g) the Treasury Rate (a
"Treasury Rate Note"), (h) the Prime Rate (a "Prime Rate Note"), (i) the 11th
District Cost of Funds Rate (an "11th District Cost of Funds Rate Note") or (j)
such other Base Rate or formula as is set forth in such Pricing Supplement and
in such Floating Rate Note.

As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period ("Maximum
Interest Rate"); and (ii) a minimum limitation, or floor, on the rate at which
interest may accrue during any interest period ("Minimum Interest Rate"). In
addition to any Maximum Interest Rate that may be applicable to any Floating
Rate Note pursuant to the above provisions, the interest rate on a Floating Rate
Note will in no event be higher than the maximum rate permitted by applicable
law, as the same may be modified by United States law of general application.
The Notes will be governed by the law of the State of New York and, under
present New York law, the maximum rate of interest, with certain exceptions, for
any loan in an amount less than $250,000 is 16% and for any loan in an amount of
$250,000 or more but less than $2,500,000 is 25% per annum on a simple interest
basis. These limits do not apply to loans of $2,500,000 or more.

The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (the "Interest Reset
Period"), as specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, the date or dates on which
interest will be reset (each an "Interest Reset Date") will be, in the case of
Floating Rate Notes that reset daily, each Business Day; in the case of Floating
Rate Notes (other than Treasury Rate Notes) that reset weekly, the Wednesday of
each week; in the case of Treasury Rate Notes that reset weekly, the Tuesday of
each week (except as provided below); in the case of Floating Rate Notes that
reset monthly, the third Wednesday of each month; in the case of Floating Rate
Notes that reset quarterly, the third Wednesday of March, June, September and
December; in the case of Floating Rate Notes that reset semi-annually, the third
Wednesday of the two months specified in the applicable Pricing Supplement; and
in the case of Floating Rate Notes that reset annually, the third Wednesday of
the month specified in the applicable Pricing Supplement; provided, however,
that (a) the interest rate in effect from the Original Issue Date to the first
Interest Reset Date will be the Initial Interest Rate (as defined below) and (b)
unless otherwise specified in the applicable Pricing Supplement, the interest
rate in effect for the ten days immediately prior to Maturity will be that in
effect on the tenth day preceding such Maturity. If any Interest Reset Date for
any Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the succeeding Business Day, except
that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day. If an auction for Treasury bills falls on a day that is
an Interest Reset Date for Treasury Rate Notes, the Interest Reset Date shall be
the next succeeding Business Day. The interest rate in effect with respect to a
Floating Rate Note from the Original Issue Date to the first Interest Reset Date
(the "Initial Interest Rate") will be specified in the applicable Pricing
Supplement.

Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate (i) plus or minus the Spread, if any, and/or (ii) multiplied
by the Spread Multiplier, if any. The "Spread" is the number of basis points
(one basis point equals one one-hundredth of a percentage point) specified in
the applicable Pricing Supplement as being applicable to the interest rate for
such Floating Rate Note, and the "Spread Multiplier" is the percentage specified
in the applicable Pricing Supplement as being applicable to the interest rate
for such Floating Rate Note.

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Unless otherwise specified in the applicable Pricing Supplement, the
interest payable on each Interest Payment Date or at Maturity for Floating Rate
Notes will be the amount of interest accrued from and including the Original
Issue Date or from and including the last Interest Payment Date to which
interest has been paid to, but excluding, such Interest Payment Date or date of
Maturity, as the case may be (an "Interest Period"). However, in the case of a
Floating Rate Note on which interest is reset daily or weekly, interest payable
on each Interest Payment Date will, unless otherwise specified in the applicable
Pricing Supplement, be the amount of interest accrued from and including the
Original Issue Date or from and excluding the last date to which interest has
been paid, as the case may be, to, and including, the Regular Record Date
immediately preceding such Interest Payment Date, except that at Maturity, the
interest payable will include interest accrued to, but excluding, the date of
Maturity.

With respect to a Floating Rate Note, accrued interest will be calculated
by multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the Interest Period or from the last
date from which accrued interest is being calculated. Unless otherwise specified
in the applicable Pricing Supplement, the interest factor for each such day is
computed by dividing the interest rate applicable on such day by 360, in the
cases of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes,
J.J. Kenny Rate Notes, LIBOR Notes, Prime Rate Notes and 11th District Cost of
Funds Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes and CMT Rate Notes. Unless otherwise specified in the
applicable Pricing Supplement, the interest rate applicable to any day that is
an Interest Reset Date is the interest rate as determined, in accordance with
the procedures hereinafter set forth, with respect to the Interest Determination
Date (as defined below) pertaining to such Interest Reset Date; and the interest
rate applicable to any other day is the interest rate for the immediately
preceding Interest Reset Date (or, if none, the Initial Interest Rate).

Unless otherwise specified in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes that reset daily, weekly or
monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in the applicable
Pricing Supplement; in the case of Floating Rate Notes that reset quarterly, on
the third Wednesday of March, June, September and December of each year; in the
case of Floating Rate Notes that reset semi-annually, on the third Wednesday of
the two months specified in the applicable Pricing Supplement; in the case of
Floating Rate Notes that reset annually, on the third Wednesday of the month
specified in the applicable Pricing Supplement; and, in each case, at Maturity.
Unless otherwise specified in the applicable Pricing Supplement, if an Interest
Payment Date with respect to any Floating Rate Note would otherwise be a day
that is not a Business Day with respect to such Floating Rate Note, such
Interest Payment Date shall be postponed to the next succeeding Business Day
with respect to such Floating Rate Note, except in the case of LIBOR Notes, if
such day would fall in the next succeeding calendar month, such Interest Payment
Date with respect to such LIBOR Note will be the immediately preceding Business
Day. Any payment of principal (and premium, if any) and interest required to be
made on a Floating Rate Note on a date of Maturity that is not a Business Day
will be made on the next succeeding Business Day with respect to such Floating
Rate Note (with the same force and effect as if made on such date of Maturity,
and no additional interest shall accrue as a result of any such delayed
payment).

The interest rate applicable to each Interest Reset Period commencing on
the Interest Reset Date with respect to such Interest Reset Period will be the
rate determined as of the applicable Interest Determination Date on or prior to
the Calculation Date (as defined below). Unless otherwise specified in the
applicable Pricing Supplement, the "Interest Determination Date" pertaining to
an Interest Reset Date will be (i) the second Business Day next preceding such
Interest Reset Date, in the case of CD Rate Notes, CMT Rate Notes, Commercial
Paper Rate Notes, Federal Funds Rate Notes, J.J. Kenny Rate Notes and Prime Rate
Notes, (ii) the second London Banking Day next preceding such Interest Reset
Date, in the case of LIBOR Notes, (iii) the last working day of the month next
preceding the applicable Interest Reset Date on which the FHLB of San Francisco
(as defined below) publishes the 11th District Cost of Funds Index (as defined
below), in the case of 11th District Cost of Funds Rate Notes, and (iv) the day
of the week in which such Interest Reset Date falls on which Treasury bills of
the applicable Index Maturity are auctioned, in the case of Treasury Rate Notes.
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

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following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will, unless otherwise specified in the applicable Pricing
Supplement, be the Interest Determination Date pertaining to the Interest Reset
Date occurring in the next succeeding week.

Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date", if applicable, pertaining to any Interest Determination Date
will be the earlier of (i) the tenth calendar day after such Interest
Determination Date, or, if such day is not a Business Day, the next succeeding
Business Day and (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity, as the case may be.

The "Index Maturity" for any Floating Rate Note is the period of maturity
(as specified in the applicable Pricing Supplement) of the instrument or
obligation from which the Base Rate is calculated.

Unless otherwise specified in the applicable Pricing Supplement, The First
National Bank of Boston will be the calculation agent (the "Calculation Agent")
with respect to the Floating Rate Notes. Upon the request of the Holder of any
Floating Rate Note, the Calculation Agent will provide the interest rate then in
effect and, if determined, the interest rate that will become effective on the
next Interest Reset Date with respect to such Floating Rate Note.

CD Rate Notes

CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in the CD Rate Notes and in the applicable Pricing Supplement.

Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" means, with respect to any Interest Determination Date, the rate on such
date for negotiable certificates of deposit having the applicable Index
Maturity, 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 of the Board of Governors of the Federal Reserve System ("H.
15(519)") under the heading "CDs (Secondary Market)" or, if not so published by
9:00 a.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 applicable
Index Maturity as published by the Federal Reserve Bank of New York in its daily
statistical release, "Composite 3:30 p.m. Quotations for U.S. Government
Securities", or any successor publication of the Federal Reserve Bank of New
York ("Composite Quotations") under the heading "Certificates of Deposit". If
such rate is not yet published in Composite Quotations by 3:00 p.m., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, then the CD Rate on such Interest Determination Date will be calculated by
the Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such Interest
Determination Date, of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United States money center
banks (in the market for negotiable certificates of deposit) with a remaining
maturity closest to the applicable Index Maturity in a denomination of U.S.
$5,000,000; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting such rates as mentioned in this sentence, the
rate of interest in effect for the applicable period will be the rate of
interest in effect on such Interest Determination Date.

CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.

CMT Rate Notes

CMT Rate Notes will bear interest at the interest rates (calculated with
references to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in the CMT Rate Notes and in the applicable Pricing Supplement.

Unless otherwise specified in the applicable Pricing Supplement, the "CMT
Rate" means, with respect to any Interest Determination Date relating to a CMT
Rate Note, the rate displayed on the Designated CMT Telerate Page under the
caption ". . .Treasury Constant Maturities . . . Federal Reserve Board Release
H.15...Mondays Approximately 3:45 P.M.", under the column for the Designated CMT

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Maturity Index for (i) if the Designated CMT Telerate Page is 7055, the rate on
such Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week, or the month, as applicable, ended immediately preceding the
week in which the related Interest Determination Date occurs. If such rate is no
longer displayed on the relevant page, or if not displayed by 3:00 p.m., New
York City time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or if not published by 3:00 p.m., New York City
time, on the related Calculation Date, then the CMT Rate for such Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the Interest Determination Date with respect
to such Interest Reset Date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 p.m., New York
City time, on the related Calculation Date, then the CMT Rate for the Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 p.m. (New York City time) on the
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York selected by the Calculation Agent
(from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the CMT
Rate for such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m. (New York City
time) on the Interest Determination Date of three Reference Dealers in The City
of New York (from five such Reference Dealers selected by the Calculation Agent
and eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate will be the CMT Rate in effect on such Interest
Determination Date. If two Treasury Notes with an original maturity as described
in the third preceding sentence have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the quotes for the CMT Rate Note with the
shorter remaining term to maturity will be used.

"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purposes of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.

"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.

Commercial Paper Rate Notes

Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified in the Commercial Paper Rate Notes and in
the applicable Pricing Supplement.

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Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the applicable Index Maturity, as published in H.
15(519) under the heading "Commercial Paper", or, if not so published by 9:00
a.m., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the Commercial Paper Rate will be the Money Market
Yield on such Interest Determination Date of the rate for commercial paper
having the applicable Index Maturity, as published in Composite Quotations under
the heading "Commercial Paper". If such rate is not yet published in Composite
Quotations by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Commercial Paper Rate will be the Money
Market Yield of the arithmetic mean of the offered rates as of 11:00 a.m., New
York City time, on such Interest Determination Date, of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent for
commercial paper placed for industrial issuers whose bond rating is "AA", or the
equivalent, from a nationally recognized rating agency, having the applicable
Index Maturity; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting offered rates as mentioned in this
sentence, the rate of interest in effect for the applicable period will be the
rate of interest in effect on such Interest Determination Date.

"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:

D x 360
Money Market Yield = ---------------- x 100
360 - (D x M)

where "D" refers to the 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 rates
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in the Federal Funds Rate Notes and in the
applicable Pricing Supplement.

Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" means, with respect to any Interest Determination Date, 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 9:00 a.m., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Federal Funds Rate will be the rate on such Interest Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate". If such rate is not yet published by 3:00 p.m., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the Federal
Funds Rate for such 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 Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by the Calculation
Agent as of 9:00 a.m., New York City time, on such Interest Determination Date;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting such rates as mentioned in this sentence, the rate of
interest in effect for the applicable period will be the rate of interest in
effect on such Interest Determination Date.

J.J. Kenny Rate Notes

J.J. Kenny Rate Notes will bear interest at the interest rates (calculated
with reference to the J.J. Kenny Rate and the Spread and/or Spread Multiplier,
if any) specified in the J.J. Kenny Rate Notes and in the applicable Pricing
Supplement.

Unless otherwise specified in the applicable Pricing Supplement, the "J.J.
Kenny Rate" means, with respect to any Interest Determination Date relating to a
J.J. Kenny Rate Note, the rate in the high grade weekly index (the "Weekly
Index") on such date made available by Kenny information Systems ("Kenny") to
the Calculation Agent. The Weekly Index is, and shall be, based upon 30-day
yield evaluations at par of bonds, the interest of which is exempt from Federal
income taxation under the Internal Revenue Code of 1986, as amended, of not less
than five high grade component issuers selected by Kenny which shall include,
without limitation, issuers of general obligation bonds. The specific issuers
included among the component issuers may be changed from time to time by Kenny
in its discretion. The bonds on which the Weekly Index is based shall not

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include any bonds on which the interest is subject to a minimum tax or similar
tax under the Internal Revenue Code of 1986, as amended, unless all tax-exempt
bonds are subject to such tax. In the event Kenny fails to make available such
Weekly Index prior to the relevant Calculation Date, a successor indexing agent
will be selected by the Calculation Agent, such index to reflect the prevailing
rate for bonds rated in the highest short-term rating category by Moody's
Investors Service, Inc. and Standard & Poor's Corporation in respect of issuers
most closely resembling the high grade component issuers selected by Kenny for
its Weekly Index, the interest on which is (A) variable on a weekly basis, (B)
exempt from Federal income taxation under the Internal Revenue Code of 1986, as
amended, and (C) not subject to a minimum tax or similar tax under the Internal
Revenue Code of 1986, as amended, unless all tax-exempt bonds are subject to
such tax. If such successor indexing agent is not available, the rate for any
Interest Determination Date shall be 67% of the rate determined if the Treasury
Rate had been originally selected as the interest rate for the Notes. The
Calculation Agent shall calculate the J.J. Kenny Rate in accordance with the
foregoing. At the request of a Holder of a Floating Rate Note bearing interest
at the J.J. Kenny Rate, the Calculation Agent will provide such holder with the
interest rate that will become effective as of the next Interest Reset Date.

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.

With respect to LIBOR Notes indexed to the offered rate for U.S. dollar
deposits, unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined by the Calculation Agent as follows:

(i) With respect to an Interest Determination Date, the Calculation
Agent will determine, if the method of calculation of LIBOR for a LIBOR
Note is specified on the face thereof to be "LIBOR-Reuters", the arithmetic
mean of the offered rates for deposits in United States dollars for the
period of the applicable Index Maturity commencing on the second London
Banking Day immediately following such Interest Determination Date, which
appear on the "Reuters Screen LIBO Page" at approximately 11:00 a.m.,
London time, on such Interest Determination Date. "Reuters Screen LIBO
Page" means the display designated as page "LIBO" on the Reuters Monitor
Money Rates Service (or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates
of major banks). If at least two such offered rates appear on the Reuters
Screen LIBO Page, LIBOR with respect to such Interest Determination Date
will be such arithmetic mean. If the method of calculation of LIBOR for a
LIBOR Note is specified on the face thereof to be "LIBOR-Telerate" or if no
method of calculation of LIBOR is specified, LIBOR will be the rate for
deposits in U.S. dollars having the Index Maturity specified in the
applicable Pricing Supplement which appears on the "Telerate Page 3750" as
of 11:00 a.m., London time, on the Interest Determination Date. "Telerate
Page 3750" means page 3750 or such other page as may replace page 3750 on
the Dow Jones Telerate Service for the purpose of displaying London
interbank offered rates of major banks.

(ii) If fewer than two such offered rates appear on the Reuters Screen
LIBO Page in the case of LIBOR-Reuters or if the rate for deposits does not
appear on the Telerate Page in the case of LIBOR-Telerate, as applicable,
the Calculation Agent will request the principal London office of each of
four major banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in U.S. dollars for the period of the applicable
Index Maturity commencing on the second London Banking 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 equal to an amount of not less
than U.S. $1,000,000 that is representative of a single transaction in such
market at such time. If at least two such quotations are provided, LIBOR
will be the arithmetic mean of such quotations. If fewer than two such
quotations are provided, LIBOR in respect of such Interest Determination
Date will be the arithmetic mean of rates quoted by three major banks in
The City of New York selected by the Calculation Agent (after consultation
with the Company) at approximately 11:00 a.m., New York City time, on such
Interest Determination Date for loans in U.S. dollars to leading European
banks, for the period of the applicable Index Maturity commencing on the
second London Banking Day immediately following such Interest Determination

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Date and in a principal amount equal to an amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market
at such time; provided, however, that if fewer than three banks selected as
aforesaid by the Calculation Agent are quoting such rates as mentioned in
this sentence, the rate of interest in effect for the applicable period
will be the rate of interest in effect on such Interest Determination Date.

If any LIBOR Note is indexed to the offered rates for deposits in
currencies other than U.S. dollars, the applicable Pricing Supplement will set
forth the method for determining such rate.

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.

Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Interest Determination Date, the rate
for the auction held on such Interest Determination Date of direct obligations
of the United States ("Treasury bills") having the applicable Index Maturity as
published in H. 15(519) under the heading "U.S. Government Securities--Treasury
bills--auction average (investment)" or, if not so published by 9:00 a.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate (expressed as a bond equivalent,
rounded to the nearest one one-hundredth of a percent, with five one-thousandths
of a percent rounded upward, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) 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 applicable Index Maturity are not published or
announced as provided above by 3:00 p.m., New York City time, on such
Calculation Date, or if no such auction is held on such Interest Determination
Date, then the Treasury Rate shall be calculated by the Calculation Agent and
shall be a yield to maturity (expressed as a bond equivalent, rounded to the
nearest one one-hundredth of a percent, with five one-thousandths of a percent
rounded upward, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Interest
Determination Date, of three leading primary United States government securities
dealers selected by the Calculation Agent for the Issue of Treasury bills with a
remaining maturity closest to the applicable Index Maturity; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting bid rates as mentioned in this sentence, the interest rate for the
applicable period will be the interest rate in effect on such Interest
Determination Date.

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,
except that the initial interest rate for each Prime Rate Note will be the rate
specified in the applicable Pricing Supplement.

Unless otherwise specified in the applicable Pricing Supplement, the "Prime
Rate" means, with respect to any Interest Determination Date, the rate on such
date as published by the Board of Governors of the Federal Reserve System in
H.15(519) under the heading "Bank Prime Loan". If such rate is not published by
9:00 a.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Prime Rate will be determined by the
Calculation Agent and will be the arithmetic mean of the rates of interest
publicly announced by each bank named on the "Reuters Screen NYMF Page" (as
defined below) as such bank's prime rate or base lending rate as in effect for
such Interest Determination Date. "Reuters Screen NYMF Page" means the display
designated as page "NYMF" on the Reuters Monitor Money Rates Service (such term
to include such other page as may replace the NYMF page on that Service for the
purpose of displaying prime rates or base lending rates of major United States
banks). If fewer than four such rates but more than one such rate appear on the
Reuters Screen NYMF Page for such Interest Determination Date, the Prime Rate
will be determined by the Calculation Agent and will be the arithmetic mean of
the prime rates quoted on the basis of the actual number of days in the year
divided by 360 as of the close of business on such Interest Determination Date
by four major money center banks in The City of New York selected by the
Calculation Agent from a list approved by the Company. If fewer than two such

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rates appear on the Reuters Screen NYMF Page, the Prime Rate will be calculated
by the Calculation Agent and will be determined as the arithmetic mean of the
prime rates furnished 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 U.S.$500,000,000 and being subject to supervision or
examination by Federal or state authority, selected by the Calculation Agent
from a list approved by the Company to provide such rate or rates; provided,
however, that if the banks or trust companies selected as aforesaid by the
Calculation Agent from a list approved by the Company are not quoting as
mentioned in this sentence, the rate of interest in effect for the applicable
period will be the rate of interest in effect on such Interest Determination
Date.

11th District Cost of Funds Rate Notes

11th District Cost of Funds Rate Notes will bear interest at the interest
rates (calculated with reference to the 11th District Cost of Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in the 11th District Cost of
Funds Rate Notes and in the applicable Pricing Supplement.

Unless otherwise specified in the applicable Pricing Supplement, "11th
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an 11th District Cost of Funds Rate Note, the rate equal to the
monthly weighted average cost of funds for the calendar month immediately
preceding the month in which such Interest Determination Date falls, as set
forth under the caption "11th District" on Telerate Page 7058 as of 11:00 a.m.,
San Francisco time, on such Interest Determination Date. If such rate does not
appear on Telerate Page 7058 on any related Interest Determination Date, the
11th District Cost of Funds Rate for such Interest Determination Date shall be
the monthly weighted average cost of funds paid by member institutions of the
11th Federal Home Loan Bank District that was most recently announced (the "11th
District Cost of Funds Index") by the Federal Home Loan Bank of San Francisco
(the "FHLB of San Francisco") as such cost of funds for the calendar month
immediately preceding the date of such announcement. If the FHLB of San
Francisco fails to announce such rate for the calendar month immediately
preceding such Interest Determination Date, then the 11th District Cost of Funds
Rate determined as of such Interest Determination Date will be the 11th District
Cost of Funds Rate in effect on such Interest Determination Date.

Currency Indexed Notes

General

The Company may from time to time offer Currency Indexed Notes, the
principal amount of which payable at the Maturity Date is determined by
reference to the rate of exchange between the currency or composite currency in
which such Notes are denominated (the "Denominated Currency") and the other
currency or currencies or composite currency or composite currencies specified
as the Indexed Currency (the "Indexed Currency") in the applicable Pricing
Supplement, or as determined in such other manner as may be specified in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, Holders of Currency Indexed Notes will be entitled to
receive a principal amount in respect of such Currency Indexed Notes exceeding
the amount designated as the face amount of such Currency Indexed Notes in the
applicable Pricing Supplement (the "Face Amount") if, at the Maturity Date, the
rate at which the Denominated Currency can be exchanged for the Indexed Currency
is greater than the rate of such exchange designated as the Base Exchange Rate,
expressed in units of the Indexed Currency per one unit of the Denominated
Currency, in the applicable Pricing Supplement (the "Base Exchange Rate").
Holders of Currency Indexed Notes will be entitled to receive a principal amount
in respect of such Currency Indexed Notes less than the Face Amount of such
Currency Indexed Notes if, at the Maturity Date, the rate at which the
Denominated Currency can be exchanged for the Indexed Currency is less than such
Base Exchange Rate. The Base Exchange Rate is determined as described below
under "Payment of Principal and Interest". Information as to the relative
historical value (which information is not necessarily indicative of relative
future value) of the applicable Denominated Currency against the applicable
Indexed Currency, any exchange controls applicable to such Denominated Currency
or Indexed Currency and certain tax consequences to holders will be set forth in
the applicable Pricing Supplement. See "Foreign Currency Risks".

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Unless otherwise specified in the applicable Pricing Supplement, the term
"Exchange Rate Day" shall mean any day (a) which is a Business Day in The City
of New York and (b)(i) if the Denominated Currency or Indexed Currency is any
currency or composite currency other than the U.S. dollar or the ECU, a Business
Day in the principal financial center of the country of such Denominated
Currency or Indexed Currency or (ii) if the Denominated Currency or Indexed
Currency is the ECU, a Business Day with respect to the ECU.

Payment of Principal and Interest

Unless otherwise specified in the applicable Pricing Supplement, interest
will be payable by the Company in the Denominated Currency based on the Face
Amount of the Currency Indexed Notes and at the rate and times and in the manner
set forth herein and in the applicable Pricing Supplement.

Unless otherwise specified in the applicable Pricing Supplement, principal
of a Currency Indexed Note will be payable by the Company in the Denominated
Currency at Maturity in an amount equal to the Face Amount of the Currency
Indexed Note, plus or minus an amount of the Denominated Currency determined by
the Exchange Rate Agent by reference to the difference between the Base Exchange
Rate and the rate at which the Denominated Currency can be exchanged for the
Indexed Currency as determined on the second Exchange Rate Day (the "Exchange
Rate Date") prior to Maturity by the Exchange Rate Agent based upon the
indicative quotation, selected by such Exchange Rate Agent at approximately
11:00 a.m., New York City time, on such Exchange Rate Date, for the Indexed
Currency (spot bid quotation for the Denominated Currency) which will yield the
largest number of units of the Indexed Currency per one unit of the Denominated
Currency, for an amount of Indexed Currency equal to the Face Amount of such
Currency Indexed Note multiplied by the Base Exchange Rate with the Denominated
Currency for settlement at Maturity (such rate of exchange, as so determined and
expressed in units of the Indexed Currency per one unit of the Denominated
Currency, is hereafter referred to as the "Spot Rate"). Unless otherwise
provided in the Pricing Supplement, such selection shall be made from among the
quotations appearing on the display "page" within the Reuters or Telerate
Monitor Foreign Exchange Service, as may be agreed to by the Company and such
Exchange Rate Agent (or, if such display "page" is not available or such Indexed
Currency or Denominated Currency is a composite currency for which separate
current composite currency quotations are not available, such other comparable
display or other comparable manner of obtaining quotations as may be agreed to
by the Company and such Exchange Rate Agent), used to determine the Spot Rate.
The principal amount of the Currency Indexed Notes determined by the Exchange
Rate Agent to be payable at Maturity will be payable to the Holders thereof in
the manner set forth herein and in the applicable Pricing Supplement. In the
absence of manifest error, the determination by the Exchange Rate Agent of the
Spot Rate and the principal amount of Currency Indexed Notes payable at Maturity
thereof shall be final and binding on the Company and the Holders of such
Currency Indexed Notes.

The formula to be used by the Exchange Rate Agent to determine the
principal amount of a Currency Indexed Note payable at the Maturity Date will be
specified in the applicable Pricing Supplement.

Unless otherwise specified in the applicable Pricing Supplement, in the
event of any redemption or repayment of a Currency Indexed Note prior to its
scheduled Maturity Date, the term "Maturity" used above would refer to the
redemption or repayment date of such Currency Indexed Note.

Other Indexed Notes and Certain Terms Applicable to All Indexed Notes

The Notes may be issued as Indexed Notes, other than Currency Indexed
Notes, the principal amount of which payable at Maturity or the interest (or
premium, if any) thereon, or both, may be determined by reference to the price
of one or more specified securities or commodities, to one or more securities or
commodities exchange indices or other indices or by other similar methods or
formulas. The Pricing Supplement relating to such an Indexed Note will describe,
as applicable, the method by which the amount of interest payable and the amount
of principal payable at the Maturity Date in respect of such Indexed Note will
be determined, certain special tax consequences to Holders of such Notes,
certain risks associated with an investment in such Notes and other information
relating to such Notes.

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An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate on such a Note is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be paid
or that negative interest will accrue, and, if the principal amount of such a
Note is so indexed, the principal amount payable at maturity may be less than
the original purchase price of such Note if allowed pursuant to the terms of
such Note, including the possibility that no principal will be paid, or if such
principal amount is utilized to net against accrued negative interest, the
principal amount payable at maturity may be less than the original purchase
price of such Note if allowed pursuant to the terms of such Note, including the
possibility that no principal will be paid. The secondary market for such Notes
will be affected by a number of factors, independent of the creditworthiness of
the issuer and the value of the applicable currency, commodity or interest rate
index, the time remaining to the maturity of such Notes, the amount outstanding
of such Notes and market interest rates. The value of the applicable currency,
commodity or interest rate index depends on a number of interrelated factors,
including economic, financial and political events, over which the Company has
no control. Additionally, if the formula used to determine the principal amount
or interest payable with respect to such Notes contains a multiple or leverage
factor, the effect of any change in the applicable currency, commodity or
interest rate index will be increased. The historical experience of the relevant
currencies, commodities or interest rate indices should not be taken as an
indication of future performance of such currencies, commodities or interest
rate indices during the term of any Note. Accordingly, prospective investors
should consult their own financial and legal advisors as to the risk entailed by
an investment in such Notes and the suitability of such Notes in light of their
particular circumstances.

Unless otherwise specified in the applicable Pricing Supplement, (a) for
the purpose of determining whether Holders of the requisite principal amount of
Securities outstanding under the Indenture have made a demand or given a notice
or waiver or taken any other action, the outstanding principal amount of Indexed
Notes will be deemed to be the face amount thereof, and (b) in the event of an
acceleration of the Maturity of an Indexed Note, the principal amount payable to
the Holder of such Note upon acceleration will be the principal amount
determined by reference to the formula by which the principal amount of such
Note would be determined on the Maturity Date thereof, as if the date of
acceleration were the Maturity Date.

Subsequent Interest Periods

The Pricing Supplement relating to each Note will indicate whether the
Company has the option with respect to such Note to reset the interest rate, in
the case of a Fixed Rate Note, or to reset the Spread and/or Spread Multiplier,
in the case of a Floating Rate Note, and, if so, the date or dates on which such
interest rate or such Spread and/or Spread Multiplier, as the case may be, may
be reset (each an "Optional Reset Date"). If the Company has such option with
respect to any Note, the following procedures shall apply, unless modified as
set forth in the applicable Pricing Supplement.

The Company may at any time and from time to time exercise such option with
respect to a Note by notifying the Trustee of such exercise at least 50 but not
more than 60 days prior to an Optional Reset Date for such Note. Not later than
10 days after receipt of such notice from the Company but in any event not later
than 40 days prior to such Optional Reset Date, the Trustee will mail to the
Holder of such Note a notice (the "Reset Notice") setting forth (i) the election
of the Company to reset the interest rate, in the case of a Fixed Rate Note, or
the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, (ii)
such new interest rate or such new Spread and/or Spread Multiplier, as the case
may be, and (iii) the provisions, if any, for redemption or repayment during the
period from such Optional Reset Date to the next Optional Reset Date or, if
there is no such next Optional Reset Date, to the Maturity Date of such Note
(each such period, a "Subsequent Interest Period"), including the date or dates
on which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period.

Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, the Company may, at its option, revoke the interest rate,
in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the

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case of a Floating Rate Note, provided for in the Reset Notice and establish an
interest rate, in the case of a Fixed Rate Note, or a Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, that is higher than the
interest rate, Spread and/or Spread Multiplier, as the case may be, provided for
in the Reset Notice, for the Subsequent Interest Period commencing on such
Optional Reset Date by causing the Trustee to transmit notice of such higher
interest rate or higher Spread and/or Spread Multiplier, as the case may be, to
the Holder of such Note. Such notice shall be irrevocable. All Notes with
respect to which the interest rate or Spread and/or Spread Multiplier is reset
on an Optional Reset Date and with respect to which the Holders of such Notes
have not tendered such Notes for repayment (or have validly revoked any such
tender pursuant to the next succeeding paragraph) will bear such higher interest
rate, in the case of a Fixed Rate Note, or higher Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, whether or not tendered for
repayment.

If the Company elects to reset the interest rate or the Spread and/or
Spread Multiplier of a Note, the Holder of such Note will have the option to
elect repayment of such Note by the Company on any Optional Reset Date at a
price equal to the aggregate principal amount thereof outstanding on, plus any
accrued interest to, such Optional Reset Date. In order for a Note to be so
repaid on an Optional Reset Date, the Trustee or any other person designated by
the Company for such purpose must receive at least 25 days but not more than 35
days prior to such Optional Reset Date (i) if such Note is a Certificated Note,
the Note with the form entitled "Option to Elect Repayment" on the reverse side
of the Note duly completed or (ii) if such Note is a Book-Entry Note, such
notices as may be set forth in the applicable Pricing Supplement. The repayment
option may be exercised by the Holder of a Note for less than the aggregate
principal amount of the Note then outstanding; provided, however, that the
principal amount of the Note remaining outstanding after repayment is an
authorized denomination. A Holder who has tendered a Note for repayment pursuant
to a Reset Notice may, by delivery by the close of business on the tenth day
prior to such Optional Reset Date of written notice to the Trustee, revoke any
such tender for repayment.

If a Note is represented by a Global Security, the Depositary's nominee
will be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will exercise timely a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right of repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Note in
order to ascertain the cut-off time by which such an instruction must be given
in order for timely notice to be delivered to the Depositary.

Extension of Maturity Date

The Pricing Supplement relating to each Note (other than an Amortizing
Note) will indicate whether the Maturity Date of such Note may be extended, and
if so, whether such Maturity Date may be extended at the option of the Company
or the Holder of such Note, or both, for one or more periods (each an "Extension
Period") up to but not beyond the date (the "Final Maturity Date") set forth in
such Pricing Supplement.

If the Company has such option with respect to any Note (other than an
Amortizing Note), the following procedures shall apply, unless modified as set
forth in the applicable Pricing Supplement. The Company may at any time and from
time to time exercise such option with respect to a Note (other than an
Amortizing Note) by notifying the Trustee of such exercise at least 50 but not
more than 60 days prior to the Maturity Date of such Note in effect immediately
prior to the exercise of such option (the "Prior Maturity Date"). Not later than
10 days after receipt of such Notice from the Company but in any event not later
than 40 days prior to the Prior Maturity Date, the Trustee will mail to the
Holder of such Note a notice (the "Extension Notice") relating to such Extension
Period, setting forth (i) the election of the Company to extend the Prior
Maturity Date, (ii) the new Maturity Date, (iii) in the case of a Fixed Rate
Note, the interest rate to be applicable to the Extension Period or, in the case
of a Floating Rate Note, the Spread and/or Spread Multiplier to be applicable to
the Extension Period, and (iv) the provisions, if any, for redemption by the
Company or repayment to the Holder, or both, during the Extension Period,
including the date or dates on which or the period or periods during which and

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the price or prices at which such redemption or repayment may occur during the
Extension Period. Upon the transmittal by the Trustee of an Extension Notice to
the Holder of a Note, the Prior Maturity Date shall be extended automatically,
and, except as modified by the Extension Notice and as described in the next
paragraph, such Note will have the same terms as prior to the transmittal of
such Extension Notice.

Notwithstanding the foregoing, not later than 20 days prior to the Prior
Maturity Date for a Note, the Company may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier,
in the case of a Floating Rate Note, provided for in the Extension Notice and
establish an interest rate, in the case of a Fixed Rate Note, or a Spread and/or
Spread Multiplier, in the case of a Floating Rate Note, that is higher than the
interest rate, Spread and/or Spread Multiplier, as the case may be, provided for
in the Extension Notice, for the Extension Period commencing on such Prior
Maturity Date by causing the Trustee to transmit notice of such higher interest
rate or higher Spread and/or Spread Multiplier, as the case may be, to the
Holder of such Note. Such notice shall be irrevocable. All Notes with respect to
which the Maturity Date is extended and with respect to which the Holders of
such Notes have not tendered such Notes for repayment (or have validly revoked
any such tender) pursuant to the next succeeding paragraph will bear such higher
interest rate, in the case of a Fixed Rate Note, or higher Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, for the Extension Period.

If the Company elects to extend the Maturity Date of a Note, the Holder of
such Note will have the option to elect repayment of such Note by the Company on
the immediately Prior Maturity Date at a price equal to the principal amount
thereof outstanding on, plus any accrued interest to, such Prior Maturity Date.
In order for a Note to be so repaid on such Prior Maturity Date, the Trustee or
any other person designated by the Company for such purpose must receive at
least 25 days but not more than 35 days prior to such Prior Maturity Date (i) if
such Note is a Certificated Note, the Note with the form entitled "Option to
Elect Repayment" on the reverse of the Note duly completed or (ii) if such Note
is a Book-Entry Note, such notices as may be set forth in the applicable Pricing
Supplement. The repayment option may be exercised by the Holder of a Note for
less than the aggregate principal amount of the Note then outstanding; provided,
however, that the principal amount of the Note remaining outstanding after
repayment is an authorized denomination. A Holder who has tendered a Note for
repayment pursuant to an Extension Notice may, by delivery of written notice by
the close of business on the tenth day prior to such Prior Maturity Date to the
Trustee, revoke any such tender for repayment.

If a Note is represented by a Global Security, see "Description of
Notes--Subsequent Interest Periods" above for the manner by which a right to
repayment may be exercised.

If the Holder of a Note (other than an Amortizing Note) has the option to
extend the Maturity Date of such Note for one or more Extension Periods up to
but not beyond the Final Maturity Date set forth in the Pricing Supplement
relating to such Note, the following provisions shall apply, unless modified as
set forth in such Pricing Supplement. The Holder of a Note (other than an
Amortizing Note) may, at such time or times as set forth in the applicable
Pricing Supplement, exercise such option by delivery to the Trustee by the date
set forth in such Pricing Supplement of a written notice of such election (the
"Holder's Extension Notice"). Such Holder's Extension Notice will be irrevocable
and will specify the new Maturity Date. Upon the transmittal by such Holder of
such Holder's Extension Notice to the Trustee, the applicable Prior Maturity
Date shall be extended automatically, and, except as modified pursuant to this
paragraph, such Note will have the same terms as prior to the transmittal of
such Holder's Extension Notice.

Redemption and Repurchase

The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to its Maturity Date or that such Note will be
redeemable at the option of the Company on a date or dates specified prior to
such Maturity Date at a price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to the date of redemption. The
Company may redeem any of the Notes that are redeemable and remain outstanding
either in whole or from time to time in part, upon not less than 30 nor more
than 60 days' notice to each Holder of such Note. If Notes of different tenor
and terms are to be redeemed, the Company shall select the Notes to be redeemed.
If less than all of the Notes with like tenor and terms are to be redeemed, the

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Notes to be redeemed shall be selected by the Trustee by such method as the
Trustee shall deem fair and appropriate. The Notes will not be subject to any
sinking fund.

The Pricing Supplement relating to each Note will indicate that such Note
cannot be repaid prior to its Maturity Date or that such Note will be repayable
at the option of the Holder thereof on a date or dates specified prior to its
Maturity Date at the price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to the date of repayment.

Unless otherwise specified in the applicable Pricing Supplement, in order
for a Note to be repaid at the option of the Holder thereof, the Trustee or any
other person designated by the Company must receive at least 25 days but not
more than 35 days prior to the repayment date, (i) if such Note is a
Certificated Note, the Note with the form entitled "Option to Elect Repayment"
on the reverse side of the Note duly completed or (ii) if such Note is a
Book-Entry Note, such notices as may be set forth in the applicable Pricing
Supplement. The repayment option may be exercised by the Holder of a Note for
less than the aggregate principal amount of the Note then outstanding; provided,
however, that the principal amount of the Note remaining outstanding after
repayment is an authorized denomination. A Holder who has tendered a Note for
repayment pursuant to such option may, by delivery by the close of business on
the tenth day prior to the repayment date of written notice to the Trustee,
revoke any such tender for repayment.

If a Note is represented by a Global Security, see "Description of
Notes--Subsequent Interest Periods" above for the manner by which a right to
repayment may be exercised.

The Company may, at any time, purchase Notes at any price in the open
market or otherwise. Notes so purchased by the Company may, at its discretion,
be held, resold or surrendered to the Trustee for cancellation.

Global Securities and Book-Entry System

Upon issuance, all Book-Entry Notes having the same Specified Currency,
Original Issue Date, Maturity Date, redemption provisions (if any), Interest
Payment Dates and, in the case of Fixed Rate Notes, interest rate (if any) or in
the case of Amortizing Notes, amortization schedule or, in the case of Floating
Rate Notes, Base Rate, Initial Interest Rate, Index Maturity, Interest Reset
Period and Dates, Spread and/or Spread Multiplier (if any), Minimum Interest
Rate (if any), original issue discount provisions (if any) and Maximum Interest
Rate (if any), will be represented by a single Global Security. Each Global
Security representing Book-Entry Notes will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York (the "Depositary") or such
other depositary as is specified in the applicable Pricing Supplement, and
registered in the name of a nominee of the Depositary. Book-Entry Notes will not
be exchangeable for Certificated Notes and, except under the circumstances
described in the Prospectus under "Description of the Debt Securities--Global
Securities" and as described below, will not otherwise be issuable in definitive
form.

The Depositary has advised the Company and the Agents as follows: The
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depositary was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depositary's participants include securities
brokers and dealers (including the Agents), banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.

Upon the issuance of a Global Security, the Depositary for such Global
Security, or its nominee, will credit the accounts of persons held with it with
the respective amount of the Book-Entry Notes represented by such Global

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Security. Such accounts shall be designated by the Agent or Agents with respect
to such Book-Entry Notes or by the Company if such Book-Entry Notes are offered
and sold directly by the Company. Ownership of beneficial interests in such
Global Security will be limited to persons that have accounts with the
Depositary for such Global Security or its nominee ("participants") or persons
that may hold interests through participants. Ownership of beneficial interests
in such Global Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the Depositary or its
nominee (with respect to interests of participants) for such Global Security and
on the records of participants (with respect to interests of persons other than
participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.

So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Book-Entry
Notes represented by such Global Security for all purposes under the Indenture
governing such Book-Entry Notes. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have Book-Entry Notes
represented by such Global Security registered in their names, will not receive
or be entitled to receive Certificated Notes in exchange for the Global Security
representing such Book-Entry Notes and will not be considered the owners or
Holders thereof under the Indenture.

Principal, premium, if any, and interest payments on Book-Entry Notes
registered in the name of a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Security representing such Book-Entry Notes. Neither the Company, the
Trustee, any Paying Agent nor the Security Registrar for such Book-Entry Notes
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of the Global
Security for such Book-Entry Notes or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.

The Company expects that the Depositary for Book-Entry Notes or its
nominee, upon receipt of any payment of principal, premium or interest, will
credit immediately participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of the Global
Security for such Book-Entry Notes as shown on the records of such Depositary or
its nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers which are registered in
"street name", and will be the responsibility of such participants.

If the Depositary for Book-Entry Notes is at any time unwilling or unable
to continue as depositary and a successor depositary is not appointed by the
Company within 90 days, the Company will issue Certificated Notes in exchange
for the Global Security representing such Book-Entry Notes. In addition, the
Company may at any time and in its sole discretion determine not to have
Book-Entry Notes represented by Global Securities and, in such event, will issue
Certificated Notes in exchange for all Global Securities representing such
Book-Entry Notes. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery of Certificated Notes
represented by such Global Security equal in principal amount to such beneficial
interest and to have such Certificated Notes registered in its name. Unless
otherwise specified by the Company in a Pricing Supplement or otherwise,
Certificated Notes will be so issued in denominations of U.S. $1,000 and any
integral multiple in excess thereof (or the equivalent thereof in a Specified
Currency other than U.S. dollars).

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IMPORTANT CURRENCY EXCHANGE INFORMATION

Purchasers are required to pay for Notes in the Specified Currency and
payments of principal of (and premium, if any) and interest on such Notes will
be made in the Specified Currency, unless otherwise provided in the applicable
Pricing Supplement. Currently, there are limited facilities in the United States
for conversion of U.S. dollars into foreign currencies and vice versa and banks
do not generally offer non-U.S. dollar checking or savings account facilities in
the United States. Accordingly, unless otherwise specified in a Pricing
Supplement or unless alternative arrangements are made between the Company and a
prospective purchaser of Notes, payment of principal of (and premium, if any)
and interest on Notes in a Specified Currency other than U.S. dollars will be
made to an account at a bank outside the United States. However, if requested by
a prospective purchaser of Notes denominated in a Specified Currency other than
U.S. dollars, the Agent soliciting the offer to purchase will arrange for the
conversion of U.S. dollars into such Specified Currency to enable the purchaser
to pay for such Notes. Such request must be made on or before the fifth Business
Day preceding the date of delivery of the Notes, or by such other date as is
determined by the Agent that presents such offer to the Company. Each such
conversion will be made by the relevant Agent on such terms and subject to such
conditions, limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange practice. All costs of
exchange, if any, will be borne by the purchasers of the Notes.

References herein to "U.S. dollars" or "U.S.$" or "$" are to the currency
of the United States of America.

FOREIGN CURRENCY RISKS

Governing Law and Judgments

The Notes will be governed by and construed in accordance with the laws of
the State of New York. Courts in the United States have not customarily rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. New York statutory law provides, however, that a court shall render a
judgment or decree in the foreign currency of the underlying obligation and that
the judgment or decree shall be converted into U.S. dollars at a rate of
exchange prevailing on the date of the entry of the judgment or decree. Exchange
Rates and Exchange Controls

An investment in Notes that are denominated in, or the payment of which is
related to the value of, a Specified Currency other than U.S. dollars ("Foreign
Currency Notes") entails significant risks that are not associated with a
similar investment in a security denominated in U.S. dollars. Similarly, an
investment in a Currency Indexed Note entails significant risks that are not
associated with a similar investment in non-Indexed Notes. Such risks include,
without limitation, the possibility of significant market changes in rates of
exchange between the U.S. dollar and the various foreign currencies or composite
currencies (and, in the case of Currency Indexed Notes, the rate of exchange
between the Specified Currency and the Indexed Currency for such Currency
Indexed Notes), the possibility of significant changes in rates of exchange
between the U.S. dollar and the various foreign currencies resulting from
official redenomination with respect to a Specified Currency and the possibility
of the imposition or modification of foreign exchange controls by either the
United States or foreign governments. Such risks generally depend on factors
over which the Company has no control, such as economic and political events and
on the supply of and demand for the relevant currencies. In recent years, rates
of exchange between the U.S. dollar and certain foreign currencies have been
volatile and such volatility may be expected in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations in the rate that may occur during the terms
of any Foreign Currency Note. Depreciation of the Specified Currency of a
Foreign Currency Note against the U.S. dollar would result in a decrease in the
effective yield of such Foreign Currency Note below its coupon rate, and in
certain circumstances could result in a loss to the investor, on a U.S. dollar
basis. Similarly, depreciation of the Denominated Currency with respect to a
Currency Indexed Note against the applicable Indexed Currency would result in
the principal amount payable with respect to such Currency Indexed Note at the
Maturity Date being less than the Face Amount of such Currency Indexed Note
which, in turn, would decrease the effective yield of such Currency Indexed Note
below its applicable interest rate and could also result in a loss to the
investor. See "Description of Notes--Currency Indexed Notes".

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The Foreign Currency Notes provide that, in the event of an official
redenomination of a foreign currency or currency unit, the obligations of the
Company with respect to payments on Foreign Currency Notes denominated in such
foreign currency or currency unit shall, in all cases, be deemed immediately
following such redenomination to provide for the payment of that amount of
redenominated currency representing the amount of such obligations immediately
before such redenomination. In no event, however, shall any adjustment be made
to any amount payable under the Notes as a result of (a) any change in the value
of a foreign currency or currency unit relative to any other currency due solely
to fluctuations in exchange rates or (b) any redenomination of any component
currency of any foreign currency unit (unless such foreign currency unit is
itself officially redenominated).

Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency at an Interest Payment Date or at Maturity of a Foreign
Currency Note. There can be no assurance that exchange controls will not
restrict or prohibit payments of principal (and premium, if any) or interest in
any Specified Currency other than U.S. dollars. Even if there are no actual
exchange controls, it is possible that at an Interest Payment Date or at
Maturity of any particular Foreign Currency Note, the Specified Currency for
such Foreign Currency Note would not be available to the Company due to
circumstances beyond the control of the Company. In any such event, the Company
will make required payments in U.S. dollars on the basis described herein. See
"Payment Currency".

THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO AND THE
ACCOMPANYING PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN
FOREIGN CURRENCY NOTES OR CURRENCY INDEXED NOTES. THE COMPANY BELIEVES THAT
THESE RISKS ARE POTENTIALLY TOO VARIABLE TO ASCERTAIN AND DESCRIBE WITH ANY
DEGREE OF CERTAINTY AND THAT PREPARATION OF A LIST OF EVERY POTENTIAL MATERIAL
RISK, INCORPORATING EVERY ECONOMIC, FINANCIAL, POLITICAL AND MILITARY
CIRCUMSTANCE, AMONG OTHER THINGS, WOULD BE IMPRACTICABLE. PROSPECTIVE INVESTORS
SHOULD THEREFORE CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS
ENTAILED BY AN INVESTMENT IN FOREIGN CURRENCY NOTES OR CURRENCY INDEXED NOTES.
SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.

Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, most banks
currently do not offer non-U.S. dollar denominated checking or savings account
facilities in the United States. Accordingly, payments on Foreign Currency Notes
made in a Specified Currency other than U.S. dollars will be made from an
account with a bank located outside the United States. See "Payment Currency".

Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in a Specified Currency other than U.S. dollars or ECU will not be
sold in or to residents of the country issuing the Specified Currency. The
information set forth in this Prospectus Supplement is directed to prospective
purchasers who are United States residents, and the Company disclaims any
responsibility to advise prospective purchasers who are residents of countries
other than the United States with respect to any matters that may affect the
purchase, holding or receipt of payments of principal of (and premium, if any)
or interest on the Notes. Such persons should consult their own counsel with
regard to such matters.

Pricing Supplements relating to Foreign Currency Notes or Indexed Notes
will contain information concerning historical exchange rates for the applicable
Specified Currency against the U.S. dollar or other relevant currency and a
description of the currency or currencies and any exchange controls affecting
such currency or currencies. The information therein concerning exchange rates
is furnished as a matter of information only and should not be regarded as
indicative of the range of or trends in fluctuations in currency exchange rates
that may occur in the future.

Payment Currency

Except as set forth below, if payment on a Foreign Currency Note is
required to be made in a Specified Currency other than U.S. dollars and such
currency in unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control, or is no longer used by the

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government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments due on that due date with respect to such Foreign
Currency Note shall be made in U.S. dollars. The amount so payable on any date
in such Specified Currency shall be converted into U.S. dollars at a rate
determined by the Exchange Rate Agent on the basis of the noon buying rate in
The City of New York for cable transfers in the Specified Currency as certified
for customs purposes by the Federal Reserve Bank of New York (the "Market
Exchange Rate") for such Specified Currency on the second Business Day prior to
such payment date, or as otherwise indicated in an applicable Pricing
Supplement. In the event such Market Exchange Rate is not then available, the
Company will be entitled to make payments in U.S. dollars (i) if such Specified
Currency is not a composite currency, on the basis of the most recently
available Market Exchange Rate for such Specified Currency or (ii) if such
Specified Currency is a composite currency, in an amount determined by the
Exchange Rate Agent to be the sum of the results obtained by multiplying the
number of units of each component currency of such composite currency, as of the
most recent date on which such composite currency was used, by the Market
Exchange Rate for such component currency on the second Business Day prior to
such payment date (or, if such Market Exchange Rate is not then available, by
the most recently available Market Exchange Rate for such component currency).

If payment on a Foreign Currency Note is required to be made in ECU and ECU
are unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control, or are no longer used in the
European Monetary System, all payments due on that due date with respect to such
Foreign Currency Notes shall be made in U.S. dollars. The amount so payable on
any date in ECU shall be converted into U.S. dollars at a rate determined by the
Exchange Rate Agent as of the second Business Day prior to the date on which
such payment is due on the following basis. The component currencies of the ECU
for this purpose (the "Components") shall be the currency amounts that were
components of the ECU as of the last date on which ECU were used in the European
Monetary System. The equivalent of ECU in U.S. dollars shall be calculated by
aggregating the U.S. dollar equivalents of the Components. The U.S. dollar
equivalent of each of the Components shall be determined by the Exchange Rate
Agent on the basis of the most recently available Market Exchange Rate, or as
otherwise indicated in the applicable Pricing Supplement.

If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into two
or more currencies, the amount of that currency as a Component shall be replaced
by amounts of such two or more currencies, each of which shall have a value on
the date of division equal to the amount of the former component currency
divided by the number of currencies into which that currency was divided.

All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion (except to the extent expressly provided herein that
any determination is subject to approval by the Company) and, in the absence of
manifest error, shall be conclusive for all purposes and binding on Holders of
the Notes and the Exchange Rate Agent shall have no liability therefor.

UNITED STATES TAXATION

In the opinion of Ivins, Phillips & Barker, Chartered, special tax counsel
to Xerox and the Company, the following summary correctly describes certain
United States Federal income tax consequences resulting from the purchase,
ownership or disposition of Notes by an initial Holder (unless otherwise
indicated) subject to United States income taxation. It does not purport to
consider all the possible tax consequences of the purchase, ownership or
disposition of the Notes, and it is not intended to reflect the individual tax
position of any Holder. It deals only with Notes and currencies or composite
currencies other than U.S. dollars ("Foreign Currency") held as capital assets.
It does not deal with special tax situations, such as dealers in securities or
currencies, Notes (or Foreign Currency) held as a hedge against currency risks
or as part of a straddle with other investments or as part of a "synthetic
security" or other integrated investment (including a "conversion transaction")

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comprised of a Note and one or more other investments, or (except for the
discussion of "Non-United States Persons" below) situations in which the
functional currency of the Holder is not the U.S. dollar. It is based upon the
United States Federal tax laws and regulations as now in effect and as currently
interpreted, and does not take into account possible changes in such tax laws or
such interpretations. It does not include any description of the tax laws of any
state or local governments, or of any foreign government, that may be applicable
to the Notes or Holders thereof. Persons considering the purchase of Notes
should consult their own tax advisers concerning the application of the United
States Federal tax laws to their particular situations as well as any
consequences arising under the laws of any other taxing jurisdiction. The
following discussion applies only to Notes under which all payments are
denominated in, or determined with reference to, a single currency, either a
single Foreign Currency or the U.S. dollar. If Notes are issued under which
payments are denominated in, or determined with reference to, more than one
currency, their tax treatment will be discussed in the applicable Pricing
Supplement relating to the issuance of such Notes.

The Tax Reform Act of 1986 made major changes in the United States Federal
tax laws that affect the treatment of currency gains and losses. Final
regulations and proposed regulations dealing with currency gains and losses were
issued by the Internal Revenue Service ("IRS") on March 17, 1992 (the "Foreign
Currency Regulations"). The following summary reflects the terms of the Foreign
Currency Regulations. Under the proposed Foreign Currency Regulations, however,
for taxable years ending on or after the date on which the proposed Foreign
Currency Regulations become final, certain Holders may elect to mark to market
foreign currency transactions based on the Holder's method of financial
accounting. Moreover, the Foreign Currency Regulations do not cover all issues,
and subsequent versions of such regulations (including the final form of the
proposed Foreign Currency Regulations) may adopt positions that would apply to
the Notes and that may be contrary to the positions discussed below.

United States Persons

The following addresses the principal United States Federal income tax
consequences resulting from the ownership of a Note by a Holder who is a United
States person.

For purposes of the following discussion, the term "United States person"
means a citizen or resident of the United States, a corporation, partnership or
other entity created or organized under the laws of the United States or an
estate or trust the income of which is subject to United States Federal income
taxation regardless of its source, and "United States" means the United States
of America (including the States and the District of Columbia).

A Holder that is a nonresident alien individual as to the United States and
a bona fide resident of Puerto Rico, Guam, American Samoa or the Northern
Mariana Islands during the entire taxable year is also subject to the rules
described in this section as if such Holder were a United States person. Such a
Holder may also be subject to United States Federal withholding tax under the
rules described in the first paragraph under "Non-United States Persons" below.

Payments of Interest

Except as described below under "Original Issue Discount", interest on a
Note (whether payable in a Foreign Currency or in U.S. dollars) will be taxable
to a Holder as ordinary income at the time it accrues or is received in
accordance with the Holder's method of accounting for tax purposes.

If payment of interest is denominated in or determined in reference to the
value of a Foreign Currency, then in the case of a cash method Holder who is not
required to accrue such interest prior to its receipt, the amount of interest
income is determined by translating the Foreign Currency into U.S. dollars at
the "spot rate" on the date of receipt. In the case of an accrual method Holder
or in the case of interest that must be accrued prior to receipt or payment
(such as original issue discount) the amount of interest income that is taken
into income for any interest accrual period is determined by translating the
Foreign Currency into U.S. dollars at the "average rate" for the interest
accrual period, or, with respect to an interest accrual period that spans two
taxable years, at the "average rate" for the partial period within the relevant
taxable year. At the time the interest so accrued in a prior accrual period is
received, the Holder will realize exchange gain or loss equal to the difference,
if any, between the "spot rate" of the Foreign Currency received by the Holder

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with respect to such accrual period on the date the interest is received and the
amount of interest income previously accrued for such period. For taxable years
beginning after March 17, 1992, such a Holder may elect to use, instead of such
"average rate", the "spot rate" on the last day of the accrual period (or, if
the accrual period spans two of the Holder's taxable years, the last day of the
first taxable year). In addition, if the interest is actually received within
five Business Days of the end of such accrual period or taxable year, an accrual
method Holder making the election may instead use the spot rate on the date the
interest is received for purposes of translating accrued interest income into
U.S. dollars (in which case no exchange gain or loss will be taken into account
upon receipt). The election applies to all debt instruments held by the Holder
and cannot be changed without the consent of the IRS.

The exchange gain or loss described in the immediately preceding paragraph
is ordinary and will generally not be considered additional interest income or
expense. The IRS has authority to issue regulations recharacterizing interest as
principal, or principal as interest, for obligations denominated in a
hyperinflationary currency. Under the proposed Foreign Currency Regulations,
which would become effective for transactions entered into after such
regulations are finalized, if a Holder acquires a Note denominated in a Foreign
Currency that is a hyperinflationary currency at the time of such acquisition,
the Holder would be required to realize exchange gain or loss on the Note each
year that the Holder holds the Note based (in general) on the change in exchange
rates between the Specified Currency and the U.S. dollar from the beginning to
the end of the year. Such exchange gain or loss would generally be treated,
respectively, as additional interest income or as an offset to interest income.

For purposes of this discussion, the "spot rate" generally means a rate
that reflects a fair market rate of exchange available to the public for
currency under a "spot contract" in a free market and involving representative
amounts. A "spot contract" is a contract to buy or sell a currency on or before
two Business Days following the date of the execution of the contract. If such a
spot rate cannot be demonstrated, the District Director of the IRS has the
authority to determine the spot rate. The "average rate" for an accrual period
(or partial period) is the simple average of the spot exchange rates for each
Business Day of such period, or other average exchange rate for the period
reasonably derived and consistently applied by the Holder.

Purchase, Sale and Retirement of Notes

A purchaser of a Note using Foreign Currency as the consideration for such
Note will generally be treated for Federal income tax purposes as though the
Foreign Currency used to purchase the Note were instead exchanged for U.S.
dollars, and the U.S. dollars received in such exchange were used to purchase
the Note. Thus, such a purchaser generally will be required to recognize
ordinary income or loss equal to the difference, if any, between the U.S. dollar
spot rate of the Foreign Currency used to purchase the Note on the date of
purchase, and the purchaser's U.S. dollar tax basis in the Foreign Currency.

Upon the sale, exchange or retirement of a Note, a Holder will recognize
gain or loss equal to the difference between the amount realized (less any
accrued but unpaid qualified stated interest which will be taxable as such) and
the Holder's tax basis in the Note. If the amount received on the sale, exchange
or retirement is not in U.S. dollars, the amount realized will be based on the
spot rate of the Foreign Currency on the date of disposition. In the case of a
Note denominated in Foreign Currency, to the extent such recognized gain or loss
is attributable to changes in Foreign Currency exchange rates between the date
of acquisition and disposition of the Note, such gain or loss ("exchange gain or
loss") will be treated as ordinary income or loss (but will generally not be
treated as interest income or expense). However, exchange gain or loss is taken
into account only to the extent of total gain or loss realized on the
transaction. Except as provided below, any gain or loss in excess of such
exchange gain or loss will be capital gain or loss, and will be long-term
capital gain or loss if the Note had been held for more than one year.

If a Holder has a tax basis for a Note, other than a Note with a fixed
Maturity Date of one year or less from the date of issue, that is less than its
principal amount (or, in the case of an Original Issue Discount Note, less than
its original issue price plus original issue discount includable, without regard
to adjustments for acquisition premium discussed below under "Original Issue
Discount", in gross income by the prior Holder or Holders), the Note may be
considered to have "market discount". As a general matter, gain on a Note is
treated as ordinary income rather than capital gain to the extent of market
discount accrued while the Holder held the Note, although Holders may elect to

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accrue market discount into income on a current basis. Such an election applies
to all debt instruments with market discount acquired by the electing Holder on
or after the first day of the first taxable year to which the election applies
and may not be revoked without the consent of the IRS. Market discount will be
treated as accruing on a ratable basis or, at the election of the Holder, based
on a constant interest method. Furthermore, unless a Holder elects to include
market discount into income on a current basis as described above, a Holder of a
Note having market discount may be required to defer the deduction of all or a
portion of the interest expense on any indebtedness incurred or maintained to
purchase or carry such Note until the Maturity Date of the Note or its earlier
disposition in a taxable transaction. In the case of a Note payable in a Foreign
Currency, (1) market discount is determined in units of the Foreign Currency,
(2) accrued market discount required to be taken into account on the Maturity or
earlier disposition of a Note is translated into U.S. dollars at the spot rate
on the Maturity or disposition date (and no part is treated as exchange gain or
loss), and (3) accrued market discount currently includable in income by a
Holder is translated into U.S. dollars at the average exchange rate for the
accrual period, and exchange gain or loss is determined on the Maturity or
disposition of the Note in the manner described in "Payments of Interest" above,
with respect to computation of exchange gain or loss on the receipt of accrued
interest.

If a Holder has a tax basis for a Note that is greater than its principal
amount, the Note may be considered to have "bond premium". The Holder may elect
to amortize such premium as offsets to interest income over the remaining life
of the Note under a constant interest method. (The treatment of Original Issue
Discount Notes purchased at a premium is discussed below. See "Original Issue
Discount".) Such an election generally applies to all Notes held by the Holder
at the beginning of the taxable year to which the election applies or thereafter
acquired by the Holder and is irrevocable without the consent of the IRS.
However, if such Note may be optionally redeemed after the Holder acquires it at
a price in excess of its principal amount, special rules would apply that could
result in a deferral of the amortization of some bond premium until later in the
term of the Note. In the case of a Note denominated in Foreign Currency, bond
premium is computed in units of Foreign Currency and amortizable bond premium
reduces interest income in units of the Foreign Currency. At the time amortized
bond premium offsets interest income, foreign currency exchange gain or loss
(taxable as ordinary income or loss, but not generally as interest income or
expense) is realized based on the difference between spot rates at that time and
at the time of the acquisition of the Note. With respect to a Holder that does
not elect to amortize bond premium, the amount of bond premium constitutes a
capital loss when the bond matures. In the case of a Note denominated in Foreign
Currency, foreign currency exchange gain or loss with respect to the premium is
realized based on the difference between the spot rates on the Maturity Date and
at the time of the acquisition of the Note. In such case, the amount of capital
loss relating to the premium may be offset or eliminated by exchange gain.

Receipt of Foreign Currency

The tax basis of Foreign Currency received by a Holder generally will equal
the U.S. dollar equivalent of such Foreign Currency at the spot rate on the date
it is received. Upon the subsequent exchange of such Foreign Currency for U.S.
dollars, another currency, or property, a Holder will generally recognize
exchange gain or loss equal to the difference between the Holder's tax basis for
the Foreign Currency and the U.S. dollars received (or, if another currency is
received, the U.S. dollar value of the other currency at the spot rate on the
date of the exchange) or, if property is received, the U.S. dollar value of the
Foreign Currency based on the spot rate on the date of purchase. Such gain or
loss will be ordinary in character.

Indexed Notes

The specific treatment of any Indexed Notes issued will be discussed in the
applicable Pricing Supplement relating to the issuance of such Notes, and would
generally be subject to different rules from those set forth in this discussion.

Original Issue Discount

The following summary is a general discussion of the United States Federal
income tax consequences to Holders who are United States persons of Notes issued
with original issue discount ("Original Issue Discount Notes"). It is based in
part upon income tax regulations (the "OlD Regulations") that were published in
the Federal Register on February 4, 1994, and which are effective only for

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securities issued on or after April 4, 1994. The discussion assumes that the
Notes will not qualify as "applicable high-yield discount obligations" under the
Code.

For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of an Original Issue
Discount Note over its "issue price" (defined as the first price at which a
substantial amount of the Original Issue Discount Notes have been sold) unless,
in most circumstances, such excess is less than 0.25% of the Original Issue
Discount Note's stated redemption price at maturity multiplied by the number of
complete years to its maturity. The stated redemption price at maturity of an
Original Issue Discount Note is the total of all payments to be made under the
Original Issue Discount Note other than "qualified stated interest". The term
"qualified stated interest" means, in general, stated interest that is
unconditionally payable in cash or property at least annually at a single fixed
rate (or at certain floating rates) that appropriately takes into account the
length of the interval between stated interest payments.

In certain cases, Notes that bear stated interest and are issued at par may
be deemed to bear original issue discount for Federal income tax purposes, with
the result that the inclusion of interest in income for Federal income tax
purposes may vary from the actual cash payments of interest made on such Notes,
generally accelerating income for cash method taxpayers. Under the OID
Regulations, a Note may be an Original Issue Discount Note where, among other
things, (i) a Floating Rate Note provides for a maximum interest rate or a
minimum interest rate that is reasonably expected as of the issue date to cause
the yield on the debt instrument to be significantly less, in the case of a
maximum rate, or more, in the case of a minimum rate, than the expected yield
determined without the maximum or minimum rate, as the case may be; (ii) a
Floating Rate Note provides for a significant front-loading or back-loading of
interest; or (iii) a Note bears interest at a floating rate in combination with
one or more other floating or fixed rates. Notice will be given in the
applicable Pricing Supplement if the Company determines that a particular Note
will be an Original Issue Discount Note. Unless specified in the applicable
Pricing Supplement, Floating Rate Notes will not be Original Issue Discount
Notes.

Persons holding Original Issue Discount Notes having maturities in excess
of one year are required to include original issue discount in income before the
receipt of cash attributable to such income. The amount of original issue
discount includable in income by the initial Holder of such Original Issue
Discount Notes and, subject to an adjustment, by any subsequent Holder, is the
sum of the daily portions of the original issue discount with respect to the
Original Issue Discount Note for each day during the taxable year in which such
Holder held the Original Issue Discount Note ("accrued original issue
discount"). The daily portion of the original issue discount on any Original
Issue Discount Note is determined by allocating to each day in any "accrual
period" a ratable portion of the original issue discount allocable to that
accrual period. The term "accrual period" generally means the period between
interest payment dates (or shorter period from the date of issue to the first
interest payment date and from the last interest payment date prior to maturity
to the date of maturity).

For any accrual period, the original issue discount allocable to the
accrual period is an amount equal to the excess, if any, of (a) the product of
the Original Issue Discount Note's adjusted issue price at the beginning of such
accrual period and its yield to maturity (determined on the basis of compounding
at the close of each accrual period and adjusted for the length of the accrual
period) over (b) the sum of the qualified stated interest, if any, allocable to
such accrual period. The "adjusted issue price" of an Original Issue Discount
Note at the beginning of the first accrual period is the issue price and at the
beginning of any accrual period thereafter is (x) the sum of the issue price of
such Original Issue Discount Note, the accrued original issue discount for each
prior accrual period (determined without regard to the amortization of any
acquisition premium, as discussed below, or bond premium, as discussed above),
and the amount of any qualified stated interest on the Note that has accrued
prior to the beginning of the accrual period but is not payable until a later
date, less (y) any prior payments on the Original Issue Discount Note that were
not qualified stated interest. If a payment (other than a payment of qualified
stated interest) is made on the first day of an accrual period, then the
adjusted issue price at the beginning of such accrual period is reduced by the
amount of the payment.

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<PAGE>

Under the above rules, persons holding Original Issue Discount Notes will
be required to include in income increasingly greater amounts of original issue
discount in successive accrual periods, assuming that no payments other than
qualified stated interest are made prior to the maturity of the Note.

If the Company has an option to redeem a Note, or the Holder has an option
to cause a Note to be repurchased, prior to the Note's stated maturity, such
option will be presumed to be exercised if, by utilizing any date on which such
Note may be redeemed or repurchased as the maturity date and the amount payable
on such date in accordance with the terms of such Note (the "redemption price")
as the stated redemption price at maturity, the yield on the Note would be (i)
in the case of an option of the Company, lower than its yield to stated
maturity, or (ii) in the case of an option of the Holder, higher than its yield
to stated maturity. If such option is not in fact exercised when presumed to be
exercised, the Note would be treated solely for original issue discount purposes
as if it were redeemed or repurchased, and a new Note were issued on the
presumed exercise date for an amount equal to the Note's adjusted issue price on
that date.

Original issue discount on an Original Issue Discount Note denominated in,
or under which all payments are determined with reference to, a single Foreign
Currency will be determined for any accrual period in that Foreign Currency and
then translated into U.S. dollars in the same manner as other interest income
accrued by an accrual method Holder before receipt, as described above under
"Payments of Interest". Likewise, as described therein, exchange gain or loss
will be recognized when the original issue discount is paid. For this purpose,
all payments (other than qualified stated interest) on a Note will first be
viewed as payments of previously accrued original issue discount (to the extent
thereof), with payments considered made for the earliest accrual periods first.

Different rules apply to Original Issue Discount Notes having maturities of
not more than one year ("Short-Term Discount Notes"). A Holder of a Short-Term
Discount Note who uses the cash method of tax accounting will generally not be
required to include original issue discount in income on a current basis (but
may be required to defer a deduction for a portion or all of the interest paid
or accrued on any indebtedness incurred to purchase or carry such Short-Term
Discount Note). Rather, such a Holder will be required to treat any gain
realized on a sale, exchange or retirement of the Short-Term Discount Note as
ordinary income to the extent such gain does not exceed the original issue
discount accrued with respect to the Short-Term Discount Note during the period
the Holder held the Short-Term Discount Note. Holders using the accrual method
of tax accounting, and certain cash method Holders (including banks, securities
dealers and regulated investment companies) will generally be required to
include original issue discount on the Short-Term Discount Note in income on a
current basis. Notwithstanding the foregoing, a cash method Holder of a
Short-Term Discount Note may elect to accrue original issue discount into income
on a current basis (in which case the limitation on the deductibility of
interest described above will not apply). Original issue discount will be
treated as accruing for these purposes on a ratable basis or, at the election of
the Holder, on a constant interest basis. Furthermore, any Holder (whether cash
or accrual method) of a Short-Term Discount Note can elect to accrue the
"acquisition discount", if any, with respect to the Short-Term Discount Note on
a current basis in lieu of original issue discount. Acquisition discount is the
excess of the stated redemption price at maturity of the Short-Term Discount
Note over the Holder's tax basis in the Note at the time of acquisition.
Acquisition discount will be treated as accruing on a ratable basis or, at the
election of the Holder, using a constant interest method. The market discount
rules do not apply with respect to Short-Term Discount Notes.

For purposes of determining the amount of original issue discount subject
to these rules, the OID Regulations provide that no interest payments on Notes
with maturities of one year or less are qualified stated interest, but instead
such interest payments are included in such Note's stated redemption price at
maturity.

In the event that a person purchases an Original Issue Discount Note
(including a Short-Term Discount Note) at an acquisition premium, i.e., at a
price in excess of the issue price plus the original issue discount accrued
prior to acquisition and minus any payments (other than payments of qualified
stated interest) made with respect to such Note prior to acquisition (such
amount, the Note's "revised issue price"), the amount includable in income in
each taxable year as original issue discount will be reduced by that portion of
the acquisition premium properly allocable to such year or, alternatively, a
Holder may elect to treat its purchase price as the Note's issue price.

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<PAGE>

The market discount and bond premium rules discussed above under "Purchase,
Sale and Retirement of Notes" may apply to an Original Issue Discount Note
purchased at a price that is less than such Note's revised issue price (in the
case of market discount) or that is greater than such Note's remaining stated
redemption price at maturity (in the case of bond premium), respectively. In
such case, the amount of market discount will generally equal the excess of the
Original Issue Discount Note's revised issue price over the Holder's purchase
price for the Note, and the amount of bond premium will equal the excess of the
Holder's purchase price over the Original Issue Discount Note's remaining stated
redemption price at maturity. A Holder of an Original Issue Discount Note with
bond premium will not be subject to the original issue discount rules described
above.

A Holder's tax basis of an Original Issue Discount Note generally will be
the Holder's cost increased by any original issue discount included in income
(and market discount, if any, if the Holder has elected to include accrued
market discount in income on an annual basis) and decreased by the amount of any
payment (other than qualified stated interest) received with respect to the
Original Issue Discount Note. Gain or loss on the sale, exchange or redemption
of an Original Issue Discount Note generally will be long-term capital gain or
loss if the Original Issue Discount Note has been held for more than a year
except to the extent that gain represents market discount not previously
included in the Holder's income.

The Proposed OID Regulations will not be applied to treat Notes as having
original issue discount solely by virtue of the contingent U.S. dollar values of
payments on Notes denominated in a Foreign Currency.

Any Holder that holds a Note issued after April 4, 1994, may elect to treat
all interest that accrues on a Note as original issue discount applying the
constant yield method described above to accrue such interest, with the
modifications described below. For purposes of this election, interest includes
stated interest, original issue discount, de minimis original issue discount,
market discount, acquisition discount, de minimis market discount and unstated
interest, as adjusted by any amortizable bond premium (described above) or
acquisition premium.

In applying the constant yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing
Holder's adjusted basis in the Note immediately after its acquisition, the issue
date of the Note will be the date of its acquisition by the electing Holder, and
no payments on the Note will be treated as payments of qualified stated
interest. This election will generally apply only to the Note with respect to
which it is made and may not be revoked without the consent of the IRS. If this
election is made with respect to a Note with amortizable bond premium, then the
electing Holder will be deemed to have elected to apply amortizable bond premium
against interest with respect to all debt instruments with amortizable bond
premium (other than debt instruments the interest on which is excludable from
gross income) held by such electing Holder as of the beginning of the taxable
year in which the Note with respect to which the election is made is acquired or
thereafter acquired. The deemed election with respect to amortizable bond
premium may not be revoked without the consent of the IRS.

If the election described above to apply the constant yield method to all
interest on a Note is made with respect to a Note that has market discount, as
described above, then the electing Holder will be treated as having made the
election discussed above under "Purchase, Sale, and Retirement of Notes" to
include market discount in income currently over the life of all debt
instruments held or thereafter acquired by such Holder.

Subsequent Interest Periods and Extensions of Maturity

If a reset of the interest rate, Spread and/or Spread Multiplier of a Note
(either alone or in conjunction with each other) by the issuer or extension of
the maturity of a Note is treated as an exchange of the Note for a new Note,
then a United States person who is a Holder of the Note may recognize taxable
gain or loss (subject to characterization as capital gain or loss or ordinary
income or loss depending on the effect of the original issue discount, foreign
currency, or other rules described herein) equal to the difference between the
fair market value of the Note and the Holder's adjusted tax basis in the Note at
the time of the reset or extension. In such case, the Holder will have a tax
basis in a new Note equal to such fair market value. The tax consequences
described above with respect to the timing and character of income, gain or loss
would apply to the holding of the new Note. If, on the other hand, the interest
reset or maturity extension is not treated as an exchange, then a United States

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<PAGE>

person who is a Holder will not recognize gain or loss upon the reset or
extension, but the reset or extension may affect the timing, character, and
amount of income, gain or loss with respect to the subsequent holding period of
the Note. On December 2, 1992, proposed regulations were published which would,
if finalized, govern the resolution of the issue of whether an interest reset or
maturity extension would or would not result in an exchange.

Non-United States Persons

Under the United States Federal tax laws as in effect on the date of this
Prospectus Supplement and subject to the discussion of backup withholding below,
payments of principal (and premium, if any) and interest, including original
issue discount, by the issuer or its agent (acting in its capacity as such) to
any Holder of a Note who is not a United States person will not be subject to
United States Federal withholding tax; provided, in the case of interest,
including original issue discount, that (i) such Holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the issuer entitled to vote, (ii) such Holder is not a controlled
foreign corporation for United States tax purposes that is related to the issuer
through stock ownership, (iii) the Holder is not receiving interest ineligible
for exemption from withholding by reason of the application of Section
881(c)(3)(A) of the Code, (iv) the Holder is not a foreign private foundation
and (v) either (A) the beneficial owner of the Note certifies to the last United
States person (the "Withholding Agent") in the chain of payment, under penalties
of perjury, that he is a non-United States person and provides his name and
address, or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "financial institution") and holds the Note certifies to the
Withholding Agent, under penalties of perjury, that such statement has been
received from the beneficial owner by it or by another financial institution and
furnishes the payor with a copy thereof. Applicable regulations contain certain
other requirements regarding the timing, form, and maintenance by the
Withholding Agent of the certification described in the preceding sentence.

Payments of certain types of contingent interest to a person who is not a
United States person may be subject to United States withholding tax equal to
30% of each such payment (or such lower amount as provided by treaty). The
applicable Pricing Supplement will state whether any Notes having contingent
payments will be subject to any U.S. withholding taxes.

If a Holder of a Note who is not a United States person is engaged in a
trade or business in the United States and interest, including original issue
discount, on the Note is effectively connected with the conduct of such trade or
business, such Holder, although exempt from the withholding tax discussed in the
preceding paragraph, may be subject to United States Federal income tax on such
interest, and original issue discount, in the same manner as if it were a United
States person. In addition, if such a Holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest (including original issue discount)
on a Note will be included in the earnings and profits of such Holder if such
interest (or original issue discount) is effectively connected with the conduct
by such Holder of a trade or business in the United States. In lieu of the
certificate described in the second preceding paragraph, such a Holder must
provide the payor with a properly executed Internal Revenue Service Form 4224 to
claim an exemption from United States Federal withholding tax. However, such a
Holder of a Note may still be required to provide the certification described in
the second preceding paragraph in order to obtain an exemption from "backup"
withholding, discussed below.

Any capital gain or market discount realized upon retirement or disposition
of a Note by a Holder who is not a United States person will not be subject to
United States Federal income or withholding taxes if(i) such gain is not
effectively connected with a United States trade or business of the Holder, and
(ii) in the case of an individual, such Holder is either (A) not present in the
United States for 183 days or more in the taxable year of the retirement or
disposition or (B) such individual does not have a "tax home" (as defined in the
Code) in the United States and the gain is not attributable to an office or
other fixed place of business maintained by such individual in the United
States.

Notes held by an individual who is neither a citizen nor a resident of the
United States for United States Federal income tax purposes at the time of such
individual's death will not be subject to United States Federal estate tax

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provided that the income from such Notes was not or would not have been
effectively connected with a United States trade or business of such individual
and that such individual qualified for the exemption from United States Federal
withholding tax (without regard to the certification requirements) that is
described above.

Backup Withholding and Information Reporting

For each calendar year in which the Notes are outstanding, the payor of
interest (including original issue discount, if any), principal, premium, or the
proceeds of disposition to a Holder is required to provide the IRS with certain
information, including the Holder's name, address and taxpayer identification
number ("TIN") (either the Holder's Social Security number or its employer
identification number, as the case may be), the aggregate amount of principal,
interest (including original issue discount, if any), premium, or the proceeds
of disposition paid to that Holder during the calendar year and the amount of
tax withheld, if any. This obligation, however does not apply with respect to
certain United States persons who are Holders, including corporations,
tax-exempt organizations, qualified pension and profit sharing trusts and
individual retirement accounts, but such entities may be required to establish
their status as such.

A "backup withholding" tax equal to 31% of each payment on the Notes will
apply to a United States person who is a Holder subject to the reporting
requirements described above if such Holder (i) fails to furnish his TIN or (ii)
under certain circumstances, fails to certify, under penalty of perjury, that he
has both furnished a correct TIN and not been notified by the IRS that he is
subject to backup withholding for failure to report interest and dividend
payments. Backup withholding will also apply if the payor is notified by the IRS
that the payee has failed to report properly a correct TIN or interest and
dividends earned by the payee. This backup withholding tax is not an additional
tax and may be credited against the United States Holder's United States Federal
income tax liability.

Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the issuer or any agent thereof (in
its capacity as such) to a Holder of a Note who is not a United States person if
the Holder has provided required certification that it is not a United States
person as set forth in clause (v)(A) in the first paragraph under "Non-United
States Persons", or has otherwise established an exemption (provided that
neither the issuer nor such agent has actual knowledge that the Holder is a
United States person or that the conditions of any exemption are not in fact
satisfied).

If such principal or interest is collected outside the United States by the
non-United States office of a foreign custodian, foreign nominee or other
foreign agent of the beneficial owner of a Note and is paid by such office
outside the United States to such owner, or if the non-United States office of a
foreign "broker" (as defined in applicable Treasury regulations) pays the
proceeds of the sale or exchange of a Note outside the United States to the
seller thereof, backup withholding and information reporting will not apply to
such payment (provided that such nominee, custodian, agent or broker derives
less than 50% of its gross income for certain specified periods from the conduct
of a trade or business in the United States and is not a controlled foreign
corporation for United States tax purposes). Principal and interest so paid by
the non-United States office of other custodians, nominees or agents, or the
payment by the foreign office of other brokers of the proceeds of the sale or
exchange of a Note will not be subject to backup withholding, but will be
subject to information reporting unless the custodian, nominee, agent or broker
has documentary evidence in its records that the beneficial owner or seller is
not or was not, as the case may be, a United States person who is a Holder and
certain conditions are met or the beneficial owner or seller otherwise
establishes an exemption. Principal and interest so paid by the United States
office of a custodian, nominee or agent, or the payment by the United States
office of a broker of the proceeds of a sale or exchange of a Note is subject to
both backup withholding and information reporting unless the beneficial owner or
seller certifies its non-United States person status under penalties of perjury
or otherwise establishes an exemption.

On February 29, 1988 and September 27, 1990, the United States Treasury
Department issued proposed regulations concerning the application of information
reporting requirements and the backup withholding tax to non-United States
persons. If adopted in their current form, these proposed regulations would not
materially affect the application of the rules discussed above. It is impossible
to predict whether or in what form the proposed regulations will become final
and what the scope or effective date of any such final regulations might be.

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PLAN OF DISTRIBUTION

The Notes are being offered on a continuous basis by the Company through
the Agents, each of which has agreed to use its reasonable best efforts to
solicit purchases of the Notes. Unless otherwise specified in the applicable
Pricing Supplement, with respect to Notes with Maturity Dates of 30 years or
less from the date of issue, the Company will pay each Agent a commission, in
the form of a discount ranging from .125% to .750% of the principal amount of
each Note, depending upon the Maturity Date, sold through such Agent. With
respect to Notes with a maturity Date that is longer than 30 years from the date
of issue sold through any Agent, the rate of commission will be negotiated at
the time of sale and will be specified in the applicable Pricing Supplement.

The Notes also may be sold by the Company to any Agent, acting as
principal, at a discount for resale to one or more purchasers at varying prices
related to prevailing market prices at the time of resale, or, if set forth in
the applicable Pricing Supplement, the Agent may also resell such Notes at a
fixed public offering price, as determined by such Agent. In connection with any
resale of Notes purchased, an Agent may use a selling or dealer group and may
reallow any portion of the discount or commission payable pursuant thereto to
dealers or purchasers. After any initial public offering of Notes to be resold
to investors and other purchasers, the public offering price (in the case of
Notes to be resold at a fixed public offering price), the commission and
discount may be changed. Unless otherwise specified in the applicable Pricing
Supplement, any Note purchased by an Agent as principal will be purchased at
100% of the principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Note of identical Maturity Date. In addition,
the Company may appoint additional agents for the purpose of soliciting offers
to purchase the Notes. Each such additional agent will solicit purchasers of the
Notes on a reasonable best efforts basis. Unless otherwise specified in the
applicable Pricing Supplement, with respect to Notes with Maturity Dates of 30
years or less from the date of issue, the Company will pay each additional agent
that it subsequently appoints a commission, in the form of a discount ranging
from .125% to .750% of the principal amount of each Note, depending upon the
Maturity Date, sold through such agent. With respect to Notes with a Maturity
Date that is longer than 30 years from the date of issue sold through such
agent, the rate of commission will be negotiated at the time of sale and will be
specified in the applicable Pricing Supplement. The Company may also sell the
Notes directly to, and may accept offers to purchase the Notes from, investors
on its own behalf in those jurisdictions where it is authorized to do so. In the
case of sales made directly by the Company, no commission will be payable. The
Company has agreed to reimburse the Agents for certain of the Agents' expenses,
and the Company contemplates that it will enter into similar arrangements with
any additional agents that it subsequently appoints.

The Company will have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes in whole or in part. Each Agent (and
each additional agent subsequently appointed) will have the right, in its
discretion reasonably exercised, to reject in whole or in part any offer to
purchase Notes received by such Agent.

Each Agent, as an agent or principal, and each additional agent
subsequently appointed by the Company, may be deemed to be an "underwriter"
within the meaning of the Securities Act of 1933. The Company has agreed to
indemnify each Agent (and will agree to indemnify each additional agent that it
subsequently appoints) against certain liabilities, including liabilities under
the Securities Act of 1933, or to contribute to payments each Agent (or
additional agent) may be required to make in respect thereof.

No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each Agent and each subsequently
appointed agent may make a market in the Notes, but such Agent or agent is not
obligated to do so and may discontinue any marketmaking at any time without
notice. There can be no assurance of a secondary market for any Notes or that
the Notes will be sold.

In the ordinary course of their respective businesses, CS First Boston
Corporation and affiliates, Goldman, Sachs & Co. and affiliates, Lehman Brothers
Inc. and affiliates, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
affiliates and Salomon Brothers Inc and affiliates have engaged, and may in the
future engage, in investment banking transactions with the Company and its
affiliates. In the ordinary course of its business, J.P. Morgan Securities Inc.
and affiliates have engaged, and may in the future engage, in investment banking
and commercial banking transactions with the Company and its affiliates.

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SUBJECT TO COMPLETION
DATE: MAY 6, 1994

PROSPECTUS

XEROX CREDIT CORPORATION

Debt Securities

Xerox Credit Corporation (the "Company") intends from time to time to
issue debt securities (the "Debt Securities") from which the Company will
receive proceeds of up to an aggregate of $1,000,000,000 (or the equivalent
thereof in one or more foreign denominated currencies or units consisting of
multiple currencies, including European Currency Units ("ECU")) and which will
be offered on terms to be determined at the time of sale. The Debt Securities
may be issued in one or more series with the same or various maturities at par
or with an original issue discount and may be issued as individual securities in
registered form without coupons or as one or more global securities in
registered form (each a "Global Security"). The purchase price for the principal
of and any premium and any interest on the Debt Securities may be payable in
U.S. dollars or in one or more foreign denominated currencies or currency units.

The specific title, aggregate principal amount, designated currency or
currency units, offering price, maturity, rate (which may be fixed or variable)
and time of any payment of interest, any right on the part of the holders of
Debt Securities to require the repurchase thereof by the Company, any
redemption, sinking fund and other terms and any securities exchange listing of
Debt Securities (the "Offered Debt Securities") in respect of which this
Prospectus is being delivered are set forth in a supplement to this Prospectus
(the "Prospectus Supplement") together with the terms of the offering.

The Company may sell the Offered Debt Securities in any one or more of
the following ways: (1) directly to investors, (2) to investors through agents,
(3) to broker-dealers as principals, (4) through underwriting syndicates led by
one or more managing underwriters as the Company may select from time to time,
or (5) through one or more underwriters acting alone. If any underwriters,
agents or dealers are involved in the sale of the Offered Debt Securities, their
names and any applicable fee, commission or discount arrangements with them will
be set forth in the Prospectus Supplement. See "Plan of Distribution".

------------------

The date of this Prospectus is .

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by the
Company can be inspected and copied at the public reference facilities of the
Commission at 450 Fifth Street, N.W. (Room 1024), Judiciary Plaza, Washington,
D.C. 20549; as well as at the Regional Offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street (Suite 1400), Chicago,
Illinois 60661; and Seven World Trade Center (13th Floor), New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such reports and other information concerning the Company also
may be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York. This Prospectus does not contain all the information
set forth in the Registration Statement and Exhibits thereto which the Company
has filed with the Commission under the Securities Act of 1933 and to which
reference is hereby made.

ANNUAL REPORTS

The Company intends to publish annual reports on Form 10-K with financial
information that has been audited and reported upon, with an opinion expressed,
by independent auditors. These reports will not be distributed to holders of the
Debt Securities but will be available to them upon request.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

There are incorporated herein by reference the following documents filed
with the Commission (File No. 1-8133) pursuant to Section 13 of the Exchange
Act:

(1) Annual Report on Form 10-K for the fiscal year ended December 31,
1993;

(2) Quarterly Report on Form 10-Q for the quarter ended March 31,
1994; and

(3) Current Report on Form 8-K dated January 11, 1994.

All reports filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities offered hereby, shall be
deemed to be incorporated by reference into this Prospectus. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom this
Prospectus is delivered, including any beneficial owner, upon written or oral
request of such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference in such documents).
Requests should be directed to the Company, 100 First Stamford Place, P.O. Box
10347, Stamford, Connecticut 06904-2347, Attention: Vice President and
Treasurer, (203) 325-6600.

THE COMPANY

Xerox Credit Corporation, a Delaware corporation (together with its
subsidiaries herein called the "Company" unless the context otherwise requires),
was organized on June 23, 1980. All of the Company's outstanding capital stock
is owned by Xerox Financial Services, Inc., a holding company, which is wholly
owned by Xerox Corporation (Xerox Corporation together with its subsidiaries
herein called "Xerox" unless the context otherwise requires). The Company's
principal executive offices are located at 100 First Stamford Place, P.O. Box
10347, Stamford, Connecticut 06904-2347 and its telephone number is (203)
325-6600.

The Company is engaged in financing long-term accounts receivable arising
out of equipment sales by Xerox to customers throughout the United States.
Contract terms on these accounts receivable range primarily from two to five

2
<PAGE>

years. The Company discontinued its real estate development and related
financing businesses in the first quarter of 1990. In the fourth quarter of
1990, the Company discontinued its third-party financing and leasing businesses.

Pursuant to a Support Agreement between Xerox and the Company, Xerox has
agreed to retain ownership of 100% of the voting capital stock of the Company
and make periodic payments to the Company to the extent necessary to insure that
its annual earnings available for fixed charges equal at least 1.25 times its
fixed charges. Income maintenance payments totaling $340 million (net of
repayments) were made under the Support Agreement in 1990 due to the Company's
having recorded a $433 million pre-tax ($375 million net of tax benefits)
provision for estimated losses in connection with its investment in VMS Realty
Partners and affiliated companies.

RATIO OF EARNINGS TO FIXED CHARGES OF THE COMPANY

The following table shows the ratio of earnings to fixed charges for
the periods indicated.

Years Ended December 31,
---------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges(1) .. 1.74 1.75 1.82 1.88 1.69

- ---------
(1) The ratio of earnings to fixed charges is computed based on the Company's
continuing operations by dividing total earnings available for fixed
charges by total fixed charges. Interest expense has been allocated to
discontinued operations principally on the basis of the relative amount of
gross assets of the discontinued operations. Management believes that this
allocation method is reasonable in light of the amount of debt specifically
assigned to discontinued operations. The discontinued operations consist of
the Company's real-estate development and related financing operations and
its third-party financing and leasing businesses.

INFORMATION CONCERNING XEROX

Xerox is a global company engaged in worldwide Document Processing
businesses.

Xerox' Document Processing activities encompass the developing,
manufacturing, marketing, servicing and financing of a broad range of document
processing products and services designed to make offices around the world more
productive. These products and services are marketed in over 130 countries by a
direct sales force and a network of agents, dealers and distributors. The
financing of Xerox equipment is generally carried out by the Company in the
United States, and internationally by several foreign financing subsidiaries.

In January 1993, Xerox announced its decision to concentrate its resources
on its core Document Processing business and to sell or otherwise disengage from
its Insurance and Other Financial Services ("IOFS") businesses.

In line with this disengagement strategy, Xerox sold The Van Kampen
Merritt Companies, Inc. in February 1993, sold Furman Selz Holding Corporation
in October 1993 and sold the business and assets of Shields Asset Management,
Inc. ("Shields") and Regent Investor Services Incorporated (a subsidiary of
Shields) in March, 1994. The operations of Xerox Financial Services Life
Insurance Company, a provider of annuity and life insurance products ("Xerox
Life"), have been discontinued, and Xerox' plan for Xerox Life calls for its
disposal.

The insurance segment includes Talegen Holdings, Inc. (formerly, Crum and
Forster, Inc.), a property and casualty insurance company, Ridge Re Insurance
Limited, a reinsurance company, and IOFS headquarters, which are presently
accounted for as continuing operations. The ultimate exit from these businesses
could take several years. The ongoing operations of the Company remain
unaffected by Xerox' disengagement strategy.

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<PAGE>

RATIO OF EARNINGS TO FIXED CHARGES OF XEROX

Year Ended December 31,
---------------------------------------
1993* 1992** 1991*** 1990 1989
----- ------ ------- ---- ----
Ratio of Earnings to
Fixed Charges(1)(2) .............. 0.71 1.12 1.90 2.07 2.33
- ---------
(1) The ratio of earnings to fixed charges has been computed based on Xerox'
continuing operations by dividing total earnings available for fixed
charges, excluding capitalized interest, by total fixed charges. Fixed
charges consist of interest, including capitalized interest, and one-third
of rent expense as representative of the interest portion of rentals.
Interest expense has been allocated to discontinued operations principally
on the basis of the relative amount of gross assets of the discontinued
operations. Xerox management believes that this allocation method is
reasonable in light of the debt specifically assigned to discontinued
operations. The discontinued operations consist of the Xerox' real-estate
development and related financing operations, third-party financing and
leasing businesses, and other financial services businesses.

USE OF PROCEEDS

Except as otherwise set forth in the Prospectus Supplement, the net
proceeds from the sale of the Debt Securities offered by the accompanying
Prospectus Supplement will be added to the general funds of the Company and may
be (a) used to repay a portion of the short-term indebtedness of the Company,
including indebtedness to Xerox or other Xerox subsidiaries which may exist from
time to time, (b) invested in contracts receivable, and (c) used for other
general corporate purposes.

DESCRIPTION OF THE DEBT SECURITIES

The Debt Securities are to be issued in one or more series under an
indenture dated as of May 1, 1994, between the Company and The First National
Bank of Boston, as Trustee (the "Trustee") (as may be amended, supplemented or
modified from time to time, the "Indenture"). A copy of the Indenture is filed
as an exhibit to the Registration Statement. 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 and the provisions of the Trust Indenture Act of 1939, as amended (the
"TIA"). Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Indenture. References in parentheticals below to
sections or articles are to Sections or Articles of the Indenture.

The Indenture contains no covenants or provisions which may afford holders
of Debt Securities protection in the event of a highly leveraged transaction by
the Company. No such transaction is contemplated. See "The Company" on pages 2
and 3 of this Prospectus concerning Xerox' obligation to retain ownership of
100% of the voting capital stock of the Company and to make support payments to
the Company under certain circumstances.

4
<PAGE>

General

Reference is made to the Prospectus Supplement which accompanies this
Prospectus for a description of the Offered Debt Securities, including: (1) the
designation and aggregate principal amount of such Offered Debt Securities; (2)
the percentage or percentages of their principal amount at which such Offered
Debt Securities will be sold; (3) the date or dates on which such Offered Debt
Securities will mature; (4) the rate or rates or the method of determination
thereof, at which such Offered Debt Securities will bear interest, if any; (5)
the dates on which such interest, if any, shall accrue or the method by which
such dates shall be determined and the dates on which such interest, if any,
will be payable; (6) the terms for redemption or early repayment, if any; (7)
the denominations in which such Offered Debt Securities are authorized to be
issued; (8) whether such Offered Debt Securities are issuable in registered
and/or bearer form; (9) whether such Debt Securities are to be issued as
Discount Securities (as defined below) and the amount of discount with which
such Debt Securities will be issued; (10) whether such Debt Securities are to be
issued in whole or in part in the form of one or more Global Securities and, if
so, the identity of the Depositary (as defined below) for such Global Security
or Securities; (11 ) if a temporary Debt Security is to be issued with respect
to such series, whether any interest thereon payable on an Interest Payment Date
prior to the issuance of a definitive Debt Security of the series will be
credited to the account of the Persons entitled thereto on such Interest Payment
Date; (12) if a temporary Global Security is to be issued with respect to such
series, the terms upon which beneficial interests in such temporary Global
Security may be exchanged in whole or in part for beneficial interests in a
definitive Global Security or for individual Debt Securities of the series and
the terms upon which beneficial interests in a definitive Global Security, if
any, may be exchanged for individual Debt Securities of the series; (13) the
currency, currencies or currency units in which the purchase price for, the
principal of and any premium and any interest on the Offered Debt Securities may
be payable; (14) if the currency, currencies or currency units in which the
purchase price for, the principal of and any premium and any interest on the
Offered Debt Securities may be payable is at the purchaser's election, the time
period within which and the manner in which and the terms and conditions upon
which such election may be made; (15) the securities exchange or exchanges, if
any, on which the Offered Debt Securities will be listed; (16) whether any
underwriter(s) will act as market maker(s) for the Offered Debt Securities; (17)
if the Offered Debt Securities are listed on a securities exchange and no
underwriter(s) intends to make a market in the Offered Debt Securities, the
nature of the exchange market for the Offered Debt Securities; (18) if the
Offered Debt Securities are not listed on a securities exchange, the extent to
which a secondary market is expected to develop; (19) any right on the part of
the holders of such Offered Debt Securities to require the repurchase thereof by
the Company; and (20) any additional terms and provisions.

One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates ("Discount Securities"). One
or more series of Debt Securities may be variable rate debt securities that may
be exchangeable for fixed rate debt securities. Federal income tax consequences
and special considerations applicable to any such series will be described in
the Prospectus Supplement relating thereto.

Debt Securities may be issued, from time to time, with the principal amount
payable on any principal payment date, or the amount of interest payable on an
interest payment date, to be determined by reference to one or more currency
exchange rates, commodity prices, equity indices or other factors. Holders of
such Debt Securities may receive a principal amount on any principal date, or a
payment of interest on any interest payment date, that is greater than or less
than the amount of principal or interest otherwise payable on such dates,
depending upon the value on such dates of the applicable currencies,
commodities, equity indices or other factors. Information as to the methods for
determining the amount of principal or interest payable on any date, the
currencies, commodities, equity indices or other factors to which the amount
payable on such date is linked and certain additional Federal income tax
considerations will be set forth in the Prospectus Supplement relating thereto.

As used herein, the term Debt Securities shall include Debt Securities
denominated in U.S. dollars or, at the option of the Company if so specified in
the applicable Prospectus Supplement, in any other freely transferable currency
or units based on or relating to foreign currencies, including ECU.

5
<PAGE>

If a Prospectus Supplement specifies that Debt Securities are denominated
in a currency or currency unit other than U.S. dollars, such Prospectus
Supplement shall also specify the denominations in which such Debt Securities
will be issued and the coin or currency in which the principal, premium, if any,
and interest, if any, on such Debt Securities, will be payable, which may be
U.S. dollars based upon the exchange rate for such other currency existing on or
about the time a payment is due.

The Debt Securities are unsecured and will rank pari passu with all other
unsecured and unsubordinated debt of the Company.

Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued in fully registered form without coupons in
denominations of $1,000 and any integral multiple thereof. Subject to the
limitations provided in the Indenture and in the Prospectus Supplement relating
thereto, Debt Securities which are issued in registered form may be transferred
or exchanged at the office of the Company to be maintained in the Borough of
Manhattan, The City of New York or at the Principal Corporate Trust Office of
the Trustee, without the payment of any service charge, other than any tax or
other governmental charge payable in connection therewith. (Section 3.05)

Global Securities

The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities will be issued in registered form and
in either temporary or definitive form. Unless and until it is exchanged in
whole or in part for the individual Debt Securities represented thereby, a
Global Security may not be transferred except as a whole by the Depositary for
such Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any nominee to a successor of such Depositary or a nominee of such
successor. (Sections 3.01, 3.03 and 3.05)

The specific terms of the depositary arrangement with respect to any Debt
Securities of a series and the rights of and limitations upon owners of
beneficial interests in a Global Security representing a series of Debt
Securities will be described in the Prospectus Supplement relating to such
series.

Covenants

Limitations on Liens. So long as any of the Debt Securities are
outstanding, the Company will not create or suffer to exist, or permit any of
its Restricted Subsidiaries to create or suffer to exist, any lien, security
interest or other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of its properties, whether now owned or
hereafter acquired, or assign, or permit any of its Restricted Subsidiaries to
assign, any right to receive income, in each case to secure any Debt without
making effective provision whereby the Debt Securities (together with, if the
Company shall so determine, any other Debt of the Company or such Restricted
Subsidiary then existing or thereafter created which is not subordinate to the
Debt Securities) shall be equally and ratably secured with the indebtedness or
obligations secured by such security, provided that the Company or its
Restricted Subsidiaries may create or suffer to exist any lien, security
interest, charge, encumbrance or preferential arrangement of any kind upon any
of the properties or assets of the Company or its Restricted Subsidiaries to
secure any Debt or Debts in an aggregate amount at any time outstanding not
greater than 20% of the Consolidated Net Worth of the Company; and provided
further that the foregoing restrictions shall not apply to any of the following:

(1) deposits, liens or pledges arising in the ordinary course of
business to enable the Company or any of its Restricted Subsidiaries to
exercise any privilege or license or to secure payments of workmen's
compensation or unemployment insurance, or to secure the performance of
bids, tenders, contracts (other than for the payment of money) or statutory
landlords' liens or to secure public or statutory obligations or surety,
stay or appeal bonds; (2) liens imposed by law or other similar liens, if
arising in the ordinary course of business, such as mechanic's,
materialman's, workman's, repairman's or carrier's liens; (3) liens arising
out of judgments or awards against the Company or any of its Restricted
Subsidiaries in an aggregate amount not to exceed the greater of (a) 15% of
the Consolidated Net Worth of Xerox or (b) the minimum amount which, if

6
<PAGE>

subtracted from such Consolidated Net Worth, would reduce such Consolidated
Net Worth below $3.2 billion and with respect to which the Company or such
Restricted Subsidiary shall in good faith be prosecuting an appeal or
proceeding for review, or liens for the purpose of obtaining a stay or
discharge in the course of any legal proceedings; (4) liens for taxes if
such taxes are not delinquent or thereafter can be paid without penalty, or
are being contested in good faith by appropriate proceedings, or minor
encumbrances, easements or restrictions which do not in the aggregate
materially detract from the value of the property so encumbered or
restricted or materially impair their use in the operation of the business
of the Company or Restricted Subsidiary owning such property; (5) liens in
favor of any government or department or agency thereof or in favor of a
prime contractor under a government contract and resulting from the
acceptance of progress or partial payments thereunder; (6) liens, security
interests, charges, encumbrances, preferential arrangements and assignments
of income existing on the date of the Indenture; (7) purchase money liens
or security interests in property of the Company or any Restricted
Subsidiary in the ordinary course of business to secure the purchase price
thereof or indebtedness incurred to finance the acquisition thereof; (8)
liens or security interests existing on property at the time of its
acquisition; (9) liens incurred (no matter when created) in connection with
the Company or any Restricted Subsidiary engaging in leveraged or single
investor lease transactions, provided that the instrument creating or
evidencing any borrowings secured by such lien shall provide that such
borrowings are payable solely out of the income and proceeds of the
property subject to such lien and are not a corporate obligation of the
Company or any such Restricted Subsidiary; (10) the replacement, extension
or renewal of any of the foregoing; and (11) liens of up to $500,000,000
which may be incurred in connection with the sale or assignment of all or
substantially all the assets of any subsidiary of the Company. (Section
5.06)

"Debt" means (i) indebtedness for borrowed money or for the deferred
purchase price of property or services (excluding trade accounts payable
incurred in the ordinary course with a maturity of not greater than 90 days),
(ii) obligations as lessee under capital leases, (iii) obligations under
guaranties in respect of, and obligations to acquire, or otherwise to assure a
creditor against loss in respect of, obligations of others of the kinds referred
to in clause (i) or (ii), and (iv) liability in respect of unfunded vested
benefits under certain benefit plans.

"Restricted Subsidiary" means each subsidiary of the Company organized and
existing under the laws of any State of the United States or the District of
Columbia.

"Consolidated Net Worth" means, at any time, as to a given entity, the sum
of the amounts appearing on the latest consolidated balance sheet of such entity
and its subsidiaries, prepared in accordance with generally accepted accounting
principles consistently applied, as (i) the par or stated value of all
outstanding capital stock (including preferred stock), (ii) capital paid-in and
earned surplus or earnings retained in the business plus or minus cumulative
translation adjustments, (iii) any unappropriated surplus reserves, and (iv) any
net unrealized appreciation of equity investments; and, in the case of Xerox
Corporation, there shall be added thereto the sum of $600,000,000.

Consolidation, Merger or Sale of Assets of the Company. The Company shall
not consolidate with or merge into any other corporation or sell its assets
substantially as an entirety, unless (1) the corporation formed by such
consolidation or into which the Company is merged or the corporation which
acquires its assets is Xerox or a corporation all of the voting capital stock of
which is owned by Xerox, is organized in the United States, and expressly
assumes the due and punctual payment of the principal of and interest on all the
Debt Securities and the performance of every covenant of the Indenture on the
part of the Company and (2) immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have happened and be continuing. Upon
any such consolidation, merger or sale, the successor corporation formed by such
consolidation or into which the Company is merged or to which such sale is made
shall succeed to, and be substituted for, the Company under the Indenture.
(Section 10.2)

Events of Default, Notice and Waiver

The Indenture provides that, if an Event of Default specified therein in
respect of any series of Debt Securities shall have happened and be continuing,
either the Trustee or the Holders of 25% in principal amount of the outstanding

7
<PAGE>

Debt Securities of such series may declare the principal (or a portion thereof
in the case of certain Debt Securities issued with an original issue discount)
of all of such Debt Securities to be due and payable. (Section 7.02)

Events of Default in respect of any series are defined in the Indenture as
being: default for 30 days in payment of any interest installment when due, and
default in payment of principal of or premium, if any, on Debt Securities of
such series when due; default for 90 days after notice to the Company by the
Trustee or by the Holders of 25% in principal amount of the outstanding Debt
Securities of such series in performance of any covenant in the Indenture in
respect of such series; and certain events of bankruptcy, insolvency and
reorganization and any other Event of Default provided for with respect to such
series. (Section 7.01)

The TIA provides that the Trustee will, within 90 days after the occurrence
of a default in respect of any series of Debt Securities, give to the Holders of
such series notice of all uncured and unwaived defaults known to it; provided
that, except in the case of default in the payment of principal of, premium, if
any, or interest on, or any sinking fund installment or analogous obligation
with respect to, any of the Debt Securities of such series, the Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the Holders of such series. The
term "default" for the purpose of this provision means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Debt Securities of such series.

The Indenture contains provisions entitling the Trustee, subject to the
duty of the Trustee during an Event of Default in respect to any series of Debt
Securities to act with the required standard of care, to be indemnified by the
Holders of the Debt Securities of such series, before proceeding to exercise any
right or power under the Indenture at the request of Securityholders of such
series. (Section 8.01)

The Indenture provides that the Holders of a majority in principal amount
of the outstanding Debt Securities of any series may direct the time, method and
place of conducting proceedings for remedies available to the Trustee, or
exercising any trust or power conferred on the Trustee, in respect of such
series. (Section 7.11)

The Indenture includes covenants that the Company will file annually with
the Trustee a certificate of no default, or specifying any default that exists.
(Section 5.04)

In certain cases, the Holders of a majority in principal amount of the
outstanding Debt Securities of a series may, on behalf of the Holders of all
Debt Securities of such series, waive any past default or Event of Default, or
compliance with certain provisions of the Indenture, except among other things a
default not theretofore cured in payment of the principal of, premium, if any,
or any interest on, or any sinking fund installment or analogous obligation with
respect to, any of the Debt Securities of such series and compliance with
certain covenants. (Sections 5.07, 7.02 and 7.12)

The Indenture provides that for purposes of calculating the principal
amount of Debt Securities of any series denominated in a foreign currency or in
units based on or relating to currencies thereunder, such principal amount shall
be deemed to be that amount of United States dollars that could be obtained for
such principal amount on the basis of a spot rate of exchange, specified to the
Trustee by the Company in an Officers' Certificate, for such currency or
currency units into United States dollars as of the date of any such
calculation. (Section 14.02)

Modification of the Indenture

The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of a majority in principal amount of the
outstanding Debt Securities of the affected series, to execute supplemental
indentures adding any provisions to or changing or eliminating any of the
provisions of the Indenture or modifying the rights of the Holders of Debt
Securities of such series, except that no such supplemental indenture may,
without the consent of the Holders of all of the affected Debt Securities, among
other things change the maturity of any Debt Securities, reduce the principal
amount thereof or any premium thereon, reduce the rate or extend the time of
payment of interest thereon, change the method of computing the amount of
principal thereof on any date or reduce the aforesaid percentage of Debt
Securities, the consent of the Holders of which is required for any such
supplemental indenture.(Section 9.02)

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<PAGE>

Concerning the Trustee

The Company may from time to time maintain credit facilities, and have
other customary banking relationships, with The First National Bank of Boston,
the Trustee under the Indenture.

PLAN OF DISTRIBUTION

The Company may sell the Debt Securities offered hereby in any one or more
of the following ways:(1) directly to investors, (2) to investors through
agents, (3) to broker-dealers as principals, (4) through underwriting syndicates
led by one or more managing underwriters as the Company may select from time to
time, or (5) through one or more underwriters acting alone.

If an underwriter or underwriters are utilized in the sale, the specific
managing underwriter or underwriters with respect to the offer and sale of the
Offered Debt Securities are set forth on the cover of the Prospectus Supplement
relating to such Offered Debt Securities and the members of the underwriting
syndicate, if any, are named in such Prospectus Supplement.

Sales of the Offered Debt Securities by underwriters may be in negotiated
transactions, at a fixed offering price or at various prices determined at the
time of sale. The Prospectus Supplement describes the method of reoffering by
the underwriters. The Prospectus Supplement, also describes the discounts and
commissions to be allowed or paid to the underwriters, if any, all other items
constituting underwriting compensation, the discounts and commissions to be
allowed or paid to dealers, if any, and the exchanges, if any, on which the Debt
Securities offered thereby will be listed.

If so indicated in the Prospectus Supplement, the Company will authorize
underwriters to solicit offers by certain institutions to purchase Debt
Securities from the Company at the price set forth in the Prospectus Supplement
pursuant to Delayed Delivery Contracts providing for payment and delivery at a
future date.

If any Debt Securities are sold pursuant to an Underwriting Agreement, the
several underwriters will agree, subject to terms and conditions set forth
therein, unless the Prospectus Supplement provides otherwise, to purchase all
the Debt Securities offered by the accompanying Prospectus Supplement if any of
such Debt Securities are purchased and, in the event of default by any
underwriter, in certain circumstances, the purchase commitments may be increased
or the Underwriting Agreement may be terminated.

Offers to purchase Debt Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. Any such agent, who
may be deemed to be an underwriter as the term is defined in the Securities Act
of 1933 (the "Act"), involved in the offer or sale of the Offered Debt
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company to such agent set forth, in a Prospectus
Supplement. Unless otherwise indicated in such Prospectus Supplement, any such
agent will be acting on a best efforts basis.

If a broker-dealer is utilized in the sale of the Offered Debt Securities
in respect of which this Prospectus is delivered, the Company will sell such
Offered Debt Securities to the dealer, as principal. The dealer may then resell
such Offered Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale.

Agents, broker-dealers or underwriters may be entitled under agreements
which may be entered into with the Company to indemnification or contribution by
the Company in respect of certain civil liabilities, including liabilities under
the Act, and may be customers of, engage in transactions with or perform
services for the Company in the ordinary course of business.

The place and time of delivery for the Offered Debt Securities in respect
of which this Prospectus is delivered are set forth in the accompanying
Prospectus Supplement.

LEGAL OPINIONS

The validity of the Debt Securities to be offered hereby will be passed
upon for the Company by Martin S. Wagner, Esq., Associate General Counsel,
Corporate, Finance and Ventures of Xerox Corporation and for the underwriters,
agents or dealers, as the case may be, by Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, New York.

9
<PAGE>

EXPERTS

The consolidated financial statements and schedules of the Company and
consolidated subsidiaries included in the Company's Annual Report on Form 10-K
as of December 31, 1993 and 1992, and for each of the years in the three-year
period ended December 31, 1993, incorporated by reference herein and elsewhere
in the Registration Statement, have been incorporated by reference herein and in
the Registration Statement in reliance upon the report set forth therein of KPMG
Peat Marwick, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick covering the December 31, 1993
consolidated financial statements refers to the Company's changes in its methods
of accounting for income taxes and postretirement benefits other than pensions
in 1992.

10
<PAGE>

No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus Supplement or the Prospectus, in connection with the offer contained
in this Prospectus Supplement and the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any of the agents. Neither the delivery of this Prospectus
Supplement (including the accompanying Pricing Supplement) and the Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the dates as of which information is given in this Prospectus Supplement
(including the accompanying Pricing Supplement) and the Prospectus. This
Prospectus Supplement (including the accompanying Pricing Supplement) and the
Prospectus do not constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make such offer or solicitation.

--------------

TABLE OF CONTENTS

Page
----
Prospectus Supplement

Selected Financial Data of the
Company ............................................. S-2
Information Concerning Xerox
Corporation ......................................... S-3
Description of Notes .................................. S-5
Important Currency Exchange
Information ......................................... S-23
Foreign Currency Risks ................................ S-23
United States Taxation ................................ S-25
Plan of Distribution .................................. S-34

Prospectus

Available Information ................................. 2
Annual Reports ........................................ 2
Incorporation of Certain Documents
by Reference ........................................ 2
The Company ........................................... 2
Ratio of Earnings to Fixed Charges of
the Company ......................................... 3
Information Concerning Xerox .......................... 3
Ratio of Earnings to Fixed Charges of
Xerox ............................................... 4
Use of Proceeds ....................................... 4
Description of the Debt Securities .................... 4
Plan of Distribution
Legal Opinions ........................................ 9
Experts ............................................... 10

- --------------------------------------

U.S. $1,000,000,000

XEROX CREDIT
CORPORATION

Medium-Term Notes, Series D

Due Nine Months or More
from Date of Issue

CS First Boston

Goldman, Sachs & Co.

Lehman Brothers

Merrill Lynch & Co.

J.P. Morgan Securities Inc.

Salomon Brothers Inc

Prospectus Supplement

Dated

<PAGE>
PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.*

The following statement sets forth the expenses, other than underwriting
discounts and commissions, to be borne by the Company in connection with the
distribution of the Debt Securities:

Securities and Exchange Commission Registration Fee ...... $344,830
Printing and Engraving ................................... 60,000
Fees of Company's Independent Auditors ................... 55,000
Blue Sky Fees and Expenses (including legal fees and
disbursements) .......................................... 15,000
Trustee Fees ............................................. 50,000
Rating Agency Fees ....................................... 220,000
Miscellaneous Expenses ................................... -0-
--------
Total ................................................ $744,830
========

- ---------
* The foregoing expenses, other than the Securities and Exchange Commission
Registration Fee, are estimated.

Item 15. Indemnification of Directors and Officers.

Reference is made to Section 145 of the General Corporation Law of
Delaware.

Item 16. Exhibits.

(1)(a) --Form of Underwriting Agreement, incorporated by reference to
Exhibit (1)(a) to Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-3, Registration No. 33-43470.

(1)(b) --Form of Selling Agency Agreement, incorporated by reference to
Exhibit (1)(b) to Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-3, Registration No. 33-43470.
The form of Selling Agency Agreement is hereby amended, effective
May 6, 1994, by adding additional agents and replacing all
references to "U.S. $525,000,000" and "Series B" notes with "U.S.
$1,000,000,000" and "Series D" notes, respectively.

(4)(a) --Form of Indenture, as supplemented by the form of First
Supplemental Indenture, incorporated by reference to Exhibits
(4)(a)(1) and (4)(a)(2) to the Company's Registration Statement
on Form S-3, Registration No. 33-43470. The form of Indenture is
hereby amended, effective May 6, 1994, by replacing all
references to Citibank, N.A. with The First National Bank of
Boston.

(4)(b) --Form of Debt Security, incorporated by reference to Exhibit
(4)(b) to the Company's Registration Statement on Form S-3,
Registration No. 2-72851. The Form of Debt Security is hereby
modified, effective as of May 6, 1994, by replacing all
references to Chemical Bank with The First National Bank of
Boston.

(4)(c) --Form of Debt Security, incorporated by reference to Exhibit
(4)(c) to the Company's Registration Statement on Form S-3,
Registration No. 2-72851. The Form of Debt Security is hereby
modified, effective as of May 6, 1994, by replacing all
references to Chemical Bank with The First National Bank of
Boston.

(4)(d) --Form of Debt Security, incorporated by reference to Exhibit
(4)(d) to the Company's Registration Statement on Form S-3,
Registration No. 2-72851. The Form of Debt Security is hereby
modified, effective as of May 6, 1994, by replacing all
references to Chemical Bank with The First National Bank of
Boston.

II-1
<PAGE>

(4)(e) --Form of Debt Security, incorporated by reference to Exhibit
(4)(e) to the Company's Registration Statement on Form S-3,
Registration No. 2-72851. The Form of Debt Security is hereby
modified, effective as of May 6, 1994, by replacing all
references to Chemical Bank with The First National Bank of
Boston.

(4)(f) --Form of Debt Security, incorporated by reference to Exhibit
(4)(f) to the Company's Registration Statement on Form S-3,
Registration No. 2-72851. The Form of Debt Security is hereby
modified, effective as of May 6, 1994, by replacing all
references to Chemical Bank with The First National Bank of
Boston.

(4)(g) --Form of Debt Security, incorporated by reference to Exhibit (4)
to the Company's Current Report on Form 8-K dated September 29,
1983. The Form of Debt Security is hereby modified, effective as
of May 6, 1994, by replacing all references to Chemical Bank with
The First National Bank of Boston.

(4)(h) --Form of Debt Security, incorporated by reference to Exhibit (4)
to the Company's Current Report on Form 8-K dated March 13, 1984.
The Form of Debt Security is hereby modified, effective as of May
6, 1994, by replacing all references to Chemical Bank with The
First National Bank of Boston.

(4)(i) --Form of Debt Security, incorporated by reference to Exhibit (4)
to the Company's Current Report on Form 8-K dated May 2, 1985.
The Form of Debt Security is hereby modified, effective as of May
6, 1994, by replacing all references to The Bank of New York with
The First National Bank of Boston.

(4)(j) --Form of Debt Security, incorporated by reference to Exhibit (4)
to the Company's Current Report on Form 8-K dated January 27,
1987. The Form of Debt Security is hereby modified, effective as
of May 6, 1994, by replacing all references to The Bank of New
York with The First National Bank of Boston.

(4)(k) --Additional Forms of Debt Securities incorporated by reference
to the Company's subsequently filed reports on Form 8-K.

(5) --Opinion of Martin S. Wagner, Esq., as to legality of the Debt
Securities.

(12)(a) --Computation of ratio of earnings to fixed charges of the
Company.

(b) --Computation of ratio of earnings to fixed charges of Xerox.

(23)(a) --Consent of Independent Auditors (see page II-5).

(b) --Consent of Martin S. Wagner, Esq. (see Exhibit 5).

(24)(a) --Certified Resolution.

(b) --Power of Attorney.

(25) --Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 of The First National Bank of
Boston to act as Trustee under the Indenture.

II-2
<PAGE>

Item 17. Undertakings.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales of the
securities registered hereby are being made, a post-effective amendment to
this registration statement (i) to include any prospectus required by
section 10(a)(3) of the Securities Act of 1933 (the "Act"); (ii) to reflect
in the prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this registration statement.

(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(4) That, for purposes of determining any liability under the Act,
each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(5) That, for purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(6) That, for the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Stamford and State of Connecticut, on the 9th day
of May, 1994.

XEROX CREDIT CORPORATION
(Registrant)

By: David Roe*
(President and Chief Executive Officer)

Pursuant to the requirements of the Securities Act of 1933, this
amendment has been signed below by the following persons in the
capacities indicated on May 9, 1994.

Signature Title
----------- -------
Principal Executive Officer:
David Roe* President, Chief Executive
Officer and Director

Principal Financial Officer:
Sandeep B. Thakore* Vice President and Treasurer

Principal Accounting Officer:
Paul G. Ryan* Controller

Directors:

Donald R. Altieri*

David R. McLellan*

Stuart B. Ross*

*By: Martin S. Wagner
(Martin S. Wagner,
Attorney-in-Fact)

II-4
<PAGE>

CONSENT OF INDEPENDENT AUDITORS

Board of Directors
Xerox Credit Corporation:

We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus. Our
report refers to the Company's changes in its methods of accounting for income
taxes and postretirement benefits other than pensions.

KPMG Peat Marwick

Stamford, Connecticut
May 6, 1994

II-5

EXHIBIT INDEX

(1)(a) --Form of Underwriting Agreement, incorporated by reference to
Exhibit (1)(a) to Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-3, Registration No. 33-43470.

(4)(a) -- Form of Indenture, as supplemented by the form of First
Supplemental Indenture, incorporated by reference to Exhibits
(4)(a)(1) and (4(a)(2) to the Company's Registration Statement on
Form S-3, Registration No. 33-43470. The form of Indenture is
hereby amended, effective May 6, 1994, by replacing all
references to Citibank, N.A. with The First National Bank of
Boston.

(4)(g) --Form of Debt Security, incorporated by reference to Exhibit
(4) to the Company's Current Report on Form 8-K dated September
29, 1983. The Form of Debt Security is hereby modified, effective
as of May 6, 1994, by replacing all references to Chemical Bank
with The First National Bank of Boston.

(4)(h) --Form of Debt Security, incorporated by reference to Exhibit
(4) to the Company's Current Report on Form 8-K dated March 13,
1984. The Form of Debt Security is hereby modified, effective as
of May 6, 1994, by replacing all references to Chemical Bank with
The First National Bank of Boston.

(4)(i) --Form of Debt Security, incorporated by reference to Exhibit
(4) to the Company's Current Report on Form 8-K dated May 2,
1985. The Form of Debt Security is hereby modified, effective as
of May 6, 1994, by replacing all references to the Bank of New
York with The First National Bank of Boston.

<PAGE>

(4)(j) --Form of Debt Security, incorporated by reference to Exhibit
(4) to the Company's Current Report on Form 8-K dated January 27,
1987. The Form of Debt Security is hereby modified, effective as
of May 6, 1994, by replacing all references to The Bank of New
York with The First National Bank of Boston.

(4)(k) --Additional Forms of Debt Securities incorporated by reference
to the Company's subsequently filed reports on Form 8-K.

(5) --Opinion of Martin S. Wagner, Esq., as to legality of the Debt
Securities.

(12)(a) --Computation of ratio of earnings to fixed charges of the
Company.

(b) --Computation of ratio of earnings to fixed charges of Xerox.

(23)(a) --Consent of Independent Auditors (see page II-5).

(b) --Consent of Martin S. Wagner, Esq. (see Exhibit 5).

(24)(a) --Certified Resolution.

(b) --Power of Attorney.

(25) --Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 of The First National Bank of
Boston to act as Trustee under the Indenture.

Exhibit 5

Xerox Corporation
P.O. Box 1600
Stamford, Connecticut 06904
203-968-3000

Office of General Counsel

Martin S. Wagner
Associate General Counsel,
Corporate, Finance and Ventures

Direct Dial (203) 968-3457

May 6, 1994

Xerox Credit Corporation
100 First Stamford Place
P.O. Box 10347
Stamford, Connecticut 06904-2347

Gentlemen:

As associate General Counsel, Corporate, Finance and Ventures, of Xerox
Corporation, I am familiar with the Registration Statement on Form S-3 filed
under the Securities Act of 1933, as amended ("Registration Statement"),
relating to the proposed offering and sale from time to time by Xerox Credit
Corporation, a Delaware corporation (the "Company"), of debt securities ("Debt
Securities") from which the Company may receive up to an aggregate of
$1,000,000,000 of proceeds and which will be offered on terms to be determined
at the time of sale. In rendering the opinions set forth herein, either I or
other lawyers in the Office of General Counsel of Xerox Corporation who report
either directly or indirectly to me have examined the Indenture dated as of May
1, 1994, between the Company and The First National Bank of Boston, as Trustee
("Indenture"), under which the Debt Securities are to be issued, the Company's
certificate of incorporation and by-laws, each as amended to date, certain
resolutions of the Board of Directors of the Company and such other documents
and matters of law as have been considered necessary or desirable for the
purpose.

Based upon the foregoing, it is my opinion that:

1. The Company has been duly incorporated and is validly existing in good
standing under the laws of Delaware.

2. The Debt Securities, when duly authorized by appropriate corporate action
and duly executed and authenticated, and when issued and delivered against
payment therefor as described in the Registration Statement and a
Prospectus Supplement, will be legally issued and validly and legally
binding obligations of the Company and such Debt Securities will be
entitled to the benefits of the Indenture.

I consent to the reference to my name under the caption "Legal Opinions" in the
Prospectus contained in the Registration Statement and to the filing of this
letter as an exhibit to the Registration Statement.

Very truly yours,

Martin S. Wagner
Associate General Counsel,
Corporate, Finance and Ventures

Exhibit 12(a)

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES OF THE COMPANY

(In Millions)
<TABLE>
<CAPTION>

Three Months Year Ended December 31,
Ended --------------------------------------------------------
March 31, 1994 1993 1992 1991 1990 1989
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income before income taxes ........................... $ 37 $154 $158 $164 $182 $140
---- ---- ---- ---- ---- ----
Fixed Charges:
Interest expense
Xerox debt ......................................... 1 4 2 -- 2 6
Other debt ......................................... 51 205 210 200 205 197
---- ---- ---- ---- ---- ----
Total fixed charges .............................. 52 209 212 200 207 203
---- ---- ---- ---- ---- ----
Earnings available for fixed charges ................. $ 89 $363 $370 $364 $389 $343
==== ==== ==== ==== ==== ====
Ratio of earnings to fixed charges(1) ................ 1.71 1.74 1.75 1.82 1.88 1.69
</TABLE>

- ---------
(1) The ratio of earnings to fixed charges has been computed based on the
Company's continuing operations by dividing total earnings available for
fixed charges by total fixed charges. Interest expense has been allocated
to discontinued operations principally on the basis of the relative amount
of gross assets of the discontinued operations. Management believes that
this allocation method is reasonable in light of the amount of debt
specifically assigned to discontinued operations. The discontinued
operations consist of the Company's real-estate development and related
financing operations and its third-party financing and leasing businesses.

Exhibit 12(b)

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES OF XEROX

(In Millions)

<TABLE>
<CAPTION>
Three Months Year Ended December 31,
Ended -----------------------------------------------------------
March 31, 1994 1993* 1992** 1991*** 1990 1989
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest expense .............................. $ 181 $ 755 $ 788 $ 758 $ 799 $ 654
Rental expense ................................ 48 201 208 206 191 164
------- ------- ------- ------- ------- -------
Total fixed charges before
capitalized interest ...................... 229 956 996 964 990 818
------- ------- ------- ------- ------- -------
Capitalized interest .......................... 1 5 17 3 -- --
Total fixed charges ......................... $ 230 $ 961 $ 1,013 $ 967 $ 990 $ 818
======= ======= ======= ======= ======= =======
Earnings available for fixed charges:
Earnings**** .................................. $ 256 $ (227) $ 192 $ 939 $ 1,116 $ 1,136
Less undistributed income in
minority owned companies .................... (2) (51) (52) (70) (60) (44)
Add fixed charges before
capitalized interest ........................ 229 956 996 964 990 818
------- ------- ------- ------- ------- -------
Total earnings available for fixed
charges ...................................... $ 483 $ 678 $ 1,136 $ 1,833 $ 2,046 $ 1,910
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed
charges(1)(2) ................................ 2.10 0.71 1.12 1.90 2.07 2.33

</TABLE>
- ---------
(1) The ratio of earnings to fixed charges has been computed based on Xerox'
continuing operations by dividing total earnings available for fixed
charges, excluding capitalized interest, by total fixed charges. Fixed
charges consist of interest, including capitalized interest, and one-third
of rent expense as representative of the interest portion of rentals.
Interest expense has been allocated to discontinued operations principally
on the basis of the relative amount of gross assets of the discontinued
operations. Xerox management believes that this allocation method is
reasonable in light of the debt specifically assigned to discontinued
operations. The discontinued operations consist of Xerox' real-estate
development and related financing operations, third-party financing and
leasing businesses, and other financial services businesses.

** In 1992, the ratio of earnings to fixed charges includes the effect of the
$936 million before-tax ($778 million after-tax) charge incurred in
connection with the decision to disengage from Xerox' IOFSbusinesses.
Excluding this charge, the ratio was 2.05.

**** Income before income taxes and income in minority-owned companies.

Exhibit 23(c)

CONSENT OF IVINS, PHILLIPS & BARKER, CHARTERED

Xerox Credit Corporation
100 First Stamford Place
P.O. Box 10347
Stamford, CT 06904-2347

May 6, 1994

Gentlemen:

We have acted as special tax counsel for Xerox Credit Corporation, a
Delaware corporation (the "Company"), in connection with the proposed offering
and sale from time to time by the Company of up to $1,000,000,000 of the
Company's Medium-Term Notes, Series D (the "Notes"), including preparation of a
Prospectus Supplement to be dated on or about the date hereof covering the Notes
(the "Prospectus Supplement"), which Prospectus Supplement is to be filed with
the Securities and Exchange Commission (the "SEC") on or about the date hereof.

We hereby consent to the reference to us and to the use of our name under
the caption "United States Income Taxation" in the Prospectus Supplement, and to
the filing of a copy of this consent as an exhibit to the Company's Registration
Statement on Form S-3 relating to the Notes.

Very truly yours,

Ivins, Phillips & Barker

Exhibit 24(b)

POWER OF ATTORNEY

Xerox Credit Corporation (the "Company") and each person whose
signature appears below authorize each of Sandeep B. Thakore and Martin S.
Wagner to file, either in paper or electronic form, one or more Registration
Statements and amendments thereto (including post-effective amendments), under
the Securities Act of 1933 for the purpose of registering the offering and sale
of a maximum of $1,000,000,000 in debt securities of the Company, which
registration statements and amendments shall contain such information and
exhibits as either Sandeep B. Thakore or Martin S. Wagner deems appropriate.
Each such person hereby appoints each of Sandeep B. Thakore and Martin S. Wagner
as attorneys-in-fact, with full power to act alone, to execute any such
registration statements and any and all amendments thereto and any and all other
documents in connection therewith, in the name of and on behalf of the Company
and each such person, individually and in each capacity stated below, including
the power to enter electronically such company identification numbers and
passwords as may be required to effect such filing as described under the rules
and regulations of the Securities and Exchange Commission (the "SEC"), and to
file, either in paper or electronic form, with the SEC a form of this Power of
Attorney. Each such person individually and in such capacities stated below
hereby grants to said attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing whatsoever that said
attorney or attorneys may deem necessary or advisable to carry out fully the
intent of the foregoing as the undersigned could do personally or in the
capacities as aforesaid.

XEROX CREDIT CORPORATION

Dated: May 6, 1994 By /s/ David Roe
---------------------------------------
David Roe
President and
Chief Executive Officer
<TABLE>
<CAPTION>

<S> <C>
President and
Chief Executive Officer and Director
/s/ David Roe (Principal Executive Officer)
- -----------------------------
(David Roe)

Vice President and Treasurer
/s/ Sandeep B. Thakore (Principal Financial Officer)
- -----------------------------
(Sandeep B. Thakore)

Controller
/s/ Paul G. Ryan (Principal Accounting Officer)
- -----------------------------
(Paul G. Ryan)

/s/ Donald R. Altieri Director
- -----------------------------
(Donald R. Altieri)

/s/ David R. McLellan Director
- -----------------------------
(David R. McLellan)

/s/ Stuart B. Ross Director
- -----------------------------
(Stuart B. Ross)

</TABLE>

Exhibit 25

SECURITIES ACT OF 1933 FILE NO: (IF APPLICATION TO DETERMINE ELIGIBILITY
OF TRUSTEE FOR DELAYED OFFERING PURSUANT TO SECTION 305(b)(2)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_______________________

FORM T-1

STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b) (2)______

______________________

THE FIRST NATIONAL BANK OF BOSTON
(Exact name of trustee as specified in its charter)

04-2472499
(I.R.S. Employer Identification No.)

100 Federal Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)

Gary A. Speiss, C ashier and General Counsel
100 Federal Street, 24th Floor, Boston, Massachusetts 02110 (617) 434-2870
(Name, address and telephone number of agent for service)
__________________________

XEROX CREDIT CORP ORATION
(Exact name of obligor as specified in its charter)

Delaware 06-1024525
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

100 First Stamford Place
P.O. Box 10347
Stamford, Connecticut 06904-2347
(Address of principal executive offices) (Zip Code)

Debt Securities
(Title of indentures ecurities)

<PAGE>

1. General Information.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to which
it is subject.

Comptroller of the Currency of the United States, Washington D.C.
Board of Governors of the Federal Reserve System, Washington, D.C
Federal Deposit Insurance Corporation, Washington, D.C.

(b) Whether it is authorized to exercise corporate trust powers.

Trustee is authorized to exercise corporate trust powers.

2. Affiliations with Obligor and Underwriters.

If the obligor or any underwriter for the obligor is an affiliate of the
trustee, describe each such affiliation.

None with respect to the Trustee.
(See Notes on page 2)
None with respect to Bank of Boston Corporation.

16. List of Exhibits.

List below all exhibits filed as part of this statement of eligibility and
qualification.

1. A copy of the articles of association of the trustee as now in effect.

A certified copy of the Articles of Association of the trustee is filed as
Exhibit No. 1 to statement of eligibility and qualification No. 22-9514 and is
incorporated herein by reference thereto.

2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.

A copy of the certificate of T. McLean Griffin, Cashier of the trustee,
dated February 3, 1978, as to corporate succession containing copies of the
Certificate of the Comptroller of the Currency that The Massachusetts Bank,
National Association, into which The First National Bank of Boston was merged
effective January 4, 1971, is authorized to commence the business of banking
as a national banking association, as well as a certificate as to such merger
is filed as Exhibit No. 2 to statement of eligibility and qualification No.
22-9514 and is incorporated herein by reference thereto.

3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents specified in
paragraph (1) or (2) above.

A copy of a certificate of the Office of the Currency dated February 6,
1978 is filed as Exhibit No. 3 to statement of eligibility and qualification
No. 22-9514 and is incorporated herein by reference thereto.

4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.

A certified copy of the existing By-Laws of the trustee dated December 23,
1993 is filed as Exhibit No. 4 to statement of eligibility and qualification No.
22-25754 and is incorporated herein by reference thereto.

<PAGE>

5. The consent of the trustee required by Section 321(b) of the Act.

The consent of the trustee required by Section 321(b) of the Act is
annexed hereto and made a part hereof.

6. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority.

A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority
is annexed hereto as Exhibit 7 and made a part hereof.

NOTES

In answering any item in this Statement of Eligibility and Qualification
which relates to matters peculiarly within the knowledge of the obligor or any
underwriter for the obligor, the trustee has relied upon information furnished
to it by the obligor and the underwriters, and the trustee disclaims
responsibility for the accuracy or completeness of such information.

The answer furnished to Item 2 of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, The First National Bank of Boston, a national banking association
organized and existing under the laws of The United States of America, has
duly caused this statement of eligibility and qualification to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the Town of
Canton and Commonwealth of Massachusetts, on the 18th day of April,1994.

THE FIRST NATIONAL BANK OF BOSTON, Trustee

By : Mark Nelson__________________
Mark Nelson
Authorized Officer

EXHIBIT 6

CONSENT OF TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939 in connection with the proposed issue by Xerox Credit Corporation of
Debt Securities, we hereby consent that reports of examinations by Federal,
State, Territorial, or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.

THE FIRST NATIONAL BANK OF BOSTON, Trustee

By : Mark Nelson_________________
Mark Nelson
Authorized Officer

<PAGE>

EXHIBIT 7

CONSOLIDATED REPORT OF CONDITION, INCLUDING DOMESTIC
AND FOREIGN SUBSIDIARIES, OF

THE FIRST NATIONAL BANK OF BOSTON

In the Commonwealth of Massachusetts, at the close of business on
December 31, 1993. Published in response to call made by Comptroller of the
Currency, under Title 12, United States Code, Section 161. Charter number 200.
Comptroller of the Currency Northeastern District.

ASSETS
Dollar
Amounts in
Thousands
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin. . . $ 1,896,648
Interest-bearing balances . . . . . . . . . . . . . . . . 989,983
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 2,120,299

Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and Agreement subsidiaries, and
in IBF's:

Federal funds sold. . . . . . . . . . . . . . . . . . . . . 786,594
Securities purchased under agreements to resell . . . . . . . . . 0
Loans and lease financing receivables:
Loans and leases, net of unearned income $21,760,082
LESS: Allowance for loan and lease losses . .488,235
LESS: Allocated transfer risk reserve . . . . . . .0
Loans and leases, net of unearned income,
allowance and reserve . . . . . . . . . . . . . . . . . .21,271,847
Assets held in trading accounts. . . . . . . . . . . . . . . . . 303,841
Premises and fixed assets (including capitalized leases) . . . . 317,599
Other real estate owned. . . . . . . . . . . . . . . . . . . . . .42,600
Investments in unconsolidated subsidiaries and
associated companies . . . . . . . . . . . . . . . . . . . . . 118,921
Customers' liability to this bank on acceptances outstanding . . 374,873
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . 307,582
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 1,020,881
-----------
Total Assets. . . . . . . . . . . . . . . . . . . . . $29,551,668
===========

LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . $13,331,731
Noninterest-bearing . . . . . . . . . . .$ 3,780,365
Interest-bearing. . . . . . . . . . . . . .9,551,366
In foreign offices, Edge and Agreement subsidiaries, and IBF's 7,295,863
Noninterest-bearing . . . . . . . . . . . . .525,888
Interest-bearing. . . . . . . . . . . . . .6,769,975

Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's:

Federal funds purchased . . . . . . . . . . . . . . . . . 1,302,034
Securities sold under agreements to repurchase. . . . . . . 199,132
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . .48,780
Other borrowed money . . . . . . . . . . . . . . . . . . . . . 3,590,569
Mortgage indebtedness and obligations under capitalized leases . .14,180
Bank's liability on acceptances executed and outstanding . . . . 375,153
Subordinated notes and debentures. . . . . . . . . . . . . . . . 598,835
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . 723,480
------------
Total Liabilities $27,479,757
Limited-life preferred stock and equity capital. . . . . . . . . . . . 0

<PAGE>

EQUITY CAPITAL

Perpetual preferred stock and related surplus. . . . . . . . . . $ 0
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .75,200
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893,227
Undivided profits and capital reserves . . . . . . . . . . . . 1,076,870
LESS: Net unrealized loss on marketable equity securities. . . .(34,746)
Cumulative foreign currency translation adjustments. . . . . . . (8,132)
Total equity capital . . . . . . . . . . . . . . . . . . . . . 2,071,911
-----------
Total Liabilities, Limited-life preferred stock, and equity $29,551,668

I, Robert T. Jefferson, Comptroller of the above-named bank, do hereby
declare that this Report of Condition is true and correct to the best of my
knowledge and belief.

Robert T. Jefferson
February 9,1994

We, the undersigned directors, attest to the correctness of this
statement of resources and liabilities. We declare that it has been examined
by us, and to the best of our knowledge and belief has been prepared in
conformance with the instructions and is true and correct.

Charles K. Gifford
Ira Stepanian
Paul C. O'Brien
Directors

February 9, 1994