Pricing Supplement No. 0178
(To Prospectus dated July 30, 1999 and
Prospectus Supplement dated August 13, 1999)
$150,000,000
Xerox Credit Corporation
1.30% Cash Exchangeable Equity-Linked
Notes Due September 15, 2006
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The $150,000,000 1.30% Cash Exchangeable Equity-Linked Notes Due
September 15, 2006 (the "Notes") of Xerox Credit Corporation (the "Company")
will mature on the earlier of (i) September 15, 2006 (subject to extension in
certain circumstances) and (ii) the Business Day immediately preceding any
Delisting Date, but in no event later than September 22, 2006. Interest will
be payable on the Notes at the per annum rate of 1.30% on each March 15 and
September 15, commencing March 15, 2000.
Subject to the Company's right to redeem the Notes prior to maturity,
holders of the Notes at maturity will receive the Maturity Amount, which will
be the higher of the principal amount of the Notes (plus accrued and unpaid
interest, if any) and an amount determined with respect to the then current
price of Xerox Corporation common stock. The Company may redeem the Notes at
any time on or after September 16, 2002 at the higher of their principal
amount, together with accrued and unpaid interest, if any, and an amount
determined with respect to the then current price of Xerox Corporation common
stock.
Prior to maturity and assuming that the Company has not given notice of
its election to redeem the Notes, Notes may be exchanged for an amount of cash
equal to the product of the then current price of Xerox Corporation common
stock and the Exchange Rate, which initially will be 16.9377 for each $1,000
principal amount of Notes. This represents an initial exchange price of $59.04
per share of Xerox Common Stock. A Note may not be exchanged unless the amount
of cash to be received equals or exceeds 105% of its principal amount.
The Notes are represented by a global certificate registered in the name
of Cede & Co. as nominee for The Depository Trust Company ("DTC"). Interests
in the Notes will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants.
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Banc of America Securities LLC
September 13, 1999
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XEROX CREDIT CORPORATION
Medium-Term Notes, Series G
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GENERAL
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Title: 1.30% Cash Exchangeable Equity-Linked
Notes Due September 15, 2006
Principal Amount: $150,000,000, see Attachment for a description
of the amount payable on the Maturity Date or upon an
earlier repayment or redemption.
Issue Price: 100% of Principal Amount (see below under "If as
Principal" if Agent is acting as Principal)
Agent's Discount or Commission: 2%
Net proceeds to Company: $147,000,000, 98% of Principal Amount)
Original Issue Date (Settlement Date): September 16, 1999
Stated Maturity Date: September 15, 2006, as may be extended or
adjusted as described in the Attachment
Agent: Banc of America Securities LLC
Agent's capacity: / / As Agent
/X/ As Principal (see below)
If as Principal:
/ / The Note is being offered at varying prices related to
prevailing market prices at the time of resale.
/X/ The Note is being offered at a fixed initial public
offering price of 100% of Principal Amount.
Form: /X/ Book Entry / / Certificated
Specified currency: U.S. Dollars
Authorized Denominations: $1,000
Integral Multiples in excess thereof: $1,000
Indexed Notes /X/ Yes / / No, see Attachment
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INTEREST
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/X/ Fixed Rate Note (other than Amortizing or Zero-Coupon
Note):
Fixed Rate of: 1.30% per annum
Interest on the Note will be calculated on a 30/360 basis and
will be payable semiannually in arrears on each March 15 and
September 15, commencing March 15, 2000, through and including
the Maturity Date (each, an "Interest Payment Date"), and the
Regular Record Date in respect of each Interest Payment Date will
be the first day (whether or not a Business Day) of the month in
which such Interest Payment
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3
Date occurs subject, in each case, to adjustment as provided in
the Attachment.
The date on which interest is payable (on each Interest Payment
Date and at Maturity) will be subject to adjustment in accordance
with:
/X/ the Following Business Day Convention.
The Fixed Rate Period End Date will be subject to:
/ / adjustment in accordance with the Following Business Day
Convention.
/X/ no adjustment.
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EARLY REDEMPTION AND/OR REPAYMENT, AND OPTIONAL EXTENSION OF
MATURITY DATE, RESETS AND PAYMENT CURRENCY
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Early redemption at Company's option:
/ / No /X/ Yes, see Attachment
Early repayment at Holder's option:
/ / No /X/ Yes, see Attachment
Option to extend Maturity Date:
/X/ No, but see Attachment / / Yes
Option to reset interest rate:
/X/ No / / Yes
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ATTACHMENT
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THE NOTES ARE EXCHANGEABLE SOLELY FOR CASH OR PAYABLE IN CASH AT
MATURITY OR UPON REDEMPTION. THE NOTES DO NOT REPRESENT ANY RIGHT
TO RECEIVE ANY XEROX CORPORATION ("XEROX") COMMON STOCK OR OTHER
SECURITIES. THE PRICE OF XEROX COMMON STOCK SERVES SOLELY AS AN
INDEX USED TO DETERMINE THE EXCHANGE AMOUNT, THE REDEMPTION
AMOUNT OR THE MATURITY AMOUNT APPLICABLE TO THE NOTES.
THE NOTES ARE NOT ISSUED OR GUARANTEED BY XEROX. THE NOTES ARE
NOT IN ANY WAY BACKED BY XEROX, OTHER THAN TO THE EXTENT OF THE
SUPPORT AGREEMENT. XEROX WILL NOT RECEIVE ANY PROCEEDS OF THE
NOTES OR ANY FEES OR ANY OTHER REMUNERATION IN CONNECTION WITH
THE ISSUANCE OF, OR DURING THE LIFE OF,
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4
THE NOTES. XEROX HAS AND HAS ASSUMED NO DUTY OR OBLIGATION OF ANY
KIND TO A HOLDER OF A NOTE AS SUCH, OR TO THE COMPANY OR THEIR
AFFILIATES IN CONNECTION WITH THE NOTES. XEROX MAY AT ANY TIME
TAKE ACTION RELATING TO ITS BUSINESS OR OTHER INTERESTS THAT MAY
BE ADVERSE TO HOLDERS OF THE NOTES.
The 1.30% Cash Exchangeable Equity--Linked Notes Due
September 15, 2006 of Xerox Credit Corporation will mature on the
earlier of (i) September 15, 2006 (subject to extension upon the
occurrence of certain Non-Trading Days (as defined below)) and
(ii) the Business Day immediately preceding any Delisting Date
(as defined below), but in no event later than September 22,
2006. The Stated Maturity Date may be extended as provided in
"Description of the Notes-Maturity Amount" below. The "Delisting
Date" will be the first date on which the Xerox Common Stock (as
defined below to include successor entities) is not listed on any
U.S. national securities exchange or U.S. national market system
subject to last sale reporting or is permanently suspended from
trading on each such securities exchange and market system on
which it is then listed.
Accrued interest will be included in the Maturity Amount or
Redemption Amount paid at the Maturity Date (as defined in
"Description of the Notes - Maturity Amount" below), Delisting
Date or redemption date; provided, that no accrued interest shall
be paid on a Note if the Maturity Amount or Redemption Amount, as
applicable, is calculated in accordance with clause (B) of the
definition thereof. If the Stated Maturity Date is extended, as
provided under "Description of the Notes-Maturity Amount", the
Notes will continue to accrue interest until the principal amount
is paid at maturity and the final Interest Payment Date will be
adjusted accordingly.
On the Maturity Date or the Delisting Date, a holder of a
Note that has not previously given a valid Exchange Notice will
be entitled to receive an amount (the "Maturity Amount") equal to
the higher of (A) the Principal Amount of such Note (together
with the accrued and unpaid interest thereon, if any) and (B) the
product of the Exchange Rate (as defined herein) and the average
Closing Price per share of Xerox Common Stock for the five
Trading Days ending on the second Business Day immediately prior
to the Maturity Date or the Delisting Date, as the case may be.
The Notes will be effectively repayable at the option of the
holder thereof, since they may be exchanged, subject to certain
limitations, at any time on or after October 18, 1999, into the
cash Exchange Amount only (determined as provided herein under
"Description of the Notes --Exchange Amount") at the option of
the holder on any Exchange Notice
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5
Date (as defined herein) by such holder giving written notice to
the Calculation Agent on behalf of the Company (the "Exchange
Notice") in the manner set forth herein. An Exchange Notice is
not valid if the product of the Exchange Rate for the Note to be
exchanged and the Closing Price of Xerox Common Stock on the
Trading Day immediately prior to the Exchange Notice Date is less
than 105% of the Principal Amount of the Note to be exchanged.
The Notes may be redeemed, at the option of the Company, as
a whole but not in part, at any time on or after September 16,
2002 at the higher of (A) the Principal Amount of such Note
(together with the accrued and unpaid interest thereon, if any)
and (B) the product of the Exchange Rate and the average Closing
Price per share of Xerox Common Stock for the five Trading Days
ending on the second Business Day immediately prior to the
redemption date.
Notwithstanding anything to the contrary contained in this
Pricing Supplement, in no event will the Exchange Amount payable
on an Exchange Payment Date, the Maturity Amount payable on the
Maturity Date or the Delisting Date or the Redemption Amount
payable on the redemption date be less than the Principal Amount
of such Note.
RISK FACTORS
The Notes to which this Pricing Supplement relates are
"Indexed Notes" as defined in the Prospectus Supplement and are
subject to various risks, including, but not limited to, the
following:
Payment upon Exchange
If an Exchange Notice is given on an Exchange Notice Date at
or after the Daily Deadline (as such capitalized terms are
defined below under "Description of the Notes-Exchange Notice"),
the Exchange Amount will be based upon the Closing Price per
share of Xerox Common Stock on the Trading Day immediately
following such Exchange Notice Date. Such Closing Price could be
lower than the Closing Price on the Exchange Notice Date, as a
result of which a holder of a Note will be entitled to receive on
the Exchange Payment Date an amount less than the value of such
Note on such Exchange Notice Date. No Exchange Notice may be
given after the Daily Deadline on the Final Exchange Notice Date.
See "Description of the Notes--Exchange Notice".
An Exchange Notice is not valid if the product of the
Exchange Rate for the Note to be exchanged and the Closing
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6
Price of Xerox Common Stock on the Trading Day immediately prior
to the Exchange Notice Date is less than 105% of the Principal
Amount of the Note to be exchanged. To that extent, a holder of a
Note will not be able to receive the Exchange Amount even though
it is in excess of the Principal Amount of a Note.
Validity of an Exchange Notice
To be valid an Exchange Notice in the form attached as
Appendix I must be given precisely as required, and must be given
through the facilities of DTC by the beneficial owner of the
Notes to be exchanged. Exchange Notices must be given to the
Calculation Agent which will provide copies to the Company and to
the Trustee. Exchange Notices that do not conform to the
requirements of the form of Exchange Notice attached hereto as
Appendix I or which are delivered after the Daily Deadline on the
Final Exchange Date (each as defined below) will not be valid.
Accordingly, once the Notes have been called for redemption, an
Exchange Notice may not be given. Any question as to the validity
of an Exchange Notice will be determined by the Calculation Agent
in its sole discretion. See "Description of the Notes--Exchange
Notice". Copies of the Calculation Agency Agreement are available
upon request from the Calculation Agent.
Relationship of Notes and Xerox Common Stock
The Notes are exchangeable solely for cash and are payable
in cash at maturity or upon redemption and do not represent any
right to receive any Xerox Common Stock or other securities. The
price of Xerox Common Stock serves solely as an index used to
determine the Exchange Amount, the Redemption Amount or the
Maturity Amount applicable to the Notes.
The market price of the Notes may be affected by a variety
of factors, including, without limitation, possible changes in
interest rates. However, the market price of the Notes is
expected to be affected primarily by changes in the price of
Xerox Common Stock. As indicated under "The Xerox
Corporation--Historical Information" below, the price of Xerox
Common Stock has been volatile during certain recent periods. As
the Exchange Amount, Maturity Amount and Redemption Amount are
calculated by reference to the Closing Prices of Xerox Common
Stock, the Exchange Amount, Maturity Amount and Redemption Amount
of the Notes may be adversely affected by volatility in the price
of Xerox Common Stock.
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Before, during and/or after the initial offering of the
Notes, the Company will enter into arrangements related to Xerox
Common Stock with a bank counterparty in order to meet the
Company's obligations under the Notes. The bank counterparty is
expected to purchase Xerox Common Stock near the time that the
initial Exchange Rate is set. The bank counterparty may sell
Xerox Common Stock during the time that exchange, redemption or
maturity values are being determined. These purchases and sales
may affect the price of Xerox Common Stock.
Xerox may also recommence purchases under its Common Stock
repurchase program. To the extent that the Company or Xerox or
one or more of its subsidiaries has a position in arrangements
related to Xerox Common Stock or Xerox recommences purchases
under its Common Stock repurchase program, the Company or Xerox
or one or more of its subsidiaries may reduce a portion of these
arrangements or Xerox may repurchase its Common Stock at or about
the time that the Maturity Amount, Redemption Amount or Exchange
Amount on the Notes is being determined. Depending on, among
other things, future market conditions, the aggregate amount and
the composition of such positions and the aggregate amount of any
such repurchases are likely to vary over time. The effect, if
any, on the market price of Xerox Common Stock of such activities
cannot be ascertained at this time.
It is impossible to predict whether the price of Xerox
Common Stock will rise or fall. Trading prices of Xerox Common
Stock will be influenced by Xerox' financial results and
prospects and by complex and interrelated political, economic,
financial and other factors that can affect capital markets
generally, the market segment of which Xerox Common Stock is a
part and Xerox itself. See "Xerox Corporation" below.
Possible Illiquidity of Notes; Secondary Trading in the
Notes
It is not possible to predict whether a secondary market for
the Notes will develop or how the Notes will trade in any market
that does develop. Banc of America Securities LLC intends, but is
not obligated, to make a market in the Notes. The spread between
bid and asked prices for Notes in any such market may be
different than the spread between bid and asked prices for Xerox
Common Stock.
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Dilution
The Closing Prices of Xerox Common Stock used to calculate
the Exchange Amount payable on the Exchange Payment Date, the
Maturity Amount payable on the Delisting Date or the Maturity
Date and the Redemption Amount payable on the redemption date are
subject to adjustment for certain events arising from stock
splits and combinations, stock dividends, extraordinary cash
dividends and certain other events that affect Xerox' capital
structure. See "Description of the Notes--Anti-Dilution
Adjustments" below. Such Closing Prices will not be adjusted for
other events, such as offerings of Xerox Common Stock for cash or
other consideration or an issuer tender or exchange offer at a
premium to the then current market price, that may adversely
affect the price of Xerox Common Stock and, therefore, adversely
affect the trading price of the Notes. There can be no assurance
that Xerox will not make offerings of Xerox Common Stock in the
future or effect an issuer tender or exchange offer or take any
other action which adversely affects the value of the Notes but
does not result in an anti-dilution adjustment.
DESCRIPTION OF THE NOTES
Calculation Agent
All determinations made by the Calculation Agent shall be at
the sole discretion of the Calculation Agent and, in the absence
of manifest error, shall be conclusive for all purposes and
binding on the Company and the holders of Notes, and the
Calculation Agent shall have no liability therefor. All results
of any calculation of the Maturity Amount, the Redemption Amount
or the Exchange Amount 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 downward).
Maturity Amount
The Notes will mature on the Stated Maturity Date, subject
to extension as hereinafter described (such date of maturity as
it may be extended is herein referred to as the "Maturity Date").
In the event that any of the five successive Business Days ending
on the second Business Day prior to the Stated Maturity Date is
not a Trading Day (a "Non--Trading Day"), the Stated Maturity
Date will be extended one Trading Day for each such Non-Trading
Day; provided, however, that in no event will the Maturity Date
be later than September 22, 2006. The Notes will continue
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9
to accrue interest until the Principal Amount of the Notes is
paid at maturity, which, in the event that the maturity of the
Notes is extended as a result of a Non--Trading Day, will be
payable to the holders of Notes on the date of extended maturity;
provided, that no accrued interest shall be paid on a Note if the
Maturity Amount is calculated in accordance with clause (B) of
the definition of Maturity Amount in the next succeeding
paragraph. The Calculation Agent shall notify each beneficial
owner of a Note through the facilities of DTC of such extension
of the Stated Maturity Date.
On the Maturity Date, the holder of a Note that has not
previously given an Exchange Notice as discussed below under
"Exchange Notice" will be entitled to receive a principal amount
(the "Maturity Amount") equal to the higher of (A) the Principal
Amount of such Note (together with the accrued interest thereon,
if any) and (B) the product of the Exchange Rate and the average
Closing Price per share of Xerox Common Stock for the five
Trading Days ending on the second Business Day immediately prior
to the Maturity Date (the "Averaging Period").
Notwithstanding anything to the contrary contained in this
Pricing Supplement, in no event will the Maturity Amount payable
on the Maturity Date with respect to a Note be less than the
Principal Amount of such Note.
Delisting of Xerox Common Stock
If not previously repaid, the Notes will mature on the
Business Day immediately preceding any Delisting Date. The amount
to which the holder of a Note will be entitled if a Delisting
Date occurs shall be calculated as described under "Description
of the Notes--Maturity Amount", above, with the Delisting Date
substituted for the Maturity Date. Notice of any Delisting Date
will be given through the facilities of DTC by the Calculation
Agent. Any questions relating to the occurrence of a Delisting
Date will be resolved by the Calculation Agent in its sole
discretion.
Interest
Interest will accrue on the Principal Amount of the Notes at
the rate per annum specified above from and including the
Original Issue Date to but excluding the Maturity Date, Delisting
Date or redemption date, as the case may be; provided, however,
that, if any Note is exchanged into the Exchange Amount, no
interest shall be deemed to have accrued on such Note from the
Interest Payment Date immediately
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10
preceding the Exchange Payment Date to the Exchange Payment Date,
and provided, further, that if the Maturity Amount or Redemption
Amount is calculated in accordance with clause (B) of the
definition thereof, no interest shall be deemed to have accrued
and no interest shall be paid on such Note from the Interest
Payment Date immediately preceding the Maturity Date, Delisting
Date or redemption date, as applicable, to such date.
Exchange Notice
Notes may be exchanged into the Exchange Amount (calculated
in the manner set forth below) at the option of the holder
thereof as follows: On any Trading Day (each such Trading Day
being an "Exchange Notice Date") on or prior to the Trading Day
prior to the first day of an Averaging Period and prior to the
date on which notice has been given that the Notes will be
redeemed (the "Final Exchange Notice Date"), the beneficial owner
of a Note (if it is a DTC participant, or the DTC participant on
whose books such Note is carried if the beneficial owner is not a
DTC participant) may give notice to the Calculation Agent, who
will provide copies to the Company and the Trustee, in writing
(by hand c/o Banc of America Securities LLC, 9 West 57th Street,
New York, New York or by facsimile at (212) 583-8208, in each
case c/o Equity Financial Products Group) in the form attached
hereto as Appendix I that such beneficial owner elects to
exchange such Note or a specified portion thereof for the
Exchange Amount. Notes may only be exchanged in a minimum amount
of $1,000 and integral multiples of $1,000 in excess thereof.
Such Exchange Notice will not be valid if the amount which is the
product of the Exchange Rate for the Note or the portion thereof
to be exchanged and the Closing Price of Xerox Common Stock on
the Trading Day immediately prior to the Exchange Notice Date is
less than 105% of the Principal Amount of the Note or portion
thereof to be exchanged. No Exchange Notice will be accepted
after the Daily Deadline on the Final Exchange Notice Date.
Accordingly, once the Notes have been called for redemption, an
Exchange Notice may not be given. The Calculation Agent will
provide any beneficial owner of a Note, through the facilities of
DTC, with information about the current delivery requirements for
Exchange Notices upon request. If the delivery instructions for
an Exchange Notice shall be changed, the Calculation Agent will
notify each beneficial owner of a Note, through the facilities of
DTC, of such revised delivery instructions. Exchange Notices must
be given by facsimile or by hand delivery to the precise
facsimile number or individuals specified by the Calculation
Agent and should be confirmed by telephone at (212)583-8232. Once
given, an Exchange Notice may not be
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11
withdrawn or revoked without the consent of the Calculation
Agent. Any question as to the validity of an Exchange Notice or
as to whether such notice has been properly and timely given will
be resolved by the Calculation Agent in its sole discretion.
Copies of the Calculation Agency Agreement are available upon
request from the Calculation Agent.
Exchange Amount
The amount that the holder of a Note will be entitled to
receive upon exchange (the "Exchange Amount") will be determined
as follows: (1) if the Exchange Notice is received before 12:00
noon New York City time (the "Daily Deadline") on any Exchange
Notice Date, the Exchange Amount will be equal to the product of
the Exchange Rate and the Closing Price per share of Xerox Common
Stock on such Exchange Notice Date; and (2) if the Exchange
Notice is received at or after the Daily Deadline on any Exchange
Notice Date, the Exchange Amount will be equal to the product of
the Exchange Rate and the Closing Price per share of Xerox Common
Stock on the Trading Day immediately following such Exchange
Notice Date. An Exchange Notice may not be given after the Daily
Deadline on the Final Exchange Notice Date.
On the third Business Day following the date on which the
Closing Price used to calculate the Exchange Amount occurred (the
"Exchange Payment Date"), the holder of a Note will be entitled
to receive the Exchange Amount solely in cash. If a valid
Exchange Notice has not been received before the Daily Deadline
on the Final Exchange Notice Date, the holder will be entitled to
receive the Maturity Amount on the Maturity Date.
Notwithstanding anything to the contrary contained in this
Pricing Supplement, in no event will the Exchange Amount payable
on the Exchange Payment Date with respect to a Note be less than
the Principal Amount of such Note.
Redemption by the Company
The Notes are redeemable, at the option of the Company, as a
whole but not in part, at any time on or after September 16, 2002
at the Redemption Amount, which shall equal the higher of (A) the
Principal Amount of such Note (together with the accrued and
unpaid interest thereon, if any) and (B) the sum of (x) the
product of the Exchange Rate and the average Closing Price per
share of Xerox Common Stock for the five Trading Days ending on
the second
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12
Business Day immediately prior to the redemption date, plus (y)
an amount equal to the dividends (regular or extraordinary) that
would have been received by a holder of the shares of Xerox
Common Stock underlying a Note, who held such Xerox Common Stock
on any record date occurring during the period commencing on the
day that the Notes are called for redemption and ending on the
second Business Day immediately prior to the redemption date (the
"Redemption Amount").
In the event that the Company exercises its option to redeem
the Notes, the Company will give written notice to the holders of
the Notes not less than 15 days nor more than 30 days prior to
the redemption date. All notices of redemption will be made in
the name, and at the expense, of the Company. Once the Notes have
been called for redemption, an Exchange Notice may not be given.
Notwithstanding anything to the contrary contained in this
Pricing Supplement, in no event will the Redemption Amount
payable on the redemption date with respect to a Note be less
than the Principal Amount of such Note.
Anti-Dilution Adjustments
The Closing Price of Xerox Common Stock on any of the
Trading Days used to calculate the Maturity Amount, Redemption
Amount or Exchange Amount shall be subject to adjustment by the
Calculation Agent as described below to the extent that any of
the events requiring such adjustment occurs during the period
commencing on the date of this Pricing Supplement and ending on
such Trading Day. All determinations made by the Calculation
Agent shall be at the sole discretion of the Calculation Agent
and, in the absence of manifest error, shall be conclusive for
all purposes and binding on the Company and the holders of Notes,
and the Calculation Agent shall have no liability therefor.
Xerox Common Stock Dividends and Extraordinary Dividends and
Distributions
In the event that a dividend or other distribution is
declared (i) on any class of Xerox capital stock, payable in
shares of Xerox Common Stock in an aggregate amount greater than
10% of the issued and outstanding shares of Xerox Common Stock on
the date fixed for the determination of the shareholders of Xerox
entitled to receive such stock dividend, (ii) on Xerox Common
Stock payable in cash in an amount greater than 10% of the
Closing Price of Xerox Common Stock on the date fixed for the
determination of the
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shareholders of Xerox entitled to receive such cash dividend (an
"Extraordinary Cash Dividend"), or (iii) on Xerox Common Stock
payable in evidences of indebtedness or assets (including
securities, but excluding any dividend or distribution covered by
clause (i) or any Xerox Spin-Off described under "--Dissolution
of Xerox; Mergers, Consolidations or Sales of Assets; Spin-Offs"
below) (an "Extraordinary Distribution"), any Closing Price of
Xerox Common Stock used to calculate the Exchange Amount, the
Redemption Amount or the Maturity Amount on any Trading Day that
follows the date (the "Xerox Record Date") fixed for the
determination of the shareholders of Xerox entitled to receive
such dividend or other distribution shall be increased by
multiplying such Closing Price by a fraction of which the
numerator shall be the number of shares of Xerox Common Stock
outstanding on the Xerox Record Date plus the number of shares
constituting such distribution or, in the case of any
Extraordinary Cash Dividend or an Extraordinary Distribution,
plus the number of shares of Xerox Common Stock that could be
purchased with the amount of such Extraordinary Cash Dividend or
the fair market value (as determined by the Calculation Agent
whose determination shall be conclusive and binding) of the
evidences of indebtedness or assets constituting such
Extraordinary Distribution at the Closing Price on the Trading
Day immediately subsequent to such Xerox Record Date, and the
denominator shall be the number of shares of Xerox Common Stock
outstanding on the Xerox Record Date.
Subdivisions and Combinations of Xerox Common Stock
In the event that the outstanding shares of Xerox Common
Stock are subdivided into a greater number of shares, the Closing
Price of Xerox Common Stock used to calculate the Exchange
Amount, the Redemption Amount or the Maturity Amount on any
Trading Day that follows the date on which such subdivision
becomes effective will be proportionately increased, and,
conversely, in the event that the outstanding shares of Xerox
Common Stock are combined into a smaller number of shares, such
Closing Price of Xerox Common Stock will be proportionately
reduced.
Reclassifications of Xerox Common Stock
In the event that Xerox Common Stock is changed into the
same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or
otherwise (except to the extent otherwise provided under "--Xerox
Common Stock Dividends and Extraordinary Dividends and
Distributions" and
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14
"--Subdivisions and Combinations of Xerox Common Stock" above or
pursuant to a Reorganization Event described under "--Dissolution
of Xerox; Mergers, Consolidations or Sales of Assets; Spin-offs"
below), the Maturity Amount, Redemption Amount or Exchange Amount
will be calculated by using the aggregate Closing Prices of the
shares of stock into which a share of Xerox Common Stock was
changed on any Trading Day that follows the effectiveness of such
change.
As a result of the foregoing provisions, in the case of a
reorganization or reclassification of Xerox Common Stock, the
Closing Prices of one or more securities in addition to or in
substitution for Xerox Common Stock may be used to calculate the
Maturity Amount, Redemption Amount or Exchange Amount. For
example, if Xerox Common Stock was reclassified into one share of
Xerox Class A Common Stock and one share of Xerox Class B Common
Stock, the Maturity Amount, Redemption Amount or Exchange Amount
would be calculated by reference to the Closing Prices of Xerox
Class A Common Stock and Xerox Class B Common Stock.
Dissolution of Xerox; Mergers, Consolidations or Sales of
Assets; Spin-offs.
In the event of any (i) consolidation or merger of Xerox,
with or into another entity (other than a consolidation or merger
that does not result in a reclassification, conversion, exchange
or cancelation of outstanding Xerox Common Stock), (ii) sale,
transfer, lease or conveyance of all or substantially all of the
assets of Xerox, (iii) liquidation, dissolution or winding up of
Xerox, or (iv) any declaration of a distribution on Xerox Common
Stock of the common stock of any subsidiary of Xerox (a "Xerox
Spin-Off") (any of the events described in (i), (ii), (iii) or
(iv), a "Reorganization Event"), for purposes of determining the
Maturity Amount, Redemption Amount or Exchange Amount, the
Closing Price of Xerox Common Stock on any Trading Day subsequent
to, in the case of a Reorganization Event other than a Xerox
Spin-Off, the effective time of such Reorganization Event or, in
the case of a Xerox Spin-Off, the record date fixed for the
determination of the shareholders of Xerox entitled to receive
the securities distributed in such Xerox Spin-Off (the "Spin-Off
Record Date") will be deemed to be the amount equal to (1) the
value of the cash and other property (including securities)
received by a holder of a share of Xerox Common Stock (assuming
such holder of Xerox common Stock failed to exercise any rights
of election and received per share the kind and amount received
by a plurality of non-electing shares) in any such Reorganization
Event (plus, in the case of a Xerox Spin-off, the value of a
share of
<PAGE>
15
Xerox Common Stock), and (2) to the extent that such holder
obtains securities in any Reorganization Event, the value of the
cash and other property received by the holder of such securities
in any subsequent Reorganization Event. For purposes of
determining any such Closing Prices, the value of (i) any cash
and other property (other than securities) received in any such
Reorganization Event will be an amount equal to the value of such
cash and other property at the effective time of such
Reorganization Event (as determined by the Calculation Agent
whose determination shall be conclusive and binding), and (ii)
any property consisting of securities received in any such
Reorganization Event will be an amount equal to the Closing
Prices of such securities on any Trading Day following, in the
case of a Reorganization Event other than a Xerox Spin-Off, the
effective time of such Reorganization Event or, in the case of a
Xerox Spin-Off, the Spin-Off Record Date.
As a result of the foregoing provisions, in the case of
certain Reorganization Events, the Closing Prices of the
securities of a successor entity to Xerox or the Closing Prices
of the securities of another issuer, including, for example, in
the case of a Xerox Spin-Off, the Closing Prices of the
distributed security, may determine the Maturity Amount,
Redemption Amount or the Exchange Amount. For example, in the
case of a stock for stock merger in which Xerox does not survive,
the Maturity Amount payable on the Maturity Date or the Delisting
Date, the Redemption Amount payable on the redemption date or the
Exchange Amount payable on the Exchange Payment Date would be
calculated by reference of the Closing Prices of a successor
entity to Xerox on the relevant Trading Days.
If any action would require adjustment of the Closing Price
pursuant to more than one of the foregoing provisions, only one
adjustment shall be made and such adjustment shall be the amount
of adjustment that has the highest absolute value to the holder
of a Note. No adjustment in the Closing Price shall be required
unless such adjustment would require an increase or decrease of
at least 1% of the Closing Price, but any adjustment that would
otherwise be required to be made shall be carried forward and
taken into account in any subsequent adjustment.
The Calculation Agent will promptly notify each beneficial
owner through the facilities of DTC of any event requiring an
adjustment and of the method of calculation to be used to make
any dilution adjustment as described above.
<PAGE>
16
Definitions
"Business Day" means any day that is not a Saturday, a
Sunday or a day on which the New York Stock Exchange, Inc.
("NYSE") (or, if different, the principal securities exchange or
national market system on which Xerox Common Stock is then
listed) or banking institutions or trust companies in The City of
New York are authorized or obligated by law or executive order to
close.
"Calculation Agent" means Banc of America Securities LLC.
"Closing Price" means, with respect to any security on any
date, the closing sale price or last reported sale price for the
security on the principal national securities exchange (currently
the NYSE for purposes of Xerox Common Stock) on which such
security is listed for trading on such date or, in the event such
security is not listed on any national securities exchange, on
the National Market System of the NASD on any such date or, in
the event such security is not quoted through the National Market
System of the NASD on any such date, on such other U.S. national
market system that is the primary market for the trading of such
security, subject to adjustment as described under "Anti-Dilution
Adjustments".
"Delisting Date" means the first date on which the Xerox
Common Stock is not listed on any U.S. national securities
exchange or U.S. national market system subject to last sale
reporting or is permanently suspended from trading (within the
meaning of the Exchange Act, and the rules and regulations
thereunder) on each such securities exchange and market system on
which it is then listed, other than as a result of a
Reorganization Event. The Company will promptly notify each
beneficial owner (if it is a DTC participant, or the DTC
participant on whose books such Note is carried if the beneficial
owner is not a DTC participant) of the occurrence of a Delisting
Date.
"Exchange Rate" means, with respect to any Note, 16.9377
shares of Xerox Common Stock per $1,000 Principal Amount.
"Trading Day" means, with respect to any security, a
Business Day on which the security (A) is not suspended from
trading on any U.S. national securities exchange or U.S. national
market system during the last half hour of scheduled trading on
such Business Day and (B) has traded at least once during the
last half hour of scheduled trading on such Business Day on the
U.S. national securities exchange or U.S. national market system
that is the primary market for the trading of such security.
<PAGE>
17
"Xerox" means Xerox Corporation, a New York corporation, and
any successor entity.
"Xerox Common Stock" means the common stock, par value $1.00
per share of Xerox.
XEROX CORPORATION
Available Information
Xerox is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities
and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed by Xerox 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. The Commission maintains a Web site
that contains reports, proxy statements and other
information regarding registrants that file electronically
with the Commission at http://www.sec.gov. Such reports,
proxy statements and other information concerning Xerox also
may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005,
and the Chicago Stock Exchange, One Financial Plaza, 120
South LaSalle Street, Chicago, Illinois 60603.
Incorporation of Certain Documents by Reference
There are incorporated herein by reference the following
documents filed with the Commission (File No. 1-4471) by Xerox
pursuant to the Exchange Act:
(1) Annual Report on Form 10-K for the fiscal year
ended December 31, 1998;
(2) Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1999 and June 30, 1999;
(3) Current Reports on Form 8-K dated December 18, 1998
(filed January 29, 1999), January 25, 1999, March 26, 1999,
May 13, 1999 and June 24, 1999;
<PAGE>
18
(4) Description of Xerox' Shareholders Rights Plan (the
"Rights Plan") contained in Form 8-A filed with the
Commission on April 7, 1997, as amended by Amendment No. 1
thereto filed with the Commission on January 26, 1999; and
description of the Rights Agreement dated as of April 7,
1997 between Xerox and The First National Bank of Boston, as
Rights Agent (the "Rights Agreement"), with respect to the
Rights Plan, which is filed as Exhibit 4.10 to Xerox'
Current Report on Form 8-K dated April 7, 1997. The Rights
Plan and the Rights Agreement relate to the rights to
Purchase Series A Cumulative Preferred Stock; and
(5) Description of Xerox' Common Stock, contained in
Amendment No. 4 on Form 8-A filed with the Commission on
January 26, 1999, relating to Xerox Common Stock.
All documents filed by Xerox pursuant to Section 13(a),
13(c), 14 (other than the information required by paragraphs (k)
and (l) of ss.229.402 of Regulation S-K) or 15(d) of the Exchange
Act subsequent to the date of this Pricing Supplement and prior
to the termination of the offerings of the Notes offered hereby
shall be deemed to be incorporated by reference into this Pricing
Supplement. 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 Pricing Supplement
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 Pricing Supplement.
Xerox will provide without charge to each person to whom
this Pricing Supplement 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 Customer Service
Unit of Citibank, N.A., 111 Wall Street -5th Floor, New York, NY
10043, telephone: (800)422-2066.
Historical Information
Xerox Common Stock is traded on the NYSE under the symbol
"XRX". The following table sets forth the quarterly intra-day
high and low prices for Xerox Common Stock for the four calendar
quarters in 1997 and 1998 and for the first
<PAGE>
19
and second quarter of 1999 and the third quarter of 1999 through
September 13, 1999, and the closing price at September 13, 1999,
adjusted for stock dividends and stock splits, all as reported by
the NYSE. The historical prices of the Xerox Common Stock should
not be taken as an indication of future performance. No assurance
can be given that the prices of Xerox Common Stock will remain at
a level which will result in the Exchange Amount, the Redemption
Amount or the Maturity Amount exceeding the Principal Amount. See
"Risk Factors--Payment upon Exchange".
High Low
($) ($)
1997
Quarter ended March 31................. 31.63 25.75
Quarter ended June 30.................. 39.69 27.38
Quarter ended September 30............. 42.56 36.34
Quarter ended December 31.............. 44.00 34.00
1998
Quarter ended March 31................. 53.38 33.09
Quarter ended June 30.................. 57.50 45.16
Quarter ended September 30............. 58.25 39.00
Quarter ended December 31.............. 60.81 40.91
1999
Quarter ended March 31................. 63.00 51.00
Quarter ended June 30.................. 63.94 51.88
Quarter ended September 30
(through September 13)............ 60.31 43.81
Closing price on September 13,
1999.............................. 48.31
Historically, Xerox has from time to time paid cash
dividends on Xerox Common Stock. The Company makes no
representation as to the amount of dividends, if any, that Xerox
may pay in the future. In any event, holders of the Notes will
not be entitled to receive any dividends that may be payable by
Xerox with respect to its Common Stock.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
For a discussion of the Federal income tax consequences of
ownership of the Notes, please see the discussion under "United
States Taxation" in the Prospectus Supplement dated August 13,
1999. Holders who exercise their exchange rights on the Notes
will be treated as if they had sold their Notes for the cash
received, as described under "United States Persons--Purchase,
Sale, Exchange and Retirement of Notes."
<PAGE>
20
Adjustment of Exchange Amount
If at any time Xerox makes a distribution of property to
shareholders that would be taxable to such shareholders as a
dividend for United States Federal income tax purposes and, in
accordance with the adjustments described above under
"Description of the Notes -- Xerox Common Stock Dividends and
Extraordinary Dividends and Distributions", the Exchange Rate is
increased, the amount of such increase may be deemed to be the
payment of a taxable dividend to holders of the Notes.
RELATIONSHIP WITH BANC OF AMERICA SECURITIES LLC
In the ordinary course of its business, Banc of America
Securities LLC and its affiliates have engaged, and may in the
future engage, in investment banking and commercial banking
transactions with the Company and its affiliates, including
Xerox, and provide other financial services to the Company and
its affiliates.
<PAGE>
Appendix I
EXCHANGE NOTICE
The undersigned registered holder of 1.30% Cash Exchangeable
Equity-Linked Notes due September 15, 2006 of Xerox Credit
Corporation (CUSIP Number 983917 BS3) (the "Notes") hereby gives
notice to Banc of America Securities LLC, as Calculation Agent,
of such holder's intention to exchange the Principal Amount of
Notes (or portion thereof) set forth below for the cash Exchange
Amount thereof.
This Exchange Notice is given subject to the provisions of
the Pricing Supplement dated September 13, 1999. Once given, this
Exchange Notice may not be withdrawn or revoked without the
consent of the Calculation Agent.
Name of Beneficial Owner: ________________________
(Name of DTC participant or name of the DTC
participant on whose books such Note is
carried if the holder is not a DTC
participant)
Principal Amount to be Exchanged:______________________
Date of Exchange Notice:_______________________________
By:_______________________________
Authorized Signature
All Exchange Notices shall be by given as follows:
By hand: c/o Banc of America Securities LLC
9 West 57th Street
New York, New York
Attention: Equity Financial Products
Group
or by facsimile at: (212) 583-8208
Attention: Equity Financial Products
Group
