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Filed Under
Rule 424(b)(2)
Registration
No. 33-59495
PROSPECTUS SUPPLEMENT
[AT&T LOGO]
(To Prospectus Dated June 5, 1995)
U.S. $3,000,000,000
AT&T Corp.
Medium Term Notes, Series B Due More Than Nine Months From Date
of Issue
AT&T Corp. (the "Company" or "AT&T") may offer from time to time
its medium
term notes, which are issuable in one or more series. The Medium
Term Notes,
Series B (the "Notes") offered by this Prospectus Supplement are
offered with
an aggregate offering price not exceeding U.S. $3,000,000,000 or
the
equivalent thereof in other currencies or currency units, as such
amount shall
be reduced by the aggregate offering price of any other debt
securities and
the aggregate purchase price of any warrants issued by the
Company, whether
inside or outside of the United States (the "Other Securities"),
pursuant to
the Registration Statement of which the accompanying Prospectus
is a part (see
"Plan of Distribution"). The Notes may be denominated in U.S.
dollars or in
such foreign currencies or currency units as may be designated by
the Company
(the "Specified Currency"). See "Important Currency Exchange
Information". The
interest rate on each Note will be either 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
maturity, or a
floating rate (a "Floating Rate Note"). A Floating Rate Note may
be either a
Regular Floating Rate Note, a Floating Rate/Fixed Rate Note or an
Inverse
Floating Rate Note (each as defined below) and its rate of
interest may be
determined by reference to one or more of the Commercial Paper
Rate, the
Federal Funds Rate, the CD Rate, LIBOR, the Treasury Rate, the
Prime Rate, the
CMT Rate or any other Base Rate (each as defined below) or
interest rate
formula set forth in the Pricing Supplement, as adjusted by the
Spread and/or
Spread Multiplier (as defined below), if any, applicable to such
Note. A Note
may pay amounts in respect of interest and principal over the
life of the
note, according to an amortization schedule (an "Amortizing
Note"). A Note may
be issued as an indexed note (an "Indexed Note") the principal
amount payable
at maturity of which, or premium or interest on which, will be
determined by
reference to the level of a designated stock index or designated
currency,
commodity or other prices or indices or will otherwise be
determined by
application of a formula. See "Description of Medium Term Notes,
Series
B--Indexed Notes". The Specified Currency, interest rate or
interest rate
formula, reset provisions, issue price, maturity, interest
payment dates,
redemption, repayment, and amortization provisions and certain
other terms
with respect to each Note will be established at the time of
issuance and set
forth in a pricing supplement to this Prospectus Supplement (a
"Pricing
Supplement").
Interest on each Note (other than an Amortizing Note) is payable
on the dates
set forth therein or in the applicable Pricing Supplement. Unless
otherwise
specified in the applicable Pricing Supplement, each Amortizing
Note will pay
principal and interest (i) semiannually each March 15 and
September 15, or
(ii) quarterly each March 15, June 15, September 15, and December
15, and
(iii) at maturity. Unless otherwise specified in the applicable
Pricing
Supplement, the Notes are not subject to redemption at the option
of the
Company or repayment at the option of the holder prior to
maturity. Each Note
will mature on a Business Day more than nine months from the date
of issue.
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The Notes will be issued only in fully registered form in
denominations of
U.S. $1,000 or the equivalent thereof in the Specified Currency
(rounded down
to an integral multiple of 1,000 units of such Specified
Currency), or any
amount in excess thereof that is an integral multiple of U.S.
$1,000 or 1,000
units of the Specified Currency. Each Note will be represented by
either a
global security (a "Book-Entry Note") registered in the name of a
nominee of
The Depository Trust Company, as depositary (the "Depositary"),
or a
certificate issued in definitive form (a "Certificated Note"),
specified in
the applicable Pricing Supplement. 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. Book-Entry Notes will not be
issuable as
Certificated Notes, except under the circumstances described
herein. See
"Description of Medium Term Notes, Series B".
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 OR THE
PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Agent's Proceeds
to
Public(1)(2) Commission(2)(3)
Company(2)(3)(4)
Per Note 100.000% .125%-.750%
99.875%-99.250%
Total U.S.$3,000,000,000 U.S.$3,750,000-$22,500,000
U.S.$2,996,250,000
- -$2,977,500,000
(1) Unless otherwise indicated in a Pricing Supplement, Notes
will be issued
at 100% of their principal amount.
(2) Or, in the case of Notes not denominated in U.S. dollars,
the equivalent
thereof in the Specified Currency.
(3) The Company will pay a commission to Salomon Brothers Inc,
Lehman
Brothers, Lehman Brothers Inc. or Morgan Stanley & Co.
Incorporated each
as agent (collectively, the "Agents" which term shall, in
the case of
Lehman Brothers Inc., also include its affiliate Lehman
Government
Securities Inc.), in the form of a discount, depending upon
maturity of
the Note, ranging from .125% to .750% of the principal
amount of any
Note sold through the Agents. See "Plan of Distribution".
(4) Before deducting expenses payable by the Company estimated
at
U.S.$1,505,000, including reimbursement of the Agents'
expenses.
The Notes are being offered on a continuous basis by the Company
through the
Agents, who have agreed to use their reasonable best efforts to
solicit
purchases of the Notes. The Company also may arrange for the
Notes to be sold
through other agents, dealers or underwriters or may sell the
Notes directly
to investors on its own behalf in those jurisdictions where it is
authorized
to do so. Unless otherwise specified in the applicable Pricing
Supplement, the
Notes will not be listed on any securities exchange, and there
can be no
assurance that the Notes will be sold or that there will be a
secondary market
for the Notes. The Company reserves the right to withdraw, cancel
or modify
the offer made hereby without notice. The Company, or the Agents
which solicit
any offer, may reject such offer in whole or in part. See "Plan
of
Distribution".
SALOMON BROTHERS INC
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus Supplement is July 5, 1995.
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IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for the Notes in the Specified
Currency, and
payments of principal of, premium, if any, and any interest on,
such Notes
will be made in the Specified Currency, unless otherwise provided
in the
applicable Pricing Supplement. Currently, there are limited
facilities in the
United States for the conversion of U.S. dollars into foreign
currencies or
currency units, and vice versa, and few banks offer non-U.S.
dollar
denominated checking or savings account facilities in the United
States.
However, if requested by a prospective purchaser of Notes
denominated in a
Specified Currency other than U.S. dollars, the Agents 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 (as defined below)
preceding the date
of delivery of the Notes, or by such other date as determined by
such Agent.
Each such conversion will be made by the relevant Agent on such
terms and
subject to such conditions, limitations and charges as such Agent
may from
time to time establish in accordance with its regular foreign
exchange
practice. All costs of exchange will be borne by purchasers of
the Notes.
References herein to "U.S. dollars", "dollars", "U.S. $" or "$"
are to the
currency of the United States of America.
DESCRIPTION OF MEDIUM TERM NOTES, SERIES B
The information herein concerning the Notes should be read in
conjunction
with the statements under "Description of the Securities" in the
Prospectus
dated June 5, 1995. The following description of the Notes will
apply unless
otherwise specified in the applicable Pricing Supplement.
GENERAL
The Notes are to be issued under Registration Statement No.
33-59495
pursuant to which the Company has registered debt securities and
warrants to
purchase debt securities having an aggregate purchase price of
$3,000,000,000.
The Notes constitute a single series which is not limited in
aggregate
principal amount. The Notes are to be issued under an Indenture
dated as of
September 7, 1990 between the Company and The Bank of New York,
as trustee
(the "Trustee"), as amended by the First Supplemental Indenture,
dated as of
October 30, 1992, between the Company and the Trustee (such
indenture, as
amended, including the provisions deemed a part thereof, or
superseding
provisions thereof, pursuant to the Trust Indenture Reform Act of
1990 (P.L.
101-550), being hereinafter referred to as the "Indenture"). The
Notes may be
issued under this Prospectus Supplement in an aggregate principal
amount of up
to U.S. $3,000,000,000 (or the equivalent thereof in other
currencies or
currency units), as such amount may be reduced by any Other
Securities issued
by the Company pursuant to the Registration Statement (see "Plan
of
Distribution").
The Notes are being offered on a continuous basis. Fixed Rate
Notes and
Amortizing Notes will mature on any Business Day (as defined
below) more than
nine months from the date of issue, as specified in the
applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing
Supplement,
Floating Rate Notes will mature on an Interest Payment Date (as
defined below)
more than nine months from the date of issue. "Business Day"
means any day,
other than a Saturday or Sunday, that is neither a legal holiday
nor a day on
which banking institutions are authorized or required by law or
regulation to
close in The City of New York and (i) with respect to Notes
denominated in a
Specified Currency other than U.S. dollars or European Currency
Units, in the
Principal Financial Center (as defined below) of the country of
the Specified
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<PAGE> 4
Currency, (ii) with respect to Notes denominated in European
Currency Units in
Brussels, Belgium or (iii) with respect to LIBOR Notes (as
defined below), in
the City of London. "London Banking Day" means any day on which
dealings in
deposits in U.S. dollars are transacted in the London interbank
market.
"Principal Financial Center" generally means the capital city of
the country
of the Specified Currency, except that with respect to U.S.
dollars and
Deutsche Marks, Principal Financial Center means the City of New
York and
Frankfurt, respectively.
A Note may be issued as a zero coupon Note or at a price which
is at a
substantial discount from its face value ("Discount Note"), in
which event
such Note will provide that upon redemption or repayment prior to
maturity or
acceleration of maturity thereof an amount less than the
principal amount
shall become due and payable. If a bankruptcy proceeding is
commenced in
respect of the Company, the claim of the holders of Discount
Notes may be
limited under section 502(b) of Title 11 of the United States
Code to the
initial public offering price of such Notes, plus that portion of
the original
issue discount that is amortized from the date of issue to the
commencement of
the bankruptcy proceeding plus accrued interest. Accordingly, the
holders of
Discount Notes under such circumstances may receive a lesser
amount than they
would be entitled to under the express terms of the Indenture.
Notwithstanding anything in this Prospectus Supplement to the
contrary,
unless otherwise specified in the applicable Pricing Supplement,
if a Note is
a Discount Note, the amount payable on such Note in the event of
redemption or
repayment prior to its maturity or acceleration of its maturity
shall be the
Amortized Face Amount of such Note as of the date of redemption,
repayment or
acceleration, as the case may be. The "Amortized Face Amount" of
a Discount
Note shall be the amount equal to (i) the issue price set forth
in the
applicable Pricing Supplement plus (ii) the portion of the
difference between
the issue price and the principal amount of such Note that has
accrued at the
yield to maturity set forth in the Pricing Supplement (computed
in accordance
with generally accepted United States bond yield computation
principles) to
such date of redemption, repayment or acceleration, but in no
event shall the
Amortized Face Amount of a Discount Note exceed its principal
amount.
The Pricing Supplement relating to each Note will describe the
following
terms: (1) the Specified Currency (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, or a Floating
Rate Note;
(3) whether such Note is a Discount Note or an Original Issue
Discount Note
(as defined below); (4) the price (expressed as a percentage of
the aggregate
principal amount thereof) at which such Note will be issued; (5)
the date on
which such Note will be issued; (6) the date on which such Note
will mature;
(7) if such Note is a Fixed Rate Note, the rate per annum at
which such Note
will bear interest, the Record Dates and the Interest Payment
Dates; (8) if
such Note is a Floating Rate Note, whether it is a Regular
Floating Rate Note,
a Floating Note/Fixed Rate Note or Inverse Floating Rate Note,
the Base Rate,
the Fixed Interest Rate, the Initial Interest Rate, the Interest
Reset Dates,
the Interest Determination Date, the Record Dates, the Interest
Payment Dates,
the Index Maturity, the Maximum and Minimum Interest Rates, if
any, and the
Spread or Spread Multiplier, if any (all as defined below), and
any other
terms relating to the method of calculating interest on 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) if such Note is an Indexed Note, the
Indexed
Principal Amount, Index (all as defined below) and any other
terms relating to
the method of calculating the principal, premium or interest on
the Note; (11)
the terms of redemption at the option of the Company, repayment
at the option
of the holder, or amortization provisions, if any, and (12) any
other terms of
such Note not inconsistent with the provisions of the Indenture.
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<PAGE> 5
Notes will be issued in fully registered form only. Each Note
will be
issued initially as either a Book-Entry Note or a Certificated
Note. Except as
set forth under "Book-Entry System" below, Book-Entry Notes will
not be
issuable as Certificated Notes. It is currently anticipated that
only Notes
which have a Specified Currency of U.S. dollars will be issued as
Book-Entry
Notes. Notes denominated in U.S. dollars will be issued in
denominations of
U.S. $1,000 or any amount in excess thereof which is a multiple
of U.S.
$1,000. Unless otherwise specified in a Pricing Supplement, Notes
denominated
in a Specified Currency other than U.S. dollars will be issued in
equivalent
denominations of the Specified Currency, as determined by the
Federal Reserve
Bank of New York, at the noon buying rate in New York City for
cable transfers
of such Specified Currency (the "Market Exchange Rate");
provided, however, in
the case of European Currency Units, Market Exchange Rate shall
mean the rate
of exchange determined by the Commission of the European
Communities (or any
successor thereto) as published in the Official Journal of the
European
Communities, or any successor publication, on the Business Day
immediately
preceding the trade date for such Notes, of U.S. $1,000 (rounded
down to an
integral multiple of 1,000 units of such Specified Currency), or
any amount in
excess thereof which is an integral multiple of 1,000 units of
such Specified
Currency.
The Company has initially designated Chemical Bank, acting
through its
principal corporate trust office in New York, New York, as the
registrar and
transfer agent for the Notes (the "Registrar", which term
includes any
additional or successor Registrar appointed by the Company), as
the paying
agent for the Notes (the "Paying Agent," which term includes any
additional or
successor Paying Agent appointed by the Company), and as the
authenticating
agent for the Notes (the "Authenticating Agent", which term
includes any
additional or successor Authenticating Agent appointed by the
Company).
The Notes will constitute unsecured and unsubordinated
indebtedness of the
Company and will rank on a parity with the Company's other
unsecured and
unsubordinated indebtedness. Unless otherwise specified in the
applicable
Pricing Supplement, the Notes are not subject to redemption at
the option of
the Company or repayment at the option of the holder prior to
maturity. The
Notes will not be subject to any sinking fund, except to the
extent otherwise
specified in the applicable Pricing Supplement.
In the case of Notes denominated in and on which principal and
premium, if
any, and interest is payable in U.S. dollars, principal and
premium, if any,
and interest will be payable, and the Notes will be transferable,
at the
principal corporate trust office of Chemical Bank, New York, New
York, or at
such other place or places as may be designated pursuant to the
Indenture,
provided that the Company, at its option, may pay interest other
than interest
due at maturity by check mailed to registered holders (which, in
the case of
Book-Entry Notes represented by a global security, will be a
nominee of the
Depositary). Unless otherwise specified in the applicable Pricing
Supplement,
interest on Notes (other than interest at maturity) payable in a
Specified
Currency other than U.S. dollars will be paid by mailing a check
or draft in
the Specified Currency drawn on an account at a bank outside of
the United
States. If any Notes are denominated in a Specified Currency
other than U.S.
dollars or if the principal of, premium, if any, or interest on
any Notes is
payable in a Specified Currency other than U.S. dollars, the
applicable
Pricing Supplement will provide additional information pertaining
to the terms
of such Notes and other matters of interest to the holders
thereof. At the
maturity of any Note, the principal thereof, together with
accrued interest
thereon, will be payable in immediately available funds upon
surrender thereof
at the office of the Paying Agent at the above address or at such
other place
or places as may be designated pursuant to the Indenture.
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PAYMENT CURRENCY
If the principal of, premium, if any, or interest on, any Note
is payable
in a Specified Currency other than U.S. dollars and such
Specified Currency is
not available to the Company for making payments thereof due to
the imposition
of exchange controls or other circumstances beyond the control of
the Company,
the Company will be entitled to satisfy its obligations to
holders of the
Notes by making such payments in U.S. dollars on the basis of the
noon buying
rate in New York City for cable transfers of such Specified
Currency as
determined by the Federal Reserve Bank of New York or, in the
case of any Note
denominated in European Currency Units, the rate of exchange
determined by the
Committee of the European Communities (or any successor thereto)
as published
in the official Journal of the European Communities, or any
successor
publication (the "Market Exchange Rate") on the date of such
payment, or, if
such rate of exchange is not then available, on the basis of the
Market
Exchange Rate as of the most recent Record Date (as defined
below). Any
payment made under such circumstances in U.S. dollars where the
required
payment is in a Specified Currency other than U.S. dollars will
not constitute
an Event of Default under the Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
Each Floating Rate Note will bear interest from the date of
issue at the
rate per annum stated or the interest rate formula set forth
therein and in
the applicable Pricing Supplement, until the principal thereof is
paid or made
available for payment. Unless otherwise specified in the
applicable Pricing
Supplement, each Fixed Rate Note will bear interest from the date
of issue at
the rate or rates per annum stated (calculated on the basis of a
year of
twelve thirty-day months) therein and in the applicable Pricing
Supplement,
until the principal thereof is paid or made available for
payment. Interest,
if any, will be payable on each Interest Payment Date (as defined
below).
Interest will be payable to the person in whose name a Note is
registered at
the close of business on the Record Date with respect to the
Interest Payment
Date (which, in the case of Book-Entry Notes represented by a
global security,
will be a nominee of the Depositary); provided, however, that
interest payable
at maturity (whether or not the maturity date is an Interest
Payment Date)
will be payable to the person to whom principal shall be payable.
The first
payment of interest on any Note (or, in the case of an Amortizing
Note,
principal and interest) originally issued between a Record Date
and an
Interest Payment Date will be payable on the Interest Payment
Date following
the next succeeding Record Date to the registered holder on such
next
succeeding Record Date of such Note. Unless otherwise specified
in the
applicable Pricing Supplement, the "Record Date" with respect to
any Interest
Payment Date shall be the date 15 calendar days prior to such
Interest Payment
Date, whether or not such date shall be a Business Day.
Interest on Floating Rate Notes and Fixed Rate Notes (other
than an
Amortizing Note) will be payable on the Interest Payment Dates
specified
therein and in the applicable Pricing Supplement (except as
provided above
with respect to Notes issued between a Record Date and an
Interest Payment
Date) and at maturity. Unless otherwise specified in the
applicable Pricing
Supplement, payments of principal and interest on each Amortizing
Note will be
made either semiannually each March 15 and September 15, or
quarterly each
March 15, June 15, September 15 and December 15 and at maturity.
Each date on
which interest is payable on a Note is referred to herein as an
"Interest
Payment Date". If any Interest Payment Date for any Note would
otherwise be a
day that is not a Business Day, such Interest Payment Date will
be postponed
to the next day that is a 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 will be the immediately preceding Business
Day.
Unless otherwise specified in an applicable Pricing Supplement,
Floating
Rate Notes will be issued as described below. Each applicable
Pricing
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Supplement will specify certain terms with respect to which such
Floating Rate
Note is being delivered, including: whether such Floating Rate
Note is a
"Regular Floating Rate Note", a "Floating Rate/Fixed Rate Note"
or an "Inverse
Floating Rate Note" (as defined below); the Base Rate or Base
Rates, Fixed
Interest Rate, Initial Interest Rate, Interest Reset Dates,
Interest
Determination Dates, Interest Reset Period, Regular Record Dates,
Interest
Payment Dates, Index Maturity, Fixed Rate Commencement Date and
Fixed Interest
Rate, if any, Maximum Interest Rate and Minimum Interest Rate, if
any, and the
"Spread" and/or "Spread Multiplier", if any, as described below.
The interest rate borne by each Floating Rate Note will be
determined as
follows:
(i) Unless such Floating Rate Note is designated as a
Floating
Rate/Fixed Rate Note, an Inverse Floating Rate Note or as
having an
Addendum attached, such Floating Rate Note will be designated a
"Regular
Floating Rate Note" and, except as described below or in an
applicable
Pricing Supplement, will bear interest at the rate determined
by reference
to the applicable Base Rate or Base Rates (a) plus or minus the
applicable
Spread, if any, and/or (b) multiplied by the applicable Spread
Multiplier,
if any. Commencing on the initial Interest Reset Date, the rate
at which
interest on such Regular Floating Rate Note shall be payable
shall be reset
as of each Interest Reset Date; provided, however, that the
interest rate
in effect for the period from its original issue date to the
initial
Interest Reset Date will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating
Rate/Fixed
Rate Note", then, except as described below or in an applicable
Pricing
Supplement, such Floating Rate Note will bear interest at the
rate
determined by reference to the applicable Base Rate or Base
Rates (a) plus
or minus the applicable Spread, if any, and/or (b) multiplied
by the
applicable Spread Multiplier, if any. Commencing on the initial
Interest
Reset Date, the rate at which interest on such Floating
Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset
Date;
provided, however, that (a) the interest rate in effect for the
period from
its original issue date to the initial Interest Reset Date will
be the
Initial Interest Rate; and (b) the interest rate in effect
commencing on,
and including, the Fixed Rate Commencement Date to maturity
shall be the
Fixed Interest Rate.
(iii) If such Floating Rate Note is designated as an
"Inverse Floating
Rate Note," then, except as described below or in an applicable
Pricing
Supplement, such Floating Rate Note will bear interest equal to
the Fixed
Interest Rate specified in the related Pricing Supplement minus
the rate
determined by reference to the applicable Base Rate or Base
Rates (a) plus
or minus the applicable Spread, if any, and/or (b) multiplied
by the
applicable Spread Multiplier, if any; provided, however, that
the interest
rate thereon will not be less than zero. Commencing on the
initial Interest
Reset Date, the rate at which interest on such Inverse Floating
Rate Note
is payable shall be reset as of each Interest Reset Date;
provided,
however, that the interest rate in effect for the period from
its original
issue date to the initial Interest Reset Date will be the
Initial Interest
Rate.
Notwithstanding the foregoing, if such Floating Rate Note is
designated as
having an Addendum attached as specified on the face thereof,
such Floating
Rate Note shall bear interest in accordance with the terms
described in such
Addendum and the applicable Pricing Supplement.
Each Floating Rate Note will bear interest at a rate determined
by
reference to one or more interest rate bases (each a "Base
Rate"), any of
which may be adjusted by a Spread or Spread Multiplier (each as
defined
below). The applicable Pricing Supplement will designate one or
more of the
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<PAGE> 8
following Base Rates as applicable to each Floating Rate Note:
(a) the
Commercial Paper Rate (a "Commercial Paper Rate Note"), (b) the
Federal Funds
Rate (a "Federal Funds Rate Note"), (c) the CD Rate (a "CD Rate
Note"), (d)
LIBOR (a "LIBOR Note"), (e) the Treasury Rate (a "Treasury Rate
Note"), (f)
the Prime Rate (a "Prime Rate Note"), (g) the CMT Rate (a "CMT
Rate Note") or
(h) such other Base Rate or interest rate formula as is set forth
in such
Pricing Supplement and in such Floating Rate Note. The "Index
Maturity" for
any Floating Rate Note is the period of maturity of the
instrument or
obligation from which the Base Rate is calculated and will be
specified in the
applicable Pricing Supplement.
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 of interest which may accrue during any
interest period
("Maximum Interest Rate"); and (ii) a minimum limitation, or
floor, on the
rate of interest which may accrue during any interest period
("Minimum
Interest Rate"). In addition to any Maximum Interest Rate which
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 New York law, as the same may be
modified by United
States law of general application. Under present New York law,
the maximum
rate of interest, with certain exceptions, is 25% per annum on a
simple
interest basis.
The rate of interest on each Floating Rate Note will be reset
daily,
weekly, monthly, quarterly, semiannually or annually (such period
being the
"Interest Reset Period" for such Note and the first date of each
Interest
Reset Period being an "Interest Reset Date"), as specified in the
applicable
Pricing Supplement. The interest rate in effect from the date of
issue to the
first Interest Reset Date with respect to a Floating Rate Note
will be the
Initial Interest Rate (as set forth in the applicable Pricing
Supplement). If
any Interest Reset Date for any Floating Rate Note would
otherwise be a day
that is not a Business Day, such Interest Reset Date shall be
postponed to the
next succeeding Business Day, except that in the case of a LIBOR
Note, if such
Business Day is in the next succeeding calendar month, such
Interest Reset
Date shall be the next preceding Business Day.
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 or Base Rates (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 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.
Unless otherwise specified in the applicable Pricing
Supplement, interest
payments on Notes shall be the amount of interest accrued from,
and including,
the date of issue or the last date to which interest has been
paid to, but
excluding, the Interest Payment Date or date of maturity, as the
case may be;
provided that, in the case of a Fixed Rate Note, if an Interest
Payment Date
or, in the case of any Note, the maturity date that would
otherwise fall on a
day that is not a Business Day is postponed or changed as
described above, the
interest payable on such date shall accrue to, but exclude, the
date that
would have been the Interest Payment Date or maturity date had it
been a
Business Day.
Unless otherwise specified in the applicable Pricing
Supplement, Fixed Rate
Notes will bear interest from the date of issue and will be
calculated on the
basis of a year of twelve thirty-day months. With respect to a
Floating Rate
Note, accrued interest shall be calculated by multiplying the
principal amount
of such Floating Rate Note (or, in the case of an Indexed Note,
unless
<PAGE>
<PAGE> 9
otherwise specified in the applicable Pricing Supplement, the
Face Amount (as
defined below) of such Indexed Note) by an accrued interest
factor. Such
accrued interest factor will be computed by adding the interest
factors
calculated for each day in the Interest Reset 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 to such day by
360, in the
cases of Commercial Paper Rate Notes, Federal Funds Rate Notes,
CD Rate Notes,
LIBOR Notes and Prime Rate Notes, or by the actual number of days
in the year,
in the case of Treasury Rate Notes and CMT Rate Notes. The
interest rate
applicable to any day that is an Interest Reset Date is the
applicable rate as
reset on such date. 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, as described below).
Unless otherwise provided in the applicable Pricing Supplement,
Chemical
Bank will be the calculation agent (the "Calculation Agent") with
respect to
any issue of Floating Rate Notes. Upon the request of the holder
of any
Floating Rate Note, the Calculation Agent will provide the
interest rate then
in effect and, if determined, the interest rate which will become
effective on
the next Interest Reset Date with respect to such Floating Rate
Note.
All percentages resulting from any calculation of the rate of
interest on a
Floating Rate Note will be rounded, if necessary, to the nearest
one-hundred-thousandth of a percentage point (.0000001), with
five
one-millionths of a percentage point rounded upward, and all
dollar amounts
used in or resulting from such calculation on Floating Rate Notes
will be
rounded to the nearest cent (with one-half cent rounded upward).
The interest rate in effect with respect to a Floating Rate
Note from the
Issue Date to the first Interest Reset Date (the "Initial
Interest Rate") will
be specified in the applicable Pricing Supplement. The interest
rate for each
subsequent Interest Reset Date will be determined by the
Calculation Agent as
follows. Unless otherwise specified in the applicable Pricing
Supplement, the
"Calculation Date" pertaining to any Commercial Paper Interest
Determination
Date, Federal Funds Interest Determination Date, CD Interest
Determination
Date, Treasury Rate Determination Date, Prime Rate Interest
Determination Date
and CMT Rate Determination Date (each as hereinafter defined)
will be the
earlier of, either (i) the tenth calendar day after such interest
rate
determination date, or, if such tenth day is not a Business Day,
the next
succeeding Business Day, or (ii) the Business Day preceding the
applicable
Interest Payment Date or date of maturity, as the case may be.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest
rate
(calculated with reference to the Commercial Paper Rate and the
Spread and/or
Spread Multiplier, if any) specified in the Commercial Paper Rate
Notes and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, the
"Commercial Paper Rate" for each Interest Reset Date will be
determined on the
Calculation Date by the Calculation Agent as of the second
Business Day prior
to such Interest Reset Date (a "Commercial Paper Interest
Determination Date")
and shall be the Money Market Yield (as defined below) on such
Commercial
Paper Interest Determination Date of the rate for commercial
paper having the
Index Maturity specified in the applicable Pricing Supplement, as
such rate
shall be published by the Board of Governors of the Federal
Reserve System in
"Statistical Release H.15(519), Selected Interest Rates"
("H.15(519)"), or any
successor publication, under the heading "Commercial Paper". In
the event that
such rate is not published prior to 9:00 A.M., New York City
time, on the
Calculation Date, then the Commercial Paper Rate shall be the
Money Market
Yield on such Commercial Paper Interest Determination Date of the
rate for
<PAGE>
<PAGE> 10
commercial paper of the specified 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" ("Composite
Quotations") under the
heading "Commercial Paper". If by 3:00 P.M., New York City time,
on such
Calculation Date such rate is not yet published in either
H.15(519) (or any
successor publication) or Composite Quotations, then the
Commercial Paper Rate
shall be the Money Market Yield of the arithmetic mean of the
offered rates as
of 11:00 A.M., New York City time, on such Commercial Paper
Interest
Determination Date of three leading dealers of commercial paper
in The City of
New York selected by the Calculation Agent for commercial paper
of the
specified Index Maturity, placed for an industrial issuer whose
bond rating is
AA, or the equivalent, from a nationally recognized rating
agency; 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 Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance
with the
following formula:
Money Market Yield = D x 360 x 100
360-(D x M)
where "D" refers to the applicable per annum rate for commercial
paper quoted
on a bank discount basis and expressed as a decimal, and "M"
refers to the
actual number of days in the period for which interest is being
calculated.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest
rate
(calculated with reference to the Federal Funds Rate and the
Spread and/or
Spread Multiplier, if any) specified in the Federal Funds Rate
Notes and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, the
"Federal Funds Rate" for each Interest Reset Date shall be the
effective rate
on the second Business Day prior to such Interest Reset Date (a
"Federal Funds
Interest Determination 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 Federal
Funds Interest Determination Date, the Federal Funds Rate will be
the interest
rate on such Federal Funds Interest Determination Date as
published in
Composite Quotations under the heading "Federal Funds/Effective
Rate". If such
rate is not yet published by 9:00 A.M., New York City time, on
the Calculation
Date pertaining to such Federal Funds Interest Determination
Date, the Federal
Funds Rate for such Federal Funds Interest Determination Date
will be the rate
on such Federal Funds Interest Determination Date made publicly
available by
the Federal Reserve Bank of New York which is equivalent to the
rate which
appears in H.15(519) under the heading "Federal Funds
(Effective)"; provided,
however, that if such rate is not made publicly available by the
Federal
Reserve Bank of New York by 9:00 A.M., New York City time, on the
Calculation
Date, the Federal Funds Rate will be the Federal Funds Rate in
effect on such
Federal Funds Interest Determination Date.
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, "CD Rate"
for each Interest Reset Date shall be the rate as of the second
Business Day
prior to the Interest Reset Date for such Interest Reset Period
(a "CD
<PAGE>
<PAGE> 11
Interest Determination Date") for negotiable certificates of
deposit having
the Index Maturity designated in the applicable Pricing
Supplement, as such
rate is published in H.15(519) under the heading "CDs (Secondary
Market)". If
such rate is not so published by 9:00 A.M., New York City time,
on the
Calculation Date pertaining to such CD Interest Determination
Date, the CD
Rate will be the rate on such CD Interest Determination Date for
negotiable
certificates of deposit of the Index Maturity specified in the
applicable
Pricing Supplement as published in Composite Quotations under the
heading
"Certificates of Deposit". If by 3:00 P.M., New York City time,
on such
Calculation Date such rate is not yet published in Composite
Quotations, the
CD Rate for such CD 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 CD
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 of the highest credit standing (in the market for
negotiable
certificates of deposit) with a remaining maturity closest to the
Index
Maturity specified in the applicable Pricing Supplement in the
denomination of
$5,000,000. However, if such dealers are not so quoting such
rates, the CD
Rate will be the CD Rate in effect on such Note on such CD
Interest
Determination 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.
Unless otherwise specified in the applicable Pricing
Supplement, "LIBOR"
for each Interest Reset Date will be determined by the
Calculation Agent as
follows:
(i) With respect to the second London Banking Day prior to
such Interest
Reset Date (a "LIBOR Determination Date"), LIBOR will be
either: (a) if
"LIBOR Reuters" is specified in the applicable Pricing
Supplement, the
arithmetic mean of the offered rates (unless the specified
Designated LIBOR
Page (as defined below) by its terms provides only for a single
rate, in
which case such single rate shall be used) for deposits in the
Index
Currency (as defined below) having the Index Maturity
designated in the
applicable Pricing Supplement, commencing on such Interest
Reset Date, that
appear on the Designated LIBOR Page as of 11:00 A.M., London
time, on that
LIBOR Determination Date, if at least two such offered rates
appear
(unless, as aforesaid, only a single rate is required) on such
Designated
LIBOR Page, or (b) if "LIBOR Telerate" is specified in the
applicable
Pricing Supplement, the rate for deposits in the Index Currency
having the
Index Maturity designated in the applicable Pricing Supplement,
commencing
on such Interest Reset Date, that appears on the Designated
LIBOR Page as
of 11:00 A.M., London time, on that LIBOR Determination Date.
If fewer than
two offered rates appear, or no rate appears, as applicable,
LIBOR in
respect of the related LIBOR Determination Date will be
determined as if
the parties had specified the rate described in clause (ii)
below.
(ii) With respect to a LIBOR Determination Date on which
fewer than two
offered rates appear (unless, as aforesaid, only a single rate
is
required), or no rate appears, as the case may be, on the
applicable
Designated LIBOR Page as specified in clause (i) above, the
Calculation
Agent will request the principal London offices of each of four
major
reference banks in the London interbank market, as selected by
the
Calculation Agent, to provide the Calculation Agent with its
offered
quotation for deposits in the Index Currency for the period of
the Index
Maturity designated in the applicable Pricing Supplement,
commencing on
such Interest Reset Date, to prime banks in the London
interbank market at
<PAGE>
<PAGE> 12
approximately 11:00 A.M., London time, on such LIBOR
Determination Date and
in a principal amount of not less than $1,000,000 (or the
equivalent in the
Index Currency, if the Index Currency is not the U.S. dollar)
that is
representative for a single transaction in such Index Currency
in such
market at such time. If at least two such quotations are
provided, LIBOR
determined on such LIBOR Determination Date will be the
arithmetic mean of
such quotations. If fewer than two quotations are provided,
LIBOR
determined on such LIBOR Determination Date will be the
arithmetic mean of
the rates quoted at approximately 11:00 A.M. (or such other
time specified
in the applicable Pricing Supplement), in the applicable
Principal
Financial Center for the country of the Index Currency on such
LIBOR
Determination Date, by three major banks in such Principal
Financial Center
selected by the Calculation Agent for loans in the Index
Currency to
leading European banks, having the Index Maturity designated in
the
applicable Pricing Supplement and in the amount of not less
than $1,000,000
(or the equivalent in the Index Currency, if the Index Currency
is not the
U.S. dollar) that is representative for a single transaction in
such Index
Currency in such market at such time; provided, however, that
if the banks
so selected by the Calculation Agent are not quoting as
mentioned in this
sentence, LIBOR determined on such LIBOR Determination Date
will be LIBOR
otherwise in effect on such LIBOR Determination Date.
"Index Currency" means the currency (including composite
currencies)
specified in the applicable Pricing Supplement as the currency
for which LIBOR
shall be calculated. If no such currency is specified in the
applicable
Pricing Supplement, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is
designated
in the applicable Pricing Supplement, the display designated as
page "LIBO"
with respect to the applicable Index Currency on the Reuters
Monitor Money
Rates Service (or such other page as may replace page "LIBO" on
such service
for the purpose of displaying the London interbank rates of major
banks for
the applicable Index Currency), or (b) if "LIBOR Telerate" is
designated in
the applicable Pricing Supplement, the display designated as page
"3750" with
respect to the applicable Index Currency on the Dow Jones
Telerate Service (or
such other page as may replace page "3750" on such service or
such other
service as may be nominated by the British Bankers' Association
for the
purpose of displaying the London interbank rates of major banks
for the
applicable Index Currency). If neither LIBOR Reuters nor LIBOR
Telerate is
specified in the applicable Pricing Supplement, LIBOR for the
applicable Index
Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is
the Index Currency, Page 3750) had been specified.
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 Reset Date,
the rate for
the auction held on the Treasury Rate Determination Date (as
defined below)
pertaining to such Interest Reset Date of direct obligations of
the United
States ("Treasury bills") having the Index Maturity designated in
the
applicable Pricing Supplement, as published in H.15(519) under
the heading
"U.S. Government Securities--Treasury bills--auction average
(investment)", or
any successor publication, or, if not so published by 9:00 A.M.,
New York City
time, on the Calculation Date pertaining to such Treasury Rate
Determination
Date, the auction average rate (expressed as a bond equivalent,
on the basis
of a year of 365 or 366 days, as applicable, and applied on a
daily basis) as
otherwise announced by the United States Department of the
Treasury. In the
event that the results of the auction of Treasury bills having
the Index
<PAGE>
<PAGE> 13
Maturity designated in the applicable Pricing Supplement are not
published or
reported as provided above by 3:00 P.M., New York City time, on
such
Calculation Date or if no such auction is held on such Treasury
Rate
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, on the basis of a year of 365 or 366 days, as
applicable, and
applied on a daily basis) of the arithmetic mean of the secondary
market bid
rates, as of approximately 3:30 P.M., New York City time, on such
Treasury
Rate Determination Date, of three leading primary United States
government
securities dealers selected by the Calculation Agent for the
issue of Treasury
bills with a remaining maturity closest to the Index Maturity
designated in
the applicable Pricing Supplement; provided, however, that if the
dealers
selected as aforesaid by the Calculation Agent are not quoting
bid rates as
mentioned in this sentence, the Treasury Rate for such Interest
Reset Date
will be the Treasury Rate in effect on such Interest Reset Date.
The "Treasury Rate Determination Date" pertaining to an
Interest Reset Date
will be the day of the week in which such Interest Reset Date
falls on which
Treasury bills would normally be auctioned. Treasury bills are
normally sold
at auction on Monday of each week, unless that day is a legal
holiday, in
which case the auction is normally held on the following Tuesday,
except that
such auction may be held on the preceding Friday. If, as the
result of a legal
holiday, an auction is so held on the preceding Friday, such
Friday will be
the Treasury Rate Determination Date pertaining to the Interest
Reset Date
occurring in the next succeeding week. If an auction date shall
fall on any
day that would otherwise be an Interest Reset Date for a Treasury
Rate Note,
then such Interest Reset Date shall instead be the Business Day
immediately
following such auction 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.
Unless otherwise specified in the applicable Pricing Supplement
the "Prime
Rate" means, with respect to any Prime Rate Interest
Determination Date (as
defined below) the rate on such date as published 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 Prime
Rate 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
Prime Rate
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 appear on the
Reuters
Screen NYMF Page for such Prime Rate Interest Determination Date,
the Prime
Rate will be determined by the Calculation Agent and will be the
arithmetic
mean of the prime rates quoted on the basis of the actual number
of days in
the year divided by 360 as of the close of business on such Prime
Rate
Interest Determination Date by at least two of three 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 rates are quoted as
aforesaid 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
<PAGE>
<PAGE> 14
rate or rates; provided 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
Prime Rate
Interest Determination Date. The "Prime Rate Interest
Determination Date"
pertaining to an Interest Reset Date for Prime Rate Notes will be
the second
Business Day prior to such Interest Reset Date.
CMT RATE NOTES
CMT Rate Notes will bear interest at the rates (calculated with
reference
to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in
such CMT Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating
to a CMT Rate
Note or any Floating Rate Note for which the interest rate
displayed is
determined with reference to the CMT Rate (a "CMT Rate Interest
Determination
Date"), 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 Maturity Index (as defined below) for (i) if the Designated
Telerate Page
is 7055, the rate on such CMT Rate Interest Determination Date
and (ii) if the
Designated CMT Telerate Page is 7052, the week, or the month, as
applicable,
ended immediately preceding the week in which the related CMT
Rate Interest
Determination Date occurs. If such rate is no longer displayed
on the
relevant page, or if not displayed by 3:00 P.M., New York City
time, on the
related Calculated Date, then the CMT Rate for such CMT Rate
Interest
Determination Date will be such treasury constant maturity rate
for the
Designated CMT Maturity Index as published in H.15(519). If such
rate is no
longer published, or if not published by 3:00 P.M., New York City
time, on the
related Calculation Date, then the CMT Rate for such CMT Rate
Interest
Determination Date will be such treasury constant maturity rate
for the
designated CMT Maturity Index (or other United States Treasury
rate for the
Designated CMT Maturity Index) for the CMT Rate 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 such CMT Rate Interest Determination Date will be
calculated by
the Calculation Agent and will be a yield to maturity, based on
the arithmetic
mean of the secondary market closing offer side prices as of
approximately
3:30 P.M., New York City time, on the CMT Rate Interest
Determination Date
reported, according to their written records, by three leading
primary United
States government securities dealers (each, a "Reference Dealer")
in the City
of New York selected by the Calculation Agent (from five such
Reference
Dealers selected by the Calculation Agent and eliminating the
highest
quotation (or, in the event of equality, one of the highest) and
the lowest
quotation (or, in the event of equality, one of the lowest)), for
the most
recently issued direct noncallable fixed rate obligations of the
United States
("Treasury Notes") with an original maturity of approximately the
Designated
CMT Maturity Index and a remaining term to maturity of not less
than such
Designated CMT Maturity Index minus one year. If the Calculation
Agent cannot
obtain three such Treasury Note quotations, the CMT Rate for such
CMT Rate
Interest Determination Date will be calculated by the Calculation
Agent and
will be a yield to maturity based on the arithmetic mean of the
secondary
market offer side prices as of approximately 3:30 P.M., New York
City time, on
the CMT Rate Interest Determination Date of three Reference
Dealers in the
City of New York (from five such Reference Dealers selected by
the Calculation
Agent and eliminating the highest quotation (or, in the event of
equality, one
of the highest) and the lowest quotation (or, in the event of
equality, one of
<PAGE>
<PAGE> 15
the lowest)), for such 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 in an
amount of at least U.S. $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 CMR Rate 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 designated in the applicable Pricing Supplement for the
purpose of
displaying Treasury Constant Maturities as reported in H.15(519)
(or any other
page as may replace such page on that service for the purpose of
displaying
Treasury Constant Maturities as reported in H.15(519)). 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.
AMORTIZING NOTES
The Company may from time to time offer Amortizing Notes.
Unless otherwise
specified in the applicable Pricing Supplement, interest on each
Amortizing
Note will be computed on the basis of a 360-day year of twelve
30-day months.
Unless otherwise specified in the applicable Pricing Supplement,
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.
Further information concerning additional terms and conditions of
any issue of
Amortizing Notes will be provided in the applicable Pricing
Supplement. A
table setting forth repayment information in respect of each
Amortizing Note
will be included in the applicable Pricing Supplement and set
forth on such
Notes.
INDEXED NOTES
The Company may from time to time offer Indexed Notes, the
principal amount
payable at maturity (the "Indexed Principal Amount") of which, or
premium or
interest on which, is determined by reference to a measure (the
"Index") which
will be related to (i) the rate of exchange between the Specified
Currency for
such Note and the other currency or composite currency (the
"Indexed
Currency") specified in the applicable Pricing Supplement (such
Indexed Notes,
"Currency Indexed Notes"); (ii) the difference in the price of a
specified
commodity (the "Indexed Commodity") on specified dates (such
Indexed Notes,
"Commodity Indexed Notes"); (iii) the difference in the level of
a specified
stock index (the "Stock Index"), which may be based on U.S. or
foreign stocks,
on specified dates (such Indexed Notes, "Stock Indexed Notes");
or (iv) such
other objective price or economic measures as are described in
the applicable
Pricing Supplement. The manner of determining the Indexed
Principal Amount of
an Indexed Note, and historical and other information concerning
the Indexed
Currency, Indexed Commodity, Stock Index or other price or
economic measures
used in such determination, will be set forth in the applicable
Pricing
Supplement, together with information concerning tax consequences
to the
holders of such Indexed Notes.
<PAGE>
<PAGE> 16
If the determination of the Indexed Principal Amount of an
Indexed Note is
based on an Index calculated or announced by a third party and
such third
party either suspends the calculation or announcement of such
Index or changes
the basis upon which such Index is calculated (other than changes
consistent
with policies in effect at the time such Indexed Note was issued
and permitted
changes described in the applicable Pricing Supplement), then
such Index shall
be calculated for purposes of such Indexed Note by an independent
calculation
agent named in the applicable Pricing Supplement on the same
basis, and
subject to the same conditions and controls, as applied to the
original third
party. If for any reason such Index cannot be calculated on the
same basis and
subject to the same conditions and controls as applied to the
original third
party, then the Indexed Principal Amount of such Indexed Note
shall be
calculated in the manner set forth in the applicable Pricing
Supplement. Any
determination of such independent calculation agent shall in the
absence of
manifest error be binding on all parties.
Unless otherwise specified in the applicable Pricing
Supplement, interest
on an Indexed Note will be payable by the Company based on the
amount
designated in the applicable Pricing Supplement as the "Face
Amount" of such
Indexed Note. The applicable Pricing Supplement will describe
whether the
principal amount of the related Indexed Note that would be
payable upon
redemption or repayment prior to maturity will be the Face Amount
of such
Indexed Note, the Indexed Principal Amount of such Indexed Note
at the time of
redemption or repayment, or another amount described in such
Pricing
Supplement.
An investment in Notes indexed, as to principal or interest or
both, to one
or more values of currencies (including exchange rates between
currencies),
commodities or interest rate indices entails significant risks
that are not
associated with a similar investment in a conventional fixed-rate
debt
security. If the interest rate of such a Note is so indexed, it
may result in
an interest rate that is less than that payable on a conventional
fixed-rate
debt security issued at the same time, including the possibility
that no
interest will be paid, and, if the principal amount of such a
Note is so
indexed, the principal amount payable at maturity may be less
than the
original purchase price of such Note if allowed pursuant to the
terms of such
Note, including the possibility that no principal will be paid.
The secondary
market for such Notes will be affected by a number of factors
independent of
the creditworthiness of the Company and the value of the
applicable currency,
commodity or interest rate index, including the volatility 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 may be
increased. The historical experience of the relevant currencies,
commodities
or interest rate indices should not be taken as an indication of
future
performance of such currencies, commodities or interest rate
indices during
the term of any Note. Accordingly, prospective investors should
consult their
own financial and legal advisors as to the risks entailed by an
investment in
such Notes and the suitability of such Notes in light of their
particular
circumstances.
REDEMPTION AND REPURCHASE
Unless otherwise specified in the Pricing Supplement relating
to a Note,
such Note cannot be redeemed prior to maturity. If any Note will
be
redeemable at the option of the Company, the applicable Pricing
Supplement
will indicate the date or dates for redemption prior to such
maturity at a
price or prices, set forth in the applicable Pricing Supplement,
together with
<PAGE>
<PAGE> 17
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 unless
otherwise specified in the applicable Pricing Supplement. If less
than all
Notes with like tenor and terms are to be redeemed, the Notes to
be redeemed
shall be selected by the Trustee by such method as the Trustee
shall deem fair
and appropriate. Unless otherwise indicated in the Pricing
Supplement relating
to each Note, the Notes will not be subject to any sinking fund.
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.
REPAYMENT
Unless otherwise specified in the Pricing Supplement relating
to a Note,
such Note cannot be repaid prior to maturity at the option of the
holder. If
any Note will be repayable at the option of the holder, the
applicable Pricing
Supplement will indicate the date or dates for repayment prior to
maturity at
a price or prices set forth in the applicable Pricing Supplement,
together
with accrued interest to the date of repayment.
In order for the repayment option applicable to a Note to be
exercised, the
Trustee must receive at least 30 days but no more than 45 days
prior to the
repayment date (i) the Note with the form entitled "Option to
Elect Repayment"
on the reverse of the Note duly completed or (ii) a telegram,
telex, facsimile
transmission or a letter from a member of a national securities
exchange or
the National Association of Securities Dealers, Inc. or a
commercial bank or
trust company in the United States setting forth the name of the
holder of the
Note, the principal amount of the Note, the principal amount of
the Note to be
repaid, the certificate number or a description of the tenor and
terms of the
Note, and containing a statement that the option to elect
repayment is being
exercised thereby and a guarantee that the Note to be repaid with
the form
entitled "Option to Elect Repayment" on the reverse of the Note
duly completed
will be received by the Trustee not later than five Business Days
after the
date of such telegram, telex, facsimile transmission or letter
and such Note
and form duly completed are received by the Trustee by such fifth
Business
Day. The repayment option may be exercised by the holder of a
Note for less
than the entire principal amount of the Note, provided that the
principal
amount of the Note remaining outstanding after repayment is an
authorized
denomination.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes having the same Issue Date,
maturity
date, redemption or repayment provisions, Interest Payment Dates
and, in the
case of Fixed Rate Notes, interest rate, amortization schedule,
or, in the
case of Floating Rate Notes, Base Rate, Initial Interest Rate,
Interest
Payment Dates, Index Maturity, Interest Reset Dates, Fixed
Interest Rate,
Spread or Spread Multiplier, if any, Minimum Interest Rate, if
any, and
Maximum Interest Rate, if any, will be represented by a single
global security
(a "Global Security"). Each Global Security representing
Book-Entry Notes will
be deposited with, or on behalf of, the Depositary and registered
in the name
of a nominee of the Depositary. Except under circumstances
described below,
Book-Entry Notes will not be exchangeable for Certificated Notes
and will not
otherwise be issuable in definitive form. The Depositary
currently only
accepts Notes which have a Specified Currency of U.S. dollars.
The Depositary has advised the Company that it is a
limited-purpose trust
company organized under the New York Banking Law, a "banking
organization"
within the meaning of the New York Banking Law, a member of the
Federal
Reserve System, a "clearing corporation" within the meaning of
the New York
Uniform Commercial Code, and a "clearing agency" registered
pursuant to the
<PAGE>
<PAGE> 18
provisions of Section 17A of the Securities Exchange Act of 1934,
as amended.
The Depositary holds securities that its participants
("Participants") deposit
with the Depositary. The Depositary also facilitates the
settlement among
Participants of securities transactions, such as transfers and
pledges, in
deposited securities through electronic computerized book-entry
changes in
Participants' accounts, thereby eliminating the need for physical
movement of
securities. Direct Participants ("Direct Participants") include
securities
brokers and dealers, banks, trust companies, clearing
corporations, and
certain other organizations. The Depositary is owned by a number
of its Direct
Participants and by the New York Stock Exchange, Inc., the
American Stock
Exchange, Inc., and the NASD. Access to the Depositary's system
is also
available to others such as securities brokers and dealers, banks
and trust
companies that clear through or maintain a custodial relationship
with a
Direct Participant, either directly or indirectly. The rules
applicable to the
Depositary and its Participants are on file with the Securities
and Exchange
Commission.
Upon the issuance of a Global Security, the Depositary will
credit on its
book-entry registration and transfer system the accounts of
persons held with
it with the respective principal amounts of the Notes represented
by such
Global Security. Such accounts shall be designated by the Agent
with respect
to such Notes or by the Company if such Notes are offered and
sold directly by
the Company. Ownership of beneficial interests in a Global
Security will be
limited to Participants or persons that may hold interests
through
Participants. Ownership of beneficial interests in such Global
Security will
be shown on, and the transfer of that ownership will be effected
only through,
records maintained by the Depositary or its nominee (with respect
to interests
of Participants) 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 or its nominee is the registered
owner of such
Global Security, the Depositary or such nominee, as the case may
be, will be
considered the sole owner or holder of the Notes represented by
such Global
Security for all purposes under the Indenture. Except as provided
below,
owners of beneficial interests in a Global Security will not be
entitled to
have Notes represented by such Global Security registered in
their names, will
not receive or be entitled to receive physical delivery of Notes
in definitive
form and will not be considered the owners or holders thereof
under the
Indenture.
Principal, premium, if any, and interest payments on Notes
registered in
the name of the 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 Notes. None of the Company, the
Trustee, any paying
agent or the registrar for such Notes will have any
responsibility or
liability for any aspect of the records relating to or payments
made on
account of beneficial interests in such Global Security for such
Notes or for
maintaining, supervising or reviewing any records relating to
such beneficial
interests.
The Company expects that the Depositary for the 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 Notes as shown on the records of the Depositary
or its
nominee. The Company also expects that payments by participants
to owners of
beneficial interest 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 in
bearer form or
registered in "street name", and will be the responsibility of
such
participants.<PAGE>
<PAGE> 19
If the Depositary 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 Notes in definitive form in
exchange for the
entire Global Security representing such Notes. In addition, the
Company may
at any time and in its sole discretion determine not to have the
Notes
represented by entire Global Securities and, in such event, will
issue Notes
in definitive form in exchange for the Global Securities
representing such
Notes. In any such instance, an owner of a beneficial interest in
a Global
Security will be entitled to physical delivery in definitive form
of Notes
represented by such Global Security equal in principal amount to
such
beneficial interest and to have such Notes registered in its
name. Notes so
issued in definitive form will be issued as registered Notes in
denominations
of $1,000 or any amount in excess thereof that is an integral
multiple of
$1,000, unless otherwise specified by the Company.
FOREIGN CURRENCY RISKS
Exchange Rates and Exchange Controls. An investment in Notes
that are
denominated in a Specified Currency other than U.S. dollars
entails
significant risks that are not associated with a similar
investment in a
security denominated and upon which interest is payable in U.S.
dollars. Such
risks include, without limitation, the possibility of significant
changes in
rates of exchange between the U.S. dollar and the various foreign
currencies
and the possibility of the imposition or modification of foreign
exchange
controls by either the U.S. or foreign governments. Such risks
generally
depend on economic and political events over which the Company
has no control.
In recent years, rates of exchange between U.S. dollars and
certain foreign
currencies have been highly volatile and such volatility may be
expected to
continue in the future.
Fluctuations in any particular exchange rate that have occurred
in the past
are not necessarily indicative, however, of fluctuations in such
rate that may
occur during the term of any Note. Depreciation of the currency
specified in a
Note against the U.S. dollar would result in a decrease in the
effective yield
of such Note below its coupon rate, and under certain
circumstances could
result in a loss to the investor on a U.S. dollar basis.
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS DO NOT
DESCRIBE ALL
THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN A FOREIGN
CURRENCY OR A
CURRENCY UNIT AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO
ADVISE
PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF
THIS
PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND
LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED IN
SPECIFIED
CURRENCIES OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN
APPROPRIATE
INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN
CURRENCY TRANSACTIONS.
Notes denominated in foreign currencies other than European
Currency Units
will not be sold in, or to residents of, the country of the
Specified Currency
in which particular Notes are denominated.
The information set forth in this Prospectus Supplement is
directed to
prospective purchasers who are United States residents, and the
Company
disclaims any responsibility to advise prospective purchasers who
are
residents of countries other than the United States with respect
to any
matters that may affect the purchase, holding or receipt of
payments of
principal of and interest on the Notes. Such persons should
consult their own
counsel with regard to such matters.
Governing Law and Judgments. The Notes will be governed by and
construed in
accordance with the laws of the State of New York. In the event
an action
based on Notes denominated in a Specified Currency other than
U.S. dollars
were commenced in a New York court, such court could render or
enter a
<PAGE>
<PAGE> 20
judgment or decree in the Specified Currency. Such judgment
would then be
converted into U.S. dollars at the rate of exchange prevailing on
the date of
entry of the judgment or decree. The Indenture provides that the
rate of
exchange to be used in determining any such judgment shall be the
rate at
which in accordance with normal banking procedures the Trustee
could purchase
such Specified Currency in The City of New York on the New York
Banking Day
(as defined in the Indenture) preceding the day on which final
judgment is
given.
Exchange Controls, etc. Governments have imposed from time to
time, and may
in the future impose, exchange controls which could affect
exchange rates as
well as the availability of a specified foreign currency at the
time of
payment of principal of, and premium, if any, or interest on a
Note. In the
case of any Note issued in a specified currency that is not
currently subject
to exchange controls, there can be no assurance that the absence
of exchange
controls will continue to exist. Even if no explicit exchange
controls are in
place, it is possible that the Specified Currency for any
particular Note
would not be available at such Note's maturity. In that event,
the Company
would make required payments in U.S. dollars on the basis of the
Market
Exchange Rate on the date of such payment, or if such rate of
exchange is not
then available, on the basis of the Market Exchange Rate as of
the most recent
Record Date. See "Description of Medium Term Notes, Series
B--Payment
Currency". Information concerning exchange rates for the
Specified Currency,
if other than U.S. dollars, in which principal of, premium, if
any, or
interest on the Notes is payable, as against the U.S. dollar at
selected times
during the last five years, as well as exchange controls
affecting such
currencies, will be set forth in the applicable Pricing
Supplement.
TAXATION
The following statements of certain United States federal
income tax
consequences of the ownership of Notes are based on the opinion
of Ephraim M.
Brecher, Vice President--Taxes and Tax Counsel of the Company.
These
statements are based on the Internal Revenue Code of 1986, as
amended to the
date hereof (the "Code"), administrative pronouncements, judicial
decisions
and existing and proposed Treasury Regulations, including final
regulations
concerning the treatment of debt instruments issued with original
issue
discount (the "OID Regulations"), changes to any of which
subsequent to the
date of this Prospectus Supplement may affect the tax
consequences described
herein. These statements address only the tax consequences to
initial holders
holding Notes as capital assets within the meaning of section
1221 of the Code
and do not address the tax consequences of holding Notes to
dealers in
securities or currencies, persons holding Notes as a hedge
against or which
are hedged against currency risks, certain financial
institutions, insurance
companies, or United States Holders (as defined below) whose
"functional
currency", as defined in section 985 of the Code, is not the U.S.
dollar.
Persons considering the purchase of Notes should consult their
tax advisors
concerning the application of United States federal income tax
laws, as well
as the laws of any state, local or foreign taxing jurisdictions,
to their
particular situations.
As used herein, a "United States Holder" of a Note means a
holder that (a)
is (i) for United States federal income tax purposes a citizen or
resident of
the United States, (ii) a corporation, partnership or other
entity created or
organized in or under the laws of the United States or of any
political
subdivision thereof, or (iii) an estate or trust the income of
which is
subject to United States federal income taxation regardless of
its source or
(b) is not otherwise a United States Holder but whose income from
a Note is
effectively connected with the conduct of a United States trade
or business.
The term also includes certain former citizens of the United
States who
continue to be subject to United States federal income tax on a
net basis with
respect to U.S. source income.
<PAGE>
<PAGE> 21
As used herein, the term "United States Alien Holder" means an
owner of a
Note that is, for United States federal income tax purposes, (i)
a nonresident
alien individual, (ii) a foreign corporation, (iii) a nonresident
alien
fiduciary of a foreign estate or trust or (iv) a foreign
partnership one or
more of the members of which is, for United States federal income
tax
purposes, a nonresident alien individual, a foreign corporation
or a
nonresident alien fiduciary of a foreign estate or trust.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
Payments of Interest. Interest on a Note (whether paid in a
foreign currency
or in U.S. dollars) will generally be taxable to a United States
Holder as
ordinary interest income at the time it accrues or is received in
accordance
with the United States Holder's method of accounting for federal
income tax
purposes. Under the OID Regulations, all payments of interest on
a Note that
matures one year or less from its date of issuance will be
included in the
stated redemption price at maturity of such Note and will be
taxed in the
manner described below under "Original Issue Discount Notes."
Special rules
governing the treatment of interest received or accrued with
respect to
Original Issue Discount Notes (as defined below), Foreign
Currency Notes (as
defined below) and Currency Indexed Notes (as defined below) are
described
under "Original Issue Discount Notes", "Foreign Currency Notes"
and "Currency
Indexed Notes" below.
Sale, Exchange or Retirement of the Notes. A United States
Holder's adjusted
tax basis in a Note will equal the cost of the Note to such
holder, increased
by any amounts of market discount and original issue discount
(each as defined
below), if any, previously includible in taxable income by the
holder with
respect to such Note and reduced by any amortized premium and any
principal
payments received by the holder and, in the case of an Original
Issue Discount
Note, by the amounts of any other payments that do not constitute
qualified
stated interest (as defined below).
Upon the sale, exchange or retirement of a Note, a United
States Holder
will recognize gain or loss equal to the difference between the
amount
realized on the sale, exchange or retirement of the Note and the
holder's
adjusted tax basis in the Note. For these purposes, the amount
realized does
not include any amount attributable to accrued interest on the
Note. Amounts
attributable to accrued interest are treated as interest as
described under
"Payments of Interest" above. In the case of a Note denominated
in a
Specified Currency other than the U.S. dollar, the amount
realized upon the
sale, exchange or retirement of the Note will be the U.S. dollar
value of the
foreign currency received on the date of sale, exchange or
retirement. Except
to the extent described under "Foreign Currency Notes" below and
except to the
extent that the gain represents market discount not previously
included in the
holder's income, such gain or loss will be capital gain or loss
and will be
long-term capital gain or loss if at the time of the sale,
exchange or
retirement the Note has been held for more than one year.
Under current law, the excess of net long-term capital gains
over net
short-term capital losses is taxed at a lower rate than ordinary
income for
certain non-corporate taxpayers. The distinction between capital
gain or loss
and ordinary income or loss is also relevant for purposes of,
among other
things, the limitations on the deductibility of capital losses.
Original Issue Discount Notes
A Note that is issued for an amount less than its stated
redemption price
at maturity will generally be considered to have been issued at
an original
issue discount for federal income tax purposes (an "Original
Issue Discount
Note"). The "issue price" of a Note will equal the first price
to the public
(not including bond houses, brokers or similar persons or
organizations acting
in the capacity of underwriters, placement agents or wholesalers)
at which a
<PAGE>
<PAGE> 22
substantial amount of such Notes is sold for money. The "stated
redemption
price at maturity" of a Note is the total of all payments
required to be made
under the Note other than "qualified stated interest" payments.
"Qualified
stated interest" is stated interest unconditionally payable as a
series of
payments in cash or property (other than debt instruments of the
issuer) at
least annually during the entire term of the Note and equal to
the outstanding
principal balance of the Note multiplied by a single fixed rate
of interest.
In addition, a Floating Rate Note providing for one or more
qualified floating
rates of interest, a single fixed rate and one or more qualified
floating
rates, a single objective rate or a single fixed rate and a
single objective
rate that is a qualified inverse floating rate will have
qualified stated
interest if interest is unconditionally payable at least annually
during the
term of the Note at a rate that is considered to be a single
qualified
floating rate or a single objective rate under the following
rules. If a
Floating Rate Note provides for two or more qualified floating
rates that can
reasonably be expected to have approximately the same values
throughout the
term of the Note, the qualified floating rates together
constitute a single
qualified floating rate. If interest on a debt instrument is
stated at a
fixed rate for an initial period of less than one year followed
by a variable
rate that is either a qualified floating rate or an objective
rate for a
subsequent period, and the value of the variable rate on the
issue date is
intended to approximate the fixed rate, the fixed rate and the
variable rate
together constitute a single qualified floating rate or objective
rate. Two
or more rates will be conclusively presumed to meet the
requirements of the
preceding two sentences if the values of the applicable rates on
the issue
date are within 1/4 of 1 percent of each other.
Special tax considerations (including possible original issue
discount) may
arise with respect to Floating Rate Notes providing for (i) one
Base Rate
followed by one or more Base Rates, (ii) a single fixed rate
followed by a
qualified floating rate, or (iii) a Spread Multiplier.
Purchasers of Floating
Rate Notes with any of such features should carefully examine the
applicable
Pricing Supplement and should consult their tax advisors with
respect to such
a feature because the tax consequences will depend, in part, on
the particular
terms of the purchased Note. Special rules may apply if a
Floating Rate Note
bears interest at an objective rate and it is reasonably expected
that the
average value of the rate during the first half of the Note's
term will be
either significantly less than or significantly greater than the
average value
of the rate during the final half of the Note's term. Special
rules may also
apply if a Floating Rate Note is subject to a cap, floor,
governor or similar
restriction that is not fixed throughout the term of the Note and
is
reasonably expected as of the issue date to cause the yield on
the Note to be
significantly less or more than the expected yield determined
without the
restriction.
Proposed regulations under the Code issued on December 15, 1994
address,
among other things, the accrual of original issue discount on,
and the
character of gain realized on the sale, exchange or retirement
of, debt
instruments providing for contingent payments. Such regulations
would apply
to contingent payment debt instruments issued on or after 60 days
after the
date final regulations are published. Prospective United States
Holders of
Indexed Notes or Floating Rate Notes that provide for contingent
payments
should refer to the discussion regarding taxation in the
applicable Pricing
Supplement.
If the difference between a Note's stated redemption price at
maturity and
its issue price is less than a de minimis amount, i.e., 1/4 of 1
percent of
the stated redemption price at maturity multiplied by the number
of complete
years to maturity, then the Note will not be considered to have
original issue
discount. Holders of Notes with a de minimis amount of original
issue discount
will include such original issue discount in income, as capital
gain, on a pro
rata basis as principal payments are made on the Note.<PAGE>
<PAGE> 23
A United States Holder of Original Issue Discount Notes will be
required to
include any qualified stated interest payments in income in
accordance with
the Holder's method of accounting for federal income tax
purposes. A United
States Holder of Original Issue Discount Notes that mature more
than one year
from their date of issuance will be required to include original
issue
discount in income for federal income tax purposes as it accrues,
in
accordance with a constant yield method based on a compounding of
interest,
before the receipt of cash payments attributable to such income.
Under this
method, United States Holders of Original Issue Discount Notes
generally will
be required to include in income increasingly greater amounts of
original
issue discount in successive accrual periods.
Under the OID Regulations, a United States Holder of a Note may
elect (the
"Constant Yield Election") to include in gross income all
interest that
accrues on a Note using the constant yield method. For purposes
of the
election, interest includes stated interest, acquisition
discount, original
issue discount, de minimis original issue discount, market
discount, de
minimis market discount, and unstated interest, as adjusted by
any amortizable
bond premium or acquisition premium. Once made, such election
may not be
revoked without the consent of the Internal Revenue Service.
If the Company has an option to redeem a Note, or the United
States Holder
has an option to cause a Note to be repurchased prior to the
Note's stated
maturity, for purposes of determining whether the Note has
original issue
discount, such option will be presumed to be exercised if, by
presuming the
option to be exercised, 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 United States 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 purposes of
accrual of
original issue discount, 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.
The OID Regulations contain aggregation rules stating that in
certain
circumstances if more than one type of Note is issued as part of
the same
issuance of securities to a single holder, some or all of such
Notes may be
treated together as a single debt instrument with a single issue
price,
maturity date, yield to maturity and stated redemption price at
maturity for
purposes of calculating and accruing any original issue discount.
Unless
otherwise provided in the applicable Pricing Supplement, the
Company does not
expect to treat any of the Notes as being subject to the
aggregation rules for
purposes of computing original issue discount.
Short Term Notes. Under the OID Regulations, a Note that matures
one year or
less from its date of issuance will be treated as a "short-term
Original Issue
Discount Note." In general, a cash method holder of a short-term
Original
Issue Discount Note is not required to accrue original issue
discount for
federal income tax purposes unless it elects to do so. United
States Holders
making such an election, United States Holders who report income
for federal
income tax purposes on the accrual method and certain other
United States
Holders, including banks and dealers in securities, are required
to include
original issue discount on such short-term Original Issue
Discount Notes on a
straight-line basis, unless an election is made to accrue the
original issue
discount according to a constant yield method based on daily
compounding. In
the case of a United States Holder who is not required, and does
not elect, to
include original issue discount in income currently, any gain
realized on the
sale, exchange or retirement of the short-term Original Issue
Discount Note
will be ordinary income to the extent of the original issue
discount accrued
on a straight-line basis (or, if elected, according to a constant
yield method
based on daily compounding) through the date of sale, exchange or
retirement.
In addition, such Holders will be required to defer deductions
for any
interest paid on indebtedness incurred to purchase short-term
Original Issue
<PAGE>
<PAGE> 24
Discount Notes in an amount not exceeding the deferred interest
income, until
such deferred interest income is recognized.
Amortizing Notes. Payments in respect of interest on an
Amortizing Note will
be includible as described under "Payments of Interest" above.
Amounts
received in respect of principal will reduce the Holder's basis
in such Note.
In the case of an Amortizing Note which is also an Original Issue
Discount
Note, each payment (other than a payment of qualified stated
interest) is
treated first as a payment of original issue discount to the
extent of the
original issue discount that has accrued as of the date of
payment and has not
been allocated to prior payments and second as a payment of
principal.
Payments other than payments of qualified stated interest reduce
the Holder's
basis in the Note.
Market Discount and Premium. If a United States Holder purchases
a Note
(other than a short-term Original Issue Discount Note) for an
amount that is
less than its stated redemption price at maturity or, in the case
of an
Original Issue Discount Note, its adjusted issue price (as
defined in section
1.1275-1 of the OID Regulations), the amount of the difference
will be treated
as "market discount" for federal income tax purposes, unless such
difference
is less than a specified de minimis amount. Under the market
discount rules of
the Code, a United States Holder will be required to treat any
principal
payment (or, in the case of an Original Issue Discount Note, any
payment that
does not constitute qualified stated interest) on, or any gain on
the sale,
exchange, retirement or other disposition of, a Note as ordinary
income to the
extent of the market discount which has not previously been
included in income
and which is treated as having accrued on such Note at the time
of such
payment or disposition. If such Note is disposed of in a
nontaxable
transaction (other than as provided in section 1276(c) and (d) of
the Code),
accrued market discount will be includible as ordinary income to
the United
States Holder as if such holder had sold the Note at its then
fair market
value. In addition, the United States Holder may not be allowed
to deduct
currently all or a portion of the interest expense on any
indebtedness
incurred or continued to purchase or to carry such Note.
Any market discount will be considered to accrue on a
straight-line basis
during the period from the date of acquisition to the maturity
date of the
Note, unless the United States Holder makes an irrevocable
election to compute
the accrual on a constant yield basis. A United States Holder of
a Note may
elect to include market discount in income currently as it
accrues (on either
a straight line or a constant yield basis) in which case the rule
described
above regarding deferral of interest deductions will not apply.
This election
to include market discount in income currently, once made,
applies to all
market discount obligations of a United States Holder acquired 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 Internal Revenue Service.
If a United States Holder acquires a Note for an amount that is
greater
than its stated redemption price at maturity, the United States
Holder will be
considered to have purchased such Note with "amortizable bond
premium" equal
in amount to such excess. Such a Holder will not be required to
include any
original issue discount in income and such Holder may elect (in
accordance
with applicable Code provisions) to amortize such premium, using
a constant
yield method, over the remaining term of the Note (where such
Note is not
optionally redeemable prior to its maturity date). If such Note
may be
optionally redeemed prior to maturity after the United States
Holder has
acquired it, the amount of amortizable bond premium is determined
with
reference to the amount payable on maturity or, if it results in
a smaller
premium attributable to the period of an earlier redemption date,
with
reference to the amount payable on the earlier redemption date.
A United
States Holder who elects to amortize bond premium must reduce his
tax basis in
the Note by the amount of premium amortized in any year. An
election to
amortize bond premium applies to all taxable debt obligations
then owned and
<PAGE>
<PAGE> 25
thereafter acquired by the United States Holder and may be
revoked only with
the consent of the Internal Revenue Service. Bond premium on a
Note held by a
United States Holder that does not make such an election will
decrease the
gain or increase the loss otherwise recognized on disposition of
a Note.
If a United States Holder makes a Constant Yield Election for a
Note with
amortizable bond premium or market discount, such election will
result in a
deemed election to amortize bond premium or accrue market
discount for all of
the United States Holder's debt instruments with amortizable bond
premium or
market discount and may be revoked only with the permission of
the Internal
Revenue Service with respect to debt instruments acquired after
revocation.
A United States Holder that purchases an Original Issue
Discount Note for
an amount that is greater than its adjusted issue price but less
than or equal
to its stated redemption price at maturity will be considered to
have
purchased such Note at an "acquisition premium" within the
meaning of the
Code. Under the OID Regulations, the amount of original issue
discount which
such United States Holder must include in its gross income with
respect to
such Note for any taxable year will be reduced by the portion of
such
acquisition premium properly allocable to such year.
Foreign Currency Notes
The following summary relates to Notes that are denominated in
a currency
or currency unit other than the U.S. dollar ("Foreign Currency
Notes").
Payment of Interest. A United States Holder who uses the cash
method of
accounting and who receives a payment of interest in a foreign
currency with
respect to a Foreign Currency Note, other than an Original Issue
Discount Note
on which original issue discount is accrued on a current basis
(except to the
extent any qualified stated interest is received) or a Note on
which market
discount is currently accrued, will be required to include in
income the U.S.
dollar value of the foreign currency payment (determined on the
date such
payment is received) regardless of whether the payment is in fact
converted to
U.S. dollars at that time. Such U.S. dollar value will be the
United States
Holder's tax basis in the foreign currency received. A cash
method United
States Holder who receives such a payment in U.S. dollars
pursuant to an
option available under such Note will be required to include the
amount of
such payment in income upon receipt.
To the extent the above paragraph is not applicable, a United
States Holder
will be required to include in income the U.S. dollar value of
the amount of
interest income (including original issue discount or market
discount, but
reduced by acquisition premium and amortizable bond premium to
the extent
applicable) that has accrued and is otherwise required to be
taken into
account with respect to a Foreign Currency Note during an accrual
period.
Unless the United States Holder makes the "Spot Rate Convention
Election"
discussed in the next paragraph, the U.S. dollar value of such
accrued income
will be determined by translating such income at the average rate
of exchange
for the accrual period or, with respect to an accrual period that
spans two
taxable years, at the average rate for the partial period within
each taxable
year. The average rate of exchange for the accrual period (or
partial period)
is the simple average of the exchange rates for each business day
of such
period (or other method if such method is reasonably derived and
consistently
applied). Such United States Holder will recognize ordinary gain
or loss with
respect to accrued interest income on the date such income is
received. The
amount of ordinary gain or loss recognized will equal the
difference between
the U.S. dollar value of the foreign currency payment received
determined on
the date such payment is received in respect of such accrual
period and the
U.S. dollar value of interest income that has accrued during such
accrual
period (as determined above).
<PAGE>
<PAGE> 26
Spot Rate Convention Election. A United States Holder may elect
to
translate accrued interest income into U.S. dollars at the
exchange rate in
effect on the last day of an accrual period for the original
issue discount,
market discount or accrued interest, or in the case of an accrual
period that
spans two taxable years, at the exchange rate in effect on the
last day of the
taxable year. Additionally, if a payment of such income is
actually received
within 5 business days of the last day of the accrual period or
taxable year,
an electing United States Holder may instead translate such
income into U.S.
dollars at the exchange rate in effect on the day of actual
receipt. Any such
election will apply to all debt instruments held by the United
States Holder
at the beginning of the first taxable year to which the election
applies or
thereafter acquired by the United States Holder, and may not be
revoked
without the consent of the Internal Revenue Service.
Purchase, Sale, Exchange or Retirement. A United States
Holder's tax basis
in a Foreign Currency Note will be the U.S. dollar value of the
foreign
currency amount paid for such Foreign Currency Note, determined
on the date of
such purchase, plus the foreign currency amount of any adjustment
on account
of original issue discount, market discount, acquisition premium
or bond
premium. A United States Holder who converts U.S. dollars to a
foreign
currency and immediately uses that currency to purchase a Foreign
Currency
Note denominated in the same currency normally will not recognize
gain or loss
in connection with such conversion and purchase. However, a
United States
Holder who purchases a Foreign Currency Note with previously
owned foreign
currency will recognize ordinary income or loss in an amount
equal to the
difference, if any, between such United States Holder's tax basis
in the
foreign currency and the U.S. dollar fair market value of the
Foreign Currency
Note on the date of purchase.
For purposes of determining the amount of any gain or loss
recognized by a
United States Holder on the sale, exchange or retirement of a
Foreign Currency
Note, the amount realized upon such sale, exchange or retirement
will be the
U.S. dollar value of the foreign currency received, determined on
the date of
sale, exchange or retirement. A United States Holder will have a
tax basis in
any foreign currency received on the sale, exchange or retirement
of a Foreign
Currency Note equal to the U.S. dollar value of such foreign
currency,
determined at the time of such sale, exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of
a Foreign
Currency Note that is attributable to fluctuations in currency
exchange rates
will be ordinary income or loss. Such gain or loss will not be
treated as
interest income or expense. Such foreign currency gain or loss
will equal the
difference between (i) the U.S. dollar value of the foreign
currency principal
amount of such Foreign Currency Note and any payment with respect
to accrued
interest, determined on the date such Note is disposed of, and
(ii) the U.S.
dollar value of the foreign currency principal amount of such
Note, determined
on the date such United States Holder acquired such Note, and the
U.S. dollar
value of the accrued interest received, determined by translating
such
interest at the average exchange rate for the accrual period or
with reference
to the "Spot Rate Convention Election" as described above. The
foreign
currency principal amount of a Foreign Currency Note generally
equals the
issue price in foreign currency of such Note. Such foreign
currency gain or
loss will be recognized only to the extent of the total gain or
loss realized
by a United States Holder on the sale, exchange or retirement of
the Foreign
Currency Note. The source of such foreign currency gain or loss
will be
determined by reference to the residence of the United States
Holder or the
"qualified business unit" of the holder on whose books the Note
is properly
reflected.
Any gain or loss recognized by such a holder in excess of such
foreign
currency gain or loss will be capital gain or loss (except to the
extent of
any accrued market discount or, in the case of a short-term
Original Issue
<PAGE>
<PAGE> 27
Discount Note, to the extent of any original issue discount not
previously
included in the United States Holder's income).
The Section 988 Regulations provide a special rule for
purchases and sales
of Foreign Currency Notes traded on an established securities
market by a cash
basis taxpayer under which units of foreign currency paid or
received are
translated into U.S. dollars at the spot rate on the settlement
date of the
purchase or sale. Accordingly, no exchange gain or loss will
result from
currency fluctuations between the trade date and the settlement
of such a
purchase or sale. An accrual basis taxpayer may elect the same
treatment
required of cash basis taxpayers with respect to purchases and
sales of
Foreign Currency Notes traded on an established securities market
provided the
election is applied consistently. Such election cannot be changed
without the
consent of the Internal Revenue Service. Any gain or loss
realized by a United
States Holder on a sale or other disposition of foreign currency
(including
its exchange for U.S. dollars or its use to purchase Foreign
Currency Notes)
will be ordinary income or loss.
Original Issue Discount. Original issue discount for any
accrual period on
an Original Issue Discount Note that is a Foreign Currency Note
will be
determined in the relevant foreign currency and then translated
into U.S.
dollars in the same manner as stated interest accrued by an
accrual basis
United States Holder, as described above under "Payment of
Interest." Upon the
receipt of an amount attributable to original issue discount
(whether in
connection with a payment of interest or the sale or retirement
of a Note), a
United States Holder may recognize ordinary income or loss.
Premium and Market Discount. In the case of a Foreign Currency
Note, market
discount will be determined in the relevant foreign currency. The
amount of
accrued market discount (other than market discount currently
included in
income pursuant to an election by the holder) which is required
to be
recognized on the disposition of the Note will be translated into
U.S. dollars
based on the exchange rate on the disposition date. No part of
such accrued
market discount will be treated as exchange gain or loss. Accrued
market
discount which a holder elects to accrue into income currently is
translated
into U.S. dollars using the average exchange rate in effect
during the accrual
period. In such case, movement in the exchange rate between the
accrual date
and disposition date will result in exchange gain or loss at the
time of the
disposition with respect to the amount of the market discount
accrued.
In the case of a Foreign Currency Note, bond premium which the
holder
elected to amortize or acquisition premium will be computed in
the relevant
foreign currency and will reduce interest income or original
issue discount
determined in such foreign currency. Exchange gain or loss will
be realized
with respect to amortizable bond premium or acquisition premium
by treating
the portion of the premium amortized with respect to any period
as a return of
principal. The Section 988 Regulations provide that if a holder
does not elect
to amortize bond premium, any loss realized on the sale, exchange
or
retirement of a Foreign Currency Note will be capital loss to the
extent of
such bond premium.
Currency Indexed Notes
The proper treatment of payments of principal of and interest
on Currency
Indexed Notes is uncertain at this time. United States Holders
of Currency
Indexed Notes should consult their tax advisors as to the federal
income tax
consequences of the ownership and disposition of such Notes.
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
Under United States federal income tax law now in effect, and
subject to
the discussion of backup withholding in the following section,
payments of
principal and interest (including original issue discount) and
premium by the
<PAGE>
<PAGE> 28
Company or any paying agent to any United States Alien Holder of
a Note will
not be subject to United States federal withholding tax,
provided, in the case
of interest, 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
Company entitled to vote, (ii) such holder is not for United
States federal
income tax purposes a controlled foreign corporation related to
the Company
through stock ownership, (iii) such holder is not a bank
receiving interest
described in section 881(c)(3)(A) of the Code, (iv) the interest
is not
contingent on certain attributes of the Company (or the
attributes of a person
who is a "related person" of the Company as defined in Code
Sections 267(b) or
707(b)), and (v) either (A) the beneficial owner of the Note
certifies, under
penalties of perjury, to the Company or paying agent, as the case
may be, that
he is not a United States Holder and provides his name and
address, and U.S.
taxpayer identification number, if any, 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 on behalf of the beneficial
owner certifies,
under penalties of perjury, to the Company or paying agent, as
the case may
be, that such certificate has been received from the beneficial
owner by it or
by a financial institution between it and the beneficial owner
and furnishes
the payor with a copy thereof. A certificate described in this
paragraph is
effective only with respect to payments of interest (including
original issue
discount) made to the certifying United States Alien Holder after
the issuance
of the certificate in the calendar year of its issuance and the
two
immediately succeeding calendar years.
If a United States Alien Holder 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,
the United
States Alien 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 Holder. See "Tax Consequences to United States
Holders" above.
Such a holder will be required to provide to the Company a
properly executed
Internal Revenue Service Form 4224 in order to claim an exemption
from
withholding tax. 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
adjustments.
For this purpose, interest (including original issue discount) on
a Note will
be included in earnings and profits if such interest and original
issue
discount is effectively connected with the conduct by the United
States Alien
Holder of a trade or business in the United States.
Generally, any gain or income realized upon the sale, exchange
or
retirement or other disposition of a Note will not be subject to
United States
federal income tax unless (i) such gain or income is effectively
connected
with a trade or business in the United States of the United
States Alien
Holder, or (ii) in the case of a United States Alien Holder who
is an
individual, the United States Alien Holder is present in the
United States for
183 days or more in the taxable year of such sale, retirement or
other
disposition, and either (a) such individual has a "tax home" (as
defined in
section 911(d)(3) of the Code) in the United States or (b) the
gain is
attributable to an office or other fixed place of business
maintained by such
individual in the United States.
A Note held by an individual who is a United States Alien
Holder at the
time of death will not be subject to United States federal estate
tax on the
Note if (i) the holder does not own, actually or constructively,
10% or more
of the total combined voting power of all classes of stock of the
Company
entitled to vote; (ii) at the time of such individual's death,
the interest
payments with respect to the Notes are not effectively connected
with a United
States trade or business of such holder; and (iii) no portion of
the value of
the Notes held by such estate is attributable to interest that is
contingent
<PAGE>
<PAGE> 29
on certain attributes of the Company (or the attributes of a
person who is a
"related person" of the Company as defined in Code Sections
267(b) or 707(b)).
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, information
reporting
requirements apply to certain payments of principal, premium and
interest
(including original issue discount) made to, and to the proceeds
of sales
before maturity by, non-corporate United States Holders. In
addition, a 31%
backup withholding tax will apply if the non-corporate United
States Holder
(i) fails to furnish its Taxpayer Identification Number ("TIN")
which, for an
individual, would be his Social Security Number, (ii) furnishes
an incorrect
TIN, (iii) is notified by the Internal Revenue Service that it
has failed to
properly report payments of interest and dividends, or (iv) under
certain
circumstances, fails to certify, under penalty of perjury, that
it has furnished a correct TIN and has not been notified by the
Internal
Revenue Service that it is subject to backup withholding for
failure to report
interest and dividend payments. Backup withholding will not apply
with respect
to payments made to certain exempt recipients, such as tax-exempt
organizations.
In the case of a United States Alien Holder, under current
Treasury
Regulations, backup withholding and information reporting will
not apply to
payments of principal and interest made by the Company or any
paying agent
thereof on a Note with respect to which the holder has provided
the required
certification under penalties of perjury of its non-United States
status
described above or has otherwise established an exemption,
provided that the
Company or paying agent, as the case may be, does not have actual
knowledge
that the payee is a United States person (as defined in section
7701(a)(30) of
the Code).
In addition, as a general rule, if principal, premium or
interest payments
are collected outside the United States by a foreign office of a
custodian,
nominee or other agent acting on behalf of a beneficial owner of
a Note, such
custodian, nominee or other agent will not be required to apply
backup
withholding to such payments made to such beneficial owner and
will not be
subject to information reporting. However, if such custodian,
nominee or other
agent is a United States person, a controlled foreign corporation
for United
States tax purposes, or a foreign person 50% or more of whose
gross income is
effectively connected with its conduct of a United States trade
or business
for a specified three-year period, such custodian, nominee or
other agent may
be subject to certain information reporting requirements with
respect to such
payments unless it has in its records documentary evidence that
the beneficial
owner is not a United States person and certain conditions are
met or the
beneficial owner otherwise establishes an exemption. Under
proposed Treasury
Regulations, backup withholding may apply to any payment which
such custodian,
nominee or other agent is required to report if such custodian,
nominee or
other agent has actual knowledge that the payee is a United
States person.
Under current Treasury Regulations, payments on the sale,
exchange or
retirement of a Note to or through a foreign office of a broker
will not be
subject to backup withholding. However, if such broker is a
United States
person, a controlled foreign corporation for United States tax
purposes, or a
foreign person 50% or more of whose gross income is effectively
connected with
its conduct of a United States trade or business for a specified
three-year
period, information reporting will be required unless the broker
has in its
records documentary evidence that the beneficial owner is not a
United States
person and certain other conditions are met or the beneficial
owner otherwise
establishes an exemption. Under proposed Treasury Regulations,
backup
withholding may apply to any payment that such broker is required
to report if
such broker has actual knowledge that the payee is a United
States person.
Payments to or through the United States office of a broker will
be subject to
backup withholding and information reporting unless the holder
certifies under
<PAGE>
<PAGE> 30
penalties of perjury to its non-United States person status or
otherwise
establishes an exemption.
Any amounts withheld from a payment to a holder under the
backup
withholding rules will be allowed as a refund or credit against
such holder's
United States federal income tax, provided that the required
information is
furnished to the United States Internal Revenue Service.
Holders should consult their tax advisors regarding the
application of
information reporting and backup withholding to their particular
situations,
the availability of an exemption therefrom, and the procedure for
obtaining
such an exemption, if available.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the
Company through
the Agents, who have agreed to use their reasonable best efforts
to solicit
purchases of the Notes. The Company will pay an Agent a
commission, in the
form of a discount ranging from .125% to .750% of the principal
amount of the
Note sold through it, depending upon maturity of the Note. The
Company may
also sell the Notes to the Agents at a discount for resale to
investors at
varying prices related to prevailing market prices at the time of
resale, to
be determined by the Agents. In addition, the Company may
arrange for the
Notes to be sold through other agents, dealers or underwriters or
may sell the
Notes directly to 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 will have the sole right to accept offers to
purchase Notes and
may reject any proposed purchase of Notes in whole or in part.
The Agents will
have the right, in their reasonable discretion, to reject any
offer to
purchase Notes received by them in whole or in part.
The Company has agreed to indemnify the Agents against certain
liabilities,
including liabilities under the Securities Act of 1993 (the
"Act"), or to
contribute to payments the Agents may be required to make in
respect thereof.
The Agents may be deemed to be "Underwriters" within the meaning
of the Act.
Each of the Agents may from time to time purchase and sell
Notes in the
secondary market, but is not obligated to do so, and there can be
no assurance
that there will be a secondary market for the Notes or liquidity
in the second
market if one develops. From time to time, each of the Agents may
make a
market in the Notes.
No person has been authorized to give any information or to make
any
representations other than those contained or incorporated by
reference in
this Prospectus Supplement or the Prospectus in connection with
the offer made
by this Prospectus Supplement and the Prospectus and, if given or
made, such
information or representations must not be relied upon as having
been
authorized. Neither the delivery of this Prospectus Supplement
and the
Prospectus nor any sale made hereunder and thereunder shall under
any
circumstances create an implication that there has been no change
in the
affairs of the Company since the date hereof. This Prospectus
Supplement and
the Prospectus do not constitute an offer or solicitation by
anyone in any
state in which such offer or solicitation is not authorized or in
which the
person making such offer or solicitation is not qualified to do
so or to
anyone to whom it is unlawful to make such offer or solicitation.
<PAGE>
<PAGE> 31
TABLE OF CONTENTS
Page
Prospectus Supplement
Important Currency Exchange Information.........................
S-
Description of Medium Term Notes, Series B......................
S-
Foreign Currency Risks..........................................
S-
Taxation........................................................
S-
Plan of Distribution............................................
S-
Prospectus
Available Information...........................................
2
Incorporation of Documents by Reference.........................
2
The Company.....................................................
3
Use of Proceeds.................................................
3
Ratio of Earnings to Fixed Charges..............................
3
Description of the Notes........................................
3
Description of the Warrants.....................................
8
Plan of Distribution............................................
9
For Florida Residents...........................................
10
Legal Opinions..................................................
10
Experts.........................................................
10
U.S. $3,000,000,000
AT&T Corp.
Medium Term Notes, Series B
Due More Than Nine Months From Date of Issue
[AT&T LOGO]
Salomon Brothers Inc Lehman Brothers Morgan Stanley & Co.
Incorporated
Prospectus Supplement
Dated July 5, 1995
<PAGE>
<PAGE> 32
PROSPECTUS
$3,000,000,000
AT&T CORP.
NOTES AND WARRANTS
------------------------
AT&T Corp. ("AT&T" or the "Company"), directly, through agents
designated
from time to time, or through dealers or underwriters also to be
designated,
may sell from time to time notes, debentures and other debt
securities (the
"Notes") of the Company, and Warrants (the "Warrants") to
purchase notes,
for an aggregate offering price of up to $3,000,000,000, or the
equivalent
thereof in one or more foreign currencies or currency units, on
terms to be
determined at the time of sale. The specific designation,
aggregate
principal amount, maturities, rates or method of calculating
rates and time
of payment of interest, purchase price, any terms for redemption
or
repayment, the currencies or currency units in which the Notes
are
denominated or payable, whether the Notes are issuable in
registered
form or bearer form (with or without interest coupons) or
both, or in
uncertificated form, whether Notes initially will be
represented by a
single temporary or permanent global Note, the duration,
purchase price,
exercise price and detachability of any Warrants, and the agent,
dealer or
underwriter, if any, in connection with the sale of, and any
other terms
with respect to, the Notes and/or Warrants in respect of which
this
Prospectus is being delivered are set forth in the
accompanying Prospectus
Supplement ("Prospectus Supplement"). The Company reserves the
sole right to
accept and, together with its agents from time to time, to
reject in whole
or in part any proposed purchase of Notes or Warrants to be made
directly or
through agents.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
If an agent of the Company or a dealer or an underwriter is
involved in the
sale of the Notes or Warrants in respect of which this Prospectus
is being
delivered, the agent's commission or dealer's or underwriter's
discount is set
forth in, or may be calculated from, the Prospectus Supplement
and the net
proceeds to the Company from such sale will be the purchase price
of such
Notes or Warrants less such commission in the case of an agent,
the purchase
price of such Notes or Warrants in the case of a dealer or the
public offering
price less such discount in the case of an underwriter, and
less, in each
case, the other attributable issuance expenses. The aggregate
proceeds to
the Company from all the Notes and Warrants will be the purchase
price of
Notes and Warrants sold, less the aggregate of agents'
commissions and
dealers' and underwriters' discounts and other expenses of
issuance and
distribution. The net proceeds to the Company from the sale of
Notes and
Warrants are also set forth in the Prospectus Supplement.
See "Plan of
Distribution" for possible indemnification arrangements for the
agents,
dealers and underwriters.
--------------------------
June 5, 1995
<PAGE>
<PAGE> 33
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS
OR THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY
THIS
PROSPECTUS AND PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE
COMPANY OR BY ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS
AND
PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN
THOSE TO WHICH THEY RELATE.
--------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements
of the
Securities Exchange Act of 1934 ("Exchange Act") and in
accordance therewith
files reports, proxy statements and other information with
the
Securities and Exchange Commission ("SEC"). Such reports,
proxy statements
and other information filed by AT&T can be inspected and
copied at the
public reference facilities maintained by the SEC at Room 1024,
Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549, and at
the regional
offices of the SEC located at 13th Floor, 7 World Trade Center,
New York, NY
10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400,
Chicago, IL 60661-2511. Such material can also be inspected at
the New York,
Boston, Chicago, Pacific and Philadelphia Stock Exchanges.
Copies of such
material can also be obtained at prescribed rates from the
Public Reference
Section of the SEC, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W.,
Washington, DC 20549.
--------------------------
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with
the SEC
(File No. 1-1105) and are incorporated herein by reference.
(1) AT&T's Annual Report on Form 10-K for the year ended
December 31, 1994;
(2) AT&T's Quarterly Report on Form 10-Q for the period ended
March 31, 1995
and;
(3) AT&T's Current Reports on Form 8-K dated January 24, 1995,
January 24,
1995, as amended (filed January 26, 1995), February 15,
1995, March 7,
1995, March 9, 1995, March 13, 1995 and April 7, 1995.
All documents filed 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 Notes and
Warrants shall
be deemed to be incorporated by reference in this Prospectus and
to be part
hereof from the date of filing of such documents; PROVIDED,
HOWEVER, that
the documents enumerated above or subsequently filed by AT&T
pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act in each
year during
which the offering made hereby is in effect prior to the filing
with the SEC
of AT&T's Annual Report on Form 10-K covering such year shall
not be
incorporated by reference herein or be a part hereof from and
after the
filing of such Annual Report on Form 10-K. 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 other
subsequently
filed document which also is or is deemed to be incorporated
by reference
herein or in the accompanying Prospectus Supplement 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.
COPIES OF THE ABOVE DOCUMENTS AND THE 1994 AT&T ANNUAL REPORT
TO
SHAREOWNERS MAY BE OBTAINED UPON REQUEST WITHOUT CHARGE FROM THE
SECRETARY'S
DEPARTMENT, AT&T, ROOM 2420E, 32 AVENUE OF THE AMERICAS, NEW
YORK, NEW YORK
10013-2412 (TELEPHONE NUMBER 212-387-5400).
<PAGE>
<PAGE> 34
THE COMPANY
AT&T was incorporated in 1885 under the laws of the State of
New York
and has its principal executive offices at 32 Avenue of the
Americas, New
York, New York 10013-2412 (telephone number 212-387-5400).
AT&T is a major participant in two industries: the global
information
movement and management industry and the financial services and
leasing
industry.
In the global information movement and management industry,
AT&T is among
the world's networking leaders, providing wireline and wireless
communications
services and products, communications products, network
equipment, business
information processing systems, and other systems, products and
services that
combine communication and computers, to business, consumers,
telecommunications service providers and government agencies.
Worldwide,
AT&T's network handles more than 175 million voice, data, video
and facsimile
messages on an average business day. AT&T's operations in the
financial
services and leasing industry involve direct financing and
finance leasing
programs for AT&T and third party products, leasing products to
customers
under operating leases, as well as the general purpose credit
card business.
USE OF PROCEEDS
AT&T intends to use the proceeds from the sale of the Notes
and
Warrants for funding investments in AT&T Universal Card
Services
Corp.; for funding investments in other subsidiary
companies; for
capital expenditures; for acquisitions of licenses, assets or
businesses;
towards refunding of debt and general corporate purposes. AT&T
Universal
Card Services Corp., the AT&T subsidiary that conducts the
AT&T
Universal Card business, will use the funding from AT&T to
finance the
purchase of accounts receivable and for general corporate
purposes. The
amount and timing of the sales of the Notes and Warrants will
depend on the
timing of the receivables purchases, market conditions and the
availability
of other funds to AT&T.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the unaudited historical
ratios of
earnings to fixed charges of AT&T and its subsidiaries.
Three Months
Ended
March 31, Year Ended December 31,
------------
- ------------------------------------------------
(Unaudited) (Unaudited)
1995 1994 1993 1992
1991 1990
---- ---- ---- ----
- ---- ----
4.7 4.9 4.1 3.6
1.2 3.3
For the purpose of calculating the ratio: (i) earnings have
been calculated
by adding fixed charges to income before income taxes, and by
deducting
therefrom interest capitalized during the period and
AT&T's share of
the undistributed income in less-than-fifty-percent-owned
affiliates; and (ii)
fixed charges comprise total interest (including capitalized
interest) and the
portion of rentals representative of the interest factor.
DESCRIPTION OF THE NOTES
The Notes are to be issued under an indenture, dated as of
September 7,
1990, between the Company and The Bank of New York, as Trustee
(the
"Trustee"), as amended by the First Supplemental Indenture,
dated as of
October 30, 1992, between the Company and the Trustee (such
indenture, as
<PAGE>
<PAGE> 35
amended, including the provisions deemed a part thereof, or
superseding
provisions thereof, pursuant to the Trust Indenture Reform
Act of 1990
(P.L. 101-550), being hereinafter referred to as 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,
including the
definitions therein of certain terms. References are to the
Indenture, and
wherever particular provisions are referred to, such
provisions are
incorporated by reference as part of the statement made, and the
statement is
qualified in its entirety by such reference.
GENERAL
The Indenture does not limit the aggregate principal amount
of Notes
which may be issued thereunder and provides that the Notes may be
issued from
time to time in one or more series. Reference is made to the
Prospectus
Supplement which accompanies this prospectus for a description
of the Notes
being offered thereby including: (1) the aggregate principal
amount of such
Notes; (2) the percentage of their principal amount at which
such Notes will
be sold; (3) the date(s) on which such Notes will mature, or
whether such
Notes are payable on demand; (4) the rate(s) per annum at
which such Notes
will bear interest, if any, or the method of calculating such
rate or
rates of interest; (5) the times at which such interest, if
any, will be
payable; (6) the terms for redemption or early repayment, if
any; (7) the
denominations in which such Notes are authorized to be issued;
(8) the coin
or currency in which the Notes are denominated, which may be a
composite
currency such as the European Currency Unit; (9) any
provision
enabling payments of the principal of or any premium or
interest on the
Notes in a coin or currency other than the currency in which
the Notes are
denominated, including a non-U.S. dollar denominated currency;
(10) the
manner in which the amount of payments of principal of and any
premium or
interest on the Notes is to be determined if such determination
is to be made
with reference to one or more indexes; (11) whether such Notes
are issuable
in registered form ("registered Notes") or bearer form (with or
without
interest coupons) ("bearer Notes") or both, and whether such
Notes shall be
uncertificated; (12) whether any series of Notes will be
represented by one
or more temporary or permanent global securities and, if so,
whether any
such global securities will be in registered or bearer form,
the
identity of the depository for such global security or
securities and the
method of transferring beneficial interests in such global
security or
securities; (13) if a temporary global security is to be issued
with respect
to a series or any portion thereof, the terms upon which
interests in such
temporary global security may be exchanged for interests in a
permanent
global security or for definitive Notes of the series and the
terms upon
which interest in a permanent global security, if any, may be
exchanged for
definitive Notes of the series; (14) information with respect
to
book-entry procedures, if any; (15) whether and under what
circumstances the
Company will pay additional amounts on any Notes held by a
person who is not
a United States person in respect of taxes or similar charges
withheld and,
if so, whether the Company will have the option to redeem
such Notes
rather than pay such additional amounts; and (16) any other
terms,
including any terms which may be required by or advisable under
United States
laws and regulations or advisable in connection with the
marketing of the
Notes of such series, which will not be inconsistent with the
provisions of
the Indenture.
Notes of any series may be registered Notes or bearer Notes or
both as
specified in the terms of the series. Additionally, Notes of any
series may be
represented by a single global note registered in the name of a
depository's
nominee and, if so represented, beneficial interests in such
global note
will be shown on, and transfers thereof will be effected only
through,
records maintained by a designated depository and its
participants.
<PAGE>
<PAGE> 36
Notes of any series may also be uncertificated. Unless
otherwise indicated
in the Prospectus Supplement, no bearer Notes (including
Notes in
permanent global bearer form, as described below) will be
offered, sold,
resold or delivered, directly or indirectly, to persons who
are within the
United States or its possessions or to any United States
person in
connection with their original issuance or their exchange for a
portion of a
temporary or permanent global Note. For purposes of this
Prospectus,
"United States person" means a citizen or resident of the
United States, a
corporation, partnership or other entity created or organized in
or under the
laws of the United States or of any political subdivision
thereof, or an
estate or trust the income of which is subject to United
States Federal
income taxation regardless of its source.
Unless otherwise indicated in the Prospectus Supplement,
principal and
interest, if any, will be payable at the office of one or more
paying agents
as specified in the Prospectus Supplement; provided that payment
of interest
may be made at the option of the Company by check mailed to
the address
of the person entitled thereto as it appears in the register
of the
Notes. To the extent set forth in the Prospectus Supplement,
except in
special circumstances set forth in the Indenture, interest, if
any, on
bearer Notes will be payable only against presentation and
surrender of
the coupons for the interest installments evidenced thereby
as they mature
at the office of a paying agent of the Company located outside
of the
United States and its possessions. The Company will
maintain one or
more such agents for a period of two years after the principal of
such bearer
Notes has become due and payable. During any period thereafter
for which it
is necessary in order to conform to United States tax laws or
regulations,
the Company will maintain a paying agent outside of the United
States and
its possessions to which the bearer Notes and coupons related
thereto may be
presented for payment and will provide the necessary funds
therefor to
such paying agent upon reasonable notice.
Bearer Notes and the coupons related thereto will be
transferable by
delivery. Unless otherwise indicated in the Prospectus
Supplement,
registered Notes will be transferable at the office of one or
more
transfer or paying agents as specified in the Prospectus
Supplement.
The Notes will be unsecured obligations of the Company and
will rank pari
passu with all other unsecured and unsubordinated indebtedness of
the Company.
Unless otherwise indicated in the Prospectus Supplement,
the Notes
will be issued only in denominations of $25,000, or the
equivalent thereof
in the case of Notes denominated in a foreign currency or
currency unit
(rounded downward to an integral multiple of 1,000 units of such
foreign
currency or currency unit), and any integral multiple of
$1,000 over
$25,000, or, in the case of Notes denominated in a foreign
currency or
currency unit, 1,000 units of such currency or currency unit, or
in such other
denominations, not less than $25,000, as may be specified in the
terms of
Notes of any particular series. No service charge will be made
for any
transfer or exchange of such Notes, but the Company may
require payment
of a sum sufficient to cover any tax or other governmental
charge payable
in connection therewith.
Notes may be issued as original issue discount Notes
(bearing no
interest or interest at a rate which at the time of issuance is
below market
rates) to be sold at a substantial discount below their stated
principal
amount. Federal income tax consequences and other special
considerations
applicable to any such original issue discount Notes will be
described in
the Prospectus Supplement relating thereto.
Registered Notes may be exchanged for an equal aggregate
principal
amount of registered Notes of the same series having the same
date of
maturity, interest rate, original issue date and other terms in
such
<PAGE>
<PAGE> 37
authorized denominations as may be requested upon surrender of
the
registered Notes to a transfer agent of the Company as specified
in the
Prospectus Supplement and upon fulfillment of all other
requirements of
such agent.
To the extent permitted by the terms of a series of Notes
authorized
to be issued in registered form and bearer form, bearer Notes
may be
exchanged for an equal aggregate principal amount of
registered or bearer
Notes of the same series having the same date of maturity,
interest rate,
original issue date and other terms in such authorized
denominations as may
be requested upon delivery of the bearer Notes with all unpaid
coupons
relating thereto to a transfer or paying agent of the Company as
specified in
the Prospectus Supplement and upon fulfillment of all other
requirements of
such agent. Registered Notes will not be exchangeable for bearer
Notes.
TEMPORARY GLOBAL NOTES
If so specified in the Prospectus Supplement, all or any
portion of the
Notes of a series that are issuable as bearer Notes initially
will be
represented by one or more temporary global Notes, without
interest coupons,
to be deposited with a common depository in London for Morgan
Guaranty
Trust Company of New York, Brussels Office, as operator of the
Euroclear
System ("Euroclear"), and CEDEL S.A. ("CEDEL") for credit to
the respective
accounts of the beneficial owners of such Notes (or to such
other accounts
as they may direct). On and after the exchange date
determined as
provided in any such temporary global Note and described in the
Prospectus
Supplement, the interest in such temporary global Note will be
exchangeable
for definitive Notes in bearer form, registered form, or
permanent global
form, or any combination thereof, as specified in the
Prospectus
Supplement.
The Prospectus Supplement will set forth the procedures by
which
interest in respect of any portion of a temporary global
Note payable in
respect of an Interest Payment Date (as defined in such
Prospectus Supplement)
occurring prior to the issuance of definitive Notes will be paid.
PERMANENT GLOBAL NOTES
If any Notes of a series are issuable in either bearer or
registered
permanent global form, the Prospectus Supplement will describe
the
circumstances, if any, under which beneficial owners of
interests in any such
permanent global Note may exchange such interests for Notes of
such series and
of like tenor and principal amount in any authorized form and
denomination.
A person having a beneficial interest in a permanent global Note,
except with
respect to payment of principal of, premium, if any, and any
interest on
such permanent global Note, will be treated as a holder of such
principal
amount of outstanding Notes represented by such permanent global
Note as
shall be specified in a written statement of the holder of such
permanent
global Note, or in the case of a permanent global Note in bearer
form, of
Euroclear or CEDEL which is produced to the Trustee by such
person. Principal
of, premium, if any, and any interest on a permanent global
Note will be
payable in the manner described in the Prospectus Supplement.
COVENANTS
Limitation on Secured Indebtedness. AT&T covenants in the
Indenture that
it will not, and will not permit any Restricted Subsidiary to,
create,
assume, incur or guarantee any Secured Indebtedness without
securing the
Notes equally and ratably with such Secured Indebtedness
unless
immediately thereafter the aggregate amount of all Secured
Indebtedness (not
including Secured Indebtedness with which the Notes are equally
and ratably
secured or Secured Indebtedness which is concurrently being
retired) and the
discounted present value of all net rentals payable under leases
entered into
<PAGE>
<PAGE> 38
in connection with sale and leaseback transactions (as further
described
below) would not exceed 10% of Consolidated Net Tangible Assets.
(Section
4.03)
Limitation on Sale and Leaseback Transactions. AT&T covenants
in the
Indenture that it will not, and will not permit any Restricted
Subsidiary
to, enter into any lease longer than three years (not
including leases of
newly acquired, improved or constructed property) covering any
Principal
Property of AT&T or any Restricted Subsidiary that is sold to
any other
person in connection with such lease, unless either (a)
immediately
thereafter, the sum of (i) the discounted present value of all
net rentals
payable under all such leases entered into after April 1,
1986 (except
any such leases entered into by a Restricted Subsidiary
before the time
it became a Restricted Subsidiary) and (ii) the aggregate
amount of all
Secured Indebtedness (not including Secured Indebtedness with
which the Notes
are equally and ratably secured) does not exceed 10% of
Consolidated Net
Tangible Assets, or (b) an amount equal to the greater of (x)
the net
proceeds to AT&T or a Restricted Subsidiary from such sale and
(y) the
discounted present value of all net rentals payable
thereunder, is
applied within 180 days to the retirement of long-term debt
of AT&T or a
Restricted Subsidiary (other than such debt which is
subordinate to the
Notes or which is owing to AT&T or a Restricted Subsidiary).
(Section 4.04)
Certain Definitions. "Secured Indebtedness" means
indebtedness of AT&T or
any Restricted Subsidiary for borrowed money secured by any
lien upon (or
in respect of any conditional sale or other title retention
agreement
covering) any Principal Property or the stock or indebtedness of
a Restricted
Subsidiary, but excluding from such definition all
indebtedness: (i)
outstanding on April 1, 1986 secured by liens (or arising from
conditional
sale or other title retention agreements) existing on that date;
(ii)
incurred after April 1, 1986 to finance the acquisition,
improvement or
construction of such property and either secured by purchase
money mortgages
or liens placed on such property within 180 days of acquisition,
improvement
or construction or arising from conditional sale or other
title retention
agreements; (iii) secured by liens on Principal Property or the
stock or
indebtedness of Restricted Subsidiaries and existing at the time
of
acquisition thereof; (iv) owing to AT&T or any other Restricted
Subsidiary;
(v) secured by liens existing at the time a corporation
becomes a
Restricted Subsidiary; (vi) incurred to finance the acquisition
or
construction of property secured by liens in favor of any country
or any
political subdivision thereof; and (vii) constituting any
replacement,
extension or renewal of any such indebtedness (to the extent
such
indebtedness is not increased). "Principal Property" means
land, land
improvements, buildings and associated factory, laboratory,
office and
switching equipment (excluding all products marketed by AT&T or
any of its
subsidiaries) constituting a manufacturing, development,
warehouse,
service, office or operating facility owned by or leased to AT&T
or a
Restricted Subsidiary, located within the United States
and having an
acquisition cost plus capitalized improvements in excess of
.25 per cent
of Consolidated Net Tangible Assets as of the date of such
determination,
other than any such property financed through the issuance of
tax-exempt
governmental obligations, or which the Board of Directors
determines is
not of material importance to AT&T and its Restricted
Subsidiaries taken as a
whole, or in which the interest of AT&T and all its subsidiaries
does not
exceed 50%. "Consolidated Net Tangible Assets" means the total
assets of AT&T
and its subsidiaries, less current liabilities and certain
intangible
assets (other than product development costs).
"Restricted
Subsidiary" means (i) any subsidiary of AT&T which has
substantially all
its property in the United States, which owns or is a lessee
of any
Principal Property and in which the investment of AT&T and all
its
subsidiaries exceeds .25 per cent of Consolidated Net
Tangible Assets
as of the date of such determination, other than certain
financing
subsidiaries and subsidiaries formed or acquired after April 1,
1986 for the
<PAGE>
<PAGE> 39
purpose of acquiring the business or assets of another person
and that do
not acquire all or any substantial part of the business or
assets of AT&T or
any Restricted Subsidiary and (ii) any other subsidiary
designated by the
Board of Directors as a Restricted Subsidiary. (Section 1.01)
Limitation on Consolidation, Merger, Sale or Conveyance of
Assets.
Nothing in the Indenture shall prevent any consolidation of
AT&T with, or
merger of AT&T into, any other corporation or corporations
(whether or not
affiliated with AT&T), or successive consolidations or mergers
to which AT&T
or its successor or successors shall be a party or parties, or
shall prevent
any sale or conveyance of the property of AT&T (including
stock of
subsidiaries) as an entirety or substantially as an entirety to
any other
corporation (whether or not affiliated with AT&T) authorized to
acquire and
own or operate the same; provided that AT&T covenants in the
Indenture that
upon any such consolidation, merger, sale or conveyance, the
due and
punctual payment of the principal of (and premium, if any) and
interest on
all of the Notes of each series, according to their tenor, and
the due and
punctual performance and observance of all of the covenants and
conditions
of the Indenture to be performed or observed by AT&T shall
be expressly
assumed, by supplemental indenture executed and delivered to
the Trustee
by the corporation formed by such consolidation, or into
which AT&T shall
have been merged, or which shall have acquired such property.
(Section
5.01)
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified
therein in
respect of any series of Notes shall have happened and be
continuing, either
the Trustee or the holders of 25% in principal amount of the
outstanding
Notes of such series may declare the principal of all of the
Notes of such
series to be due and payable. (Section 6.01)
Events of Default in respect of the Notes of any series
are defined
in the Indenture as being: default for 90 days in payment of any
interest
installment when due; unless otherwise specified in the
Prospectus
Supplement with respect to the Notes of any series, default in
payment of
principal of or premium, if any, on Notes of such series when
due; default
for 90 days after written notice to the Company by the Trustee or
by the
holders of 25% in principal amount of the outstanding Notes
of such series
in performance of any agreement in the Notes or Indenture in
respect of
such series; and certain events of bankruptcy, insolvency and
reorganization. (Section 6.01) The Company is not required to
furnish any
periodic evidence as to the absence of default or as to
compliance with the
terms of the Indenture.
The Indenture provides that the Trustee will, within 90
days after
the occurrence of a default in respect of any series of Notes,
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 payment
on any of
the Notes 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
passage of time or both would be, an Event of Default. (Section
7.05)
The Indenture contains provisions entitling the Trustee,
subject to the
duty of the Trustee during an Event of Default in respect of any
series of
Notes to act with the required standard of care, to refuse to
perform any
duty or exercise any right or power unless it receives indemnity
satisfactory to it. (Section 7.01)
The Indenture provides that the holders of a majority in
principal amount
of the outstanding Notes of any series may direct the time,
method and
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<PAGE> 40
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 6.06)
In certain cases, the holders of a majority in
principal amount
of the outstanding Notes of a series may on behalf of the
holders of all
Notes 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 in payment of the principal of, premium, if
any, or
interest on, any of the Notes of such series. (Sections 6.01 and
6.06)
DISCHARGE AND DEFEASANCE
Under terms satisfactory to the Trustee, the Company may
discharge
certain obligations to holders of any series of Notes issued
under the
Indenture which have not already been delivered to the Trustee
for
cancellation and which have either become due and payable or are
by their
terms due and payable within one year (or scheduled for
redemption within one
year) by irrevocably depositing with the Trustee as trust funds
an amount in
cash sufficient to pay at maturity (or upon redemption) the
principal of and
interest on such Notes. (Section 8.01)
In the case of any series of Notes the exact amounts
(including the
currency of payment) of principal of and interest due on such
series can be
determined at the time of making the deposit referred to below,
the Company
at its option may also (i) discharge any and all of its
obligations to
holders of such series of Notes ("defeasance") on the 91st day
after the
conditions set forth below have been satisfied, but may not
thereby avoid
its duty to register the transfer or exchange of such series
of Notes, to
replace any temporary, mutilated, destroyed, lost or stolen
Notes of
such series or to maintain an office or agency in respect of
such series of
Notes, or (ii) be released with respect to such series of Notes
from the
obligations imposed by the covenants described under
"Covenants" above
("covenant defeasance"). Defeasance and covenant defeasance
may be
effected only if, among other things, (i) the Company
irrevocably
deposits with the Trustee as trust funds (a) money in an amount,
(b) in the
case of Notes payable only in U.S. Dollars, U.S. Government
Obligations (as
defined in the Indenture) which through the payment of
interest and
principal in respect thereof will provide money in an
amount or (c)
a combination of (a) and (b), certified by a nationally
recognized
firm of independent public accountants to be sufficient to
pay each
installment of principal of and interest on all outstanding
Notes of such
series on the dates such installments of principal and
interest are due;
and (ii) the Company delivers to the Trustee an opinion of
independent counsel
to the effect that the holders of such series of Notes will
not recognize
gain or loss for United States Federal income tax purposes as
a result of
such defeasance or covenant defeasance and will be subject to
United States
Federal income tax on the same amount and in the same manner
and at the same
time as would have been the case if such defeasance or covenant
defeasance
had not occurred (which opinion may include or be based on a
ruling to that
effect received from or published by the Internal Revenue
Service). (Section
8.02)
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 Notes of each series affected thereby (with such
series voting
as a separate class), 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 Notes of
each such
series, except that no such supplemental indenture may,
without the consent
of each holder affected, among other things, change the maturity
of any
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<PAGE> 41
Notes, or change the principal amount thereof, or any premium
thereon, or
change the rate or change the time of payment of interest
thereon, make any
Note payable in money other than that stated in the Note, or
reduce the
aforesaid percentage of outstanding Notes. (Sections 9.01 and
9.02)
CONCERNING THE TRUSTEE
The Company may from time to time maintain lines of
credit, and have
other customary banking relationships, with The Bank of New
York, the
Trustee under the Indenture.
DESCRIPTION OF THE WARRANTS
The Company may issue Warrants for the purchase of Notes.
Warrants may be
issued independently or together with any Notes offered by
any
Prospectus Supplement and may be attached to or separate from
such Notes. The
Warrants will be issued under a Warrant Agreement to be entered
into between
the Company and a bank or trust company, as Warrant Agent,
and may be
issued in one or more series, all as set forth in the Prospectus
Supplement
relating to the particular issue of Warrants. The Warrant Agent
will act
solely as an agent of the Company in connection with the
Warrants and
will not assume any obligation or relationship of agency or
trust for or
with any holders or beneficial owners of Warrants. The
following summaries
of certain provisions of the form of Warrant Agreement do not
purport to be
complete and are subject to, and are qualified in their entirety
by reference
to, the provisions of the form of Warrant
Agreement (including the form of certificate evidencing
the Warrants
("Warrant Certificate")), copies of which are filed as
exhibits to the
Registration Statement.
GENERAL
If Warrants are offered, the Prospectus Supplement will
describe the
following terms of the Warrants offered hereby (to the extent
such terms are
applicable to such Warrants): (i) the offering price; (ii)
the coin or
currency for which Warrants may be purchased, which may be a
composite
currency such as the European Currency Unit; (iii) the date on
which the
right to exercise the Warrants shall commence and the date on
which such
right shall expire or, if the Warrants are not continuously
exercisable
throughout such period, the specific date or dates on which
they will be
exercisable; (iv) whether the Warrants will be issuable in
registered or
bearer form or both and whether the Warrants will be issued in
temporary
and/or permanent global form, or in uncertificated form; (v) the
designation,
aggregate principal amount, currency or currency unit and
other terms
of the Notes purchasable upon exercise of the Warrants and,
if such Notes
are issuable in bearer form, restrictions applicable to the
purchase of
Notes in bearer form upon exercise of the Warrants; (vi) the
designation and
terms of the Notes with which the Warrants are issued and the
number of
Warrants issued with each such Note; (vii) the date on and
after which the
Warrants and the related Notes will be separately transferable;
(viii) the
principal amount of Notes purchasable upon exercise of one
Warrant and
the price at which and currency or currency units in which such
principal
amount of Notes may be purchased upon such exercise; (ix)
United States
Federal income tax consequences; and (x) any other terms of the
Warrants,
including any terms which may be required or advisable under
United States
laws or regulations.
Warrant Certificates may be exchanged for new Warrant
Certificates of
different denominations, may (if in registered form) be
presented for
registration of transfer, and may be exercised at the
corporate trust
office of the Warrant Agent or any other office indicated in the
Prospectus
Supplement. Prior to the exercise of their Warrants, holders of
Warrants
will not have any of the rights of holders of the Notes
purchasable upon such
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<PAGE> 42
exercise, including the right to receive payments of principal
of, premium,
if any, or interest, if any, on the Notes purchasable upon such
exercise or
to enforce covenants in the Indenture.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal
amount of
Notes at such exercise price as shall in each case be set
forth in, or
calculable from, the Prospectus Supplement relating to the
Warrants.
Warrants may be exercised at any time up to 5:00 P.M. New York
time on the
date set forth in the Prospectus Supplement relating to such
Warrants. After
such time on the date (or such later date to which such date may
be extended
by the Company), unexercised Warrants will become void.
Subject to any restrictions and additional requirements that
may be set
forth in the Prospectus Supplement relating thereto,
Warrants may be
exercised by delivery to the Warrant Agent of the Warrant
Certificate
evidencing such Warrants properly completed and duly executed
and of payment
as provided in the Prospectus Supplement of the amount required
to purchase
the Notes purchasable upon such exercise. Warrants will be
deemed to have
been exercised upon receipt of such Warrant Certificate and
payment at the
corporate trust office of the Warrant Agent or any other office
indicated in
the Prospectus Supplement and the Company will, as soon as
practicable
thereafter, issue and deliver the Notes purchasable upon such
exercise. If
fewer than all of the Warrants represented by such Warrant
Certificate are
exercised, a new Warrant Certificate will be issued for the
remaining amount
of the Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Notes and Warrants being offered
hereby in four
ways: (i) directly to purchasers, (ii) through agents, (iii)
through dealers,
or (iv) through underwriters. Any or all of the foregoing may be
customers of,
engage in transactions with or perform services for the Company
in the
ordinary course of business.
Offers to purchase the Notes and Warrants 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 that
term is
defined in the Securities Act of 1933, as amended (the
"Securities Act"),
involved in the offer or sale of the Notes and/or Warrants in
respect of
which this Prospectus is delivered will be named, and any
commissions
payable by the Company to such agent set forth, in the
Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such
agent will
be acting on a best efforts basis for the period of its
appointment. Agents
may be entitled under agreements, which may be entered into
with the
Company, to indemnification by the Company against certain civil
liabilities,
including liabilities under the Securities Act.
If a dealer is utilized in the sale of the Notes and/or
Warrants in
respect of which this Prospectus is delivered, the Company
will sell such
Notes and/or Warrants to the dealer, as principal. The
dealer may then
resell such Notes and/or Warrants to the public (or to other
dealers for
resale to the public at prices to be determined by such other
dealers) at
varying prices to be determined by such dealer at the time of
resale. Dealers
may be entitled to indemnification by the Company against certain
liabilities,
including liabilities under the Securities Act.
If the sale is accomplished through an underwriter or
underwriters, the
Company will enter into an underwriting agreement with such
underwriters at
the time of sale to them and the names of the underwriters and
the terms of
the transaction will be set forth in the Prospectus
Supplement, which
will be used by the underwriters to make resales of the
Securities in
<PAGE>
<PAGE> 43
respect of which this Prospectus is delivered to the public.
The
underwriters may be entitled, under the relevant underwriting
agreement, to
indemnification by the Company against certain liabilities,
including
liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will
authorize
agents and underwriters to solicit offers by certain
institutions to
purchase Notes and/or Warrants from the Company at the public
offering price
set forth in the Prospectus Supplement pursuant to Delayed
Delivery
Contracts ("Contracts") providing for payment and delivery on a
specified
future date. Institutions with which Contracts, when
authorized, may be
made include commercial and savings banks, insurance
companies, pension
funds, educational and charitable institutions, and other
institutions,
but shall in all cases be subject to the approval of the
Company. Except
as otherwise provided in the Prospectus Supplement,
Contracts will not
be subject to any conditions except that the purchase by an
institution of
the Notes covered by its Contract shall not at the time of
delivery be
prohibited under the laws of any jurisdiction in the United
States to which
such institution is subject. A commission indicated in the
Prospectus
Supplement will be paid to agents and underwriters
soliciting purchases
of the Notes and/or Warrants pursuant to Contracts accepted
by the
Company.
The place and time of delivery for the Notes and/or Warrants in
respect of
which this Prospectus is delivered are set forth in the
accompanying
Prospectus Supplement.
FOR FLORIDA RESIDENTS
AT&T provides telecommunications services between the
United States and
Cuba jointly with Empresa de Telecomunicaciones
Internacionales de
Cuba ("EMTELCUBA"), the Cuban telephone company, pursuant to all
applicable
U.S. laws and regulations. All payments due EMTELCUBA are
handled in
accordance with the provisions of the Cuban Assets Control
Regulations and
the Cuban Democracy Act of 1992 and specific licenses issued
thereunder. AT&T
is the sole owner of the Cuban American Telephone and Telegraph
Company
("CATT"), a Cuban corporation. CATT owns cable facilities
between the
United States and Cuba that were activated on November 25, 1994.
This information is accurate as of the date hereof.
Current
information concerning AT&T's business dealings with the
government of
Cuba or with any person or affiliate located in Cuba may be
obtained
from the Division of Securities and Investor Protection of
the Florida
Department of Banking and Finance, the Capitol, Tallahassee,
Florida 32399-
0350, telephone number (904) 488-9805.
LEGAL OPINIONS
Marilyn J. Wasser, Vice President Law and Secretary of AT&T, is
passing
upon the legality of the Common Shares for the Company. As of
April 30, 1995,
Marilyn J. Wasser owned 3,019 common shares of AT&T and had
options to
acquire 19,329 shares of AT&T.
Davis Polk & Wardwell of New York City is passing upon the
legality of the
Notes and Warrants for any agent, dealer or underwriter which may
be involved
in any sale thereof. Such firm from time to time acts as counsel
for the
Company and its subsidiaries.
EXPERTS
The consolidated financial statements and consolidated
financial
statement schedules of AT&T and its subsidiaries at December 31,
1994 and 1993
and for the years ended December 31, 1994, 1993 and 1992
included in AT&T's
<PAGE>
<PAGE> 44
Annual Report on Form 10-K for the year ended December 31, 1994
have been
incorporated herein by reference in reliance upon the reports of
Coopers &
Lybrand L.L.P., independent auditors, which reports include
explanatory
paragraphs regarding AT&T's change in 1993 in methods of
accounting for
postretirement benefits, postemployment benefits and income
taxes, given on
the authority of that firm as ex erts in accounting and auditing.
