<PAGE> 1
Filed pursuant to Rule 424(b)(2)
Registration No. 33-64193
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 31, 1996)
J.P. MORGAN & CO. INCORPORATED
$2,300,000,000
Medium-Term Notes, Series A
Due From Nine Months to 30 Years From Date of Issue
J.P. Morgan & Co. Incorporated (the "Company") may offer from time to time its
Medium-Term Notes, Series A (the "Notes") which are issuable in one or more
series. The Notes offered by this Prospectus Supplement are offered in an
aggregate principal amount of up to $2,300,000,000 or the equivalent thereof in
other currencies, including composite currencies such as the European Currency
Unit ("ECUs"). See "Important Currency Exchange Information." Such aggregate
principal amount is subject to reduction as a result of the sale of other
Securities, described in the Prospectus. See "Description of Notes -- General"
and "Plan of Distribution" herein. The interest rate on each Note will be either
a fixed rate established by the Company at the date of issue of such Note
("Fixed Rate Note"), which may be zero in the case of certain Original Issue
Discount Securities (as defined herein), or a floating rate as specified in the
applicable Pricing Supplement pertaining to such Note ("Floating Rate Note"). A
Fixed Rate Note may pay a level amount in respect of both interest and principal
amortized over the life of the Note (an "Amortizing Note").
The Notes may be issued as senior debt securities (the "Debt Securities") or
subordinated debt securities (the "Subordinated Debt Securities"). Subordinated
Debt Securities will be subordinated as described under "Description of J.P.
Morgan Debt Securities -- Subordinated Debt Securities" in the Prospectus.
Unless otherwise indicated in the applicable Pricing Supplement interest on
Fixed Rate Notes is payable semi-annually on each March 15 and September 15 and
at maturity or upon earlier redemption or repayment. Interest on Floating Rate
Notes is payable on the dates indicated herein and in the applicable Pricing
Supplement. Amortizing Notes will pay principal and interest as set forth in the
applicable Pricing Supplement. See "Description of Notes -- Interest and
Interest Rates." Each Note will mature on a Business Day (as defined below) nine
months to 30 years from the date of issue, and may be subject to redemption at
the option of the Company or repayment at the option of the holder of the Note
(the "Holder") prior to its stated maturity, as set forth in the applicable
Pricing Supplement (the "Stated Maturity"). See "Description of Notes."
Each Note may be denominated or payable in U.S. dollars or in a foreign
currency, ECUs or such other currency unit specified in the applicable Pricing
Supplement (the "Specified Currency"). Unless otherwise indicated in the
applicable Pricing Supplement, Notes denominated in U.S. dollars will be issued
in denominations of $1,000 and any integral multiple of $1,000 in excess
thereof. The authorized denominations of Notes not denominated in U.S. dollars
will be set forth in the applicable Pricing Supplement. See "Description of
Notes -- Payment Currency."
Each Note will be issued only in fully registered form and will be represented
by either a Global Security or a master security (the "Master Security")
registered in the name of a nominee of The Depositary Trust Company, as
Depositary (a "Book-Entry Note"), or a certificate issued in definitive form (a
"Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in Book-Entry Notes will be shown on, and transfers thereof
will be effected only through, the records maintained by the Depositary and its
participants. Except as described in "Description of Notes -- Book-Entry System"
herein and in "Description of J.P. Morgan Debt Securities -- Global J.P. Morgan
Debt Securities" in the Prospectus, owners of beneficial interests in a Global
Security or the Master Security will not be entitled to receive Notes in
definitive form and will not be considered the holders thereof.
The Notes are not deposits or other obligations of a bank and are not insured by
the Federal Deposit Insurance Corporation or any other federal agency.
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.
<TABLE>
<CAPTION>
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PRICE TO AGENT'S DISCOUNT PROCEEDS TO
PUBLIC (1) OR COMMISSION(2)(3) COMPANY(2)(4)(5)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 100% .125% - .750% 99.875% - 99.250%
- --------------------------------------------------------------------------------------------------------------------------
Total $2,300,000,000(5) $2,875,000 - $17,250,000 $2,297,125,000 - $2,282,750,000(6)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise indicated in the applicable Pricing Supplement, Notes will
be sold at 100% of their principal amount.
(2) The commission payable to the Agent for each Note sold through such Agent
shall range from .125% to .750% of the principal amount of such Note unless
otherwise indicated in the applicable Pricing Supplement. The Company may
also sell Notes to the Agent, as principal at negotiated discounts, for
resale to investors and other purchasers at varying prices related to the
prevailing market prices at the time of resale as determined by the Agent
or, if so agreed, at a fixed public offering price. See "Plan of
Distribution."
(3) The Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended. The Company has agreed to indemnify the
Agent and Underwriter against and contribute toward certain liabilities,
including liabilities under applicable securities law.
(4) Unless otherwise indicated in the applicable Pricing Supplement.
(5) Before deducting other expenses payable by the Company estimated at up to
$1,000,000
(6) Or the equivalent thereof in other currencies including composite
currencies.
Offers to purchase the Notes are being solicited from time to time by J.P.
Morgan Securities Inc. (the "Agent" or "JPMSI"), on behalf of the Company. The
Agent has agreed to use reasonable efforts to solicit purchases of such Notes.
The Company also may sell Notes to the Agent acting as principal for its own
account or otherwise, to be determined by the Agent. The Company may also sell
Notes directly to investors on its own behalf in jurisdictions where it is
authorized to do so. No termination date for the offering of the Notes has been
established. 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 offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Notes. The Company reserves the
right to withdraw, cancel or modify the offer made hereby without notice. The
Company or the Agent, if it receives the offer, may reject any offer to purchase
Notes, in whole or in part. See "Plan of Distribution." This Prospectus
Supplement and Prospectus may be used by JPMSI, a wholly owned subsidiary of the
Company, in connection with offers and sales related to secondary market
transactions in the Notes. JPMSI may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale.
This Prospectus Supplement, the related Pricing Supplement and the accompanying
Prospectus may be used by the Company, JPMSI, a wholly owned subsidiary of the
Company, or other affiliates of the Company in connection with offers and sales
related to secondary market transactions in the Notes offered hereby. JPMSI or
other such Company affiliates may act as principal or agent in such
transactions. Such sales will be made at varying prices related to prevailing
market prices at the time of sale.
J.P. MORGAN & CO.
February 20, 1996
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IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY OR OTHER DEBT SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INVORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, 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. THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOTES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE PROSPECTUS, NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
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PAGE
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<S> <C>
Important Currency Exchange Information..................................................... S-2
Description of Notes........................................................................ S-3
Foreign Currency Risks...................................................................... S-14
United States Taxation...................................................................... S-16
Plan of Distribution........................................................................ S-22
Legal Opinions.............................................................................. S-23
Glossary.................................................................................... A-1
PROSPECTUS
Available Information....................................................................... 2
Incorporation of Certain Documents by Reference............................................. 2
J.P. Morgan & Co. Incorporated.............................................................. 2
Consolidated Ratio of Earnings to Fixed Charges............................................. 4
Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends...... 5
Use of Proceeds............................................................................. 5
Description of J.P. Morgan Debt Securities.................................................. 5
Description of Debt Warrants................................................................ 11
Description of Series Preferred Stock....................................................... 13
Depositary Shares........................................................................... 16
Description of Preferred Stock Warrants..................................................... 18
Description of Currency Warrants............................................................ 19
Risk Factors Relating to Currency Warrants.................................................. 20
Description of Capital Stock................................................................ 21
Plan of Distribution........................................................................ 22
Experts..................................................................................... 24
Legal Opinions.............................................................................. 24
</TABLE>
IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for the Notes in U.S. dollars, and payments of
principal, premium, if any, and interest on the Notes will also be made in U.S.
dollars, unless the applicable Pricing Supplement provides that purchasers are
instead required to pay for the Notes in a Specified Currency and/or that
payments of principal, premium, if any, and interest on such Notes will be made
in a Specified Currency. Currently, there are limited facilities in the United
States for the conversion of U.S. dollars into foreign currencies and vice
versa. In addition, most banks do not currently offer non-U.S. dollar
denominated checking or savings account facilities in the United States.
Accordingly, unless otherwise specified in a Pricing Supplement or unless
alternative arrangements are made, payment of principal, premium, if any, and
interest on Notes in a Specified Currency other than U.S. dollars will be made
to an account at a bank outside the United States. See "Description of Notes"
and "Foreign Currency Risks."
If the applicable Pricing Supplement provides for payments of principal of and
interest on a non-U.S. dollar denominated Note to be made in U.S. dollars or for
payments of principal of and interest on a U.S. dollar denominated Note to be
made in a Specified Currency other than U.S. dollars, the conversion of the
Specified Currency into U.S. dollars or U.S. dollars into the Specified
Currency, as the case may be, will be handled by the Exchange Rate Agent
identified in the Pricing Supplement. The Agent may act, from time to time, as
Exchange Rate Agent. The costs of such conversion will be borne by the Holder of
a Note through deductions from such payments.
Reference herein to "U.S. dollars" or "U.S. $" or "$" are to the currency of the
United States of America.
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DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
(referred to in the accompanying Prospectus as the "J.P. Morgan Debt
Securities", the "Debt Securities" or the "Subordinated Debt Securities", as
applicable) supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the J.P. Morgan Debt
Securities, Debt Securities and Subordinated Debt Securities set forth in the
Prospectus, to which description reference is hereby made. Unless otherwise
specified in the applicable pricing supplement hereto (the "Pricing
Supplement"), the Notes will have the terms described below, except that
references to interest payments and interest-related information do not apply to
certain Original Issue Discount Securities.
If any Note is not to be denominated in U.S. dollars, then certain provisions
with respect thereto will be as set forth in the applicable Pricing Supplement.
The applicable Pricing Supplement will specify the currency or currencies,
including composite currencies such as the ECU, in which the principal, premium,
if any, and interest, if any, with respect to such Note are to be paid, along
with any other terms relating to the non-U.S. dollar denomination, including
exchange rates for the Specified Currency as against the U.S. dollar at selected
times during the last five years, and any exchange controls affecting such
Specified Currency. See "Foreign Currency Risks."
GENERAL
The Notes may be Debt Securities or Subordinated Debt Securities. The Notes
constituting Debt Securities will be issued under an Indenture dated as of
August 15, 1982, as amended by a First Supplemental Indenture dated as of May 5,
1986, between the Company and First Trust of New York, National Association, as
successor Trustee to Chemical Bank (formerly Manufacturers Hanover Trust
Company) (such Indenture as amended, the "Senior Indenture"). The Notes
constituting Subordinated Debt Securities will be issued under the Indenture
dated as of March 1, 1993, between the Company and First Trust of New York,
National Association, as successor Trustee to Citibank, N.A. (such Indenture as
amended, the "Subordinated Indenture") (the Senior Indenture and the
Subordinated Indenture are referred to together as the "Indentures").
Notes issued under the Senior Indenture will rank pari passu with all
outstanding senior indebtedness of the Company. See "Description of J.P. Morgan
Debt Securities -- Senior Debt Securities" in the Prospectus. Notes issued under
the Subordinated Indenture will be subordinated in right of payment to Senior
Indebtedness (as defined) and, in certain circumstances relating to the
bankruptcy or insolvency of the Company, the Derivative Obligations (as defined)
of the Company. At December 31, 1995, the amount of indebtedness constituting
Senior Indebtedness was approximately $7.0 billion and the amount of Derivative
Obligations was immaterial. See "Description of J.P. Morgan Debt
Securities -- Subordinated Debt Securities -- Subordination" in the Prospectus.
The Notes may be Fixed Rate Notes or Floating Rate Notes. The following
summaries of certain provisions of the Indentures do not purport to be complete,
are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indentures, including the definitions therein of certain
terms.
The Notes may be issued from time to time in an aggregate principal amount of up
to $2,300,000,000 or the equivalent thereof in one or more foreign or composite
currencies, subject to reduction as a result of the sale by the Company of other
Securities as referred to in the accompanying Prospectus. For the purpose of
this Prospectus Supplement, (i) the principal amount of any Original Issue
Discount Security (as defined herein) means the Issue Price (as defined herein)
of such Note and (ii) the principal amount of any Note issued in a foreign
currency or composite currency means the U.S. dollar equivalent on the date of
issue of the Issue Price of such Note.
Each Note will mature on a Business Day (as defined below) from nine months to
30 years from its date of issue, as selected by the initial purchaser and agreed
to by the Company, and may be subject to redemption or repayment prior to
maturity at the price or prices specified in the applicable Pricing Supplement.
The Notes will not be subject to any sinking fund.
Except as may be specified for Notes denominated in foreign or composite
currencies or as otherwise provided in the applicable Pricing Supplement, the
Notes will be issued only in fully registered form in denominations of U.S.
$1,000 or any amount in excess thereof which is an integral multiple of U.S.
$1,000. Unless otherwise provided in the applicable Pricing Supplement, Notes
denominated in a Specified Currency other than U.S. dollars will be issued in
S-3
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denominations of the equivalent of U.S. $1,000 (rounded 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, as
determined by reference to the noon dollar buying rate in New York City for
cable transfers of such Specified Currency published by the Federal Reserve Bank
of New York (the "Market Exchange Rate") on the Business Day (as defined below)
immediately preceding the date of issuance; provided, however, that in the case
of ECUs, the Market Exchange Rate shall be 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 date of issuance.
The Notes will be offered on a continuing basis. Each Note will be issued
initially as either a Book-Entry Note or a Certificated Note. The Company
currently contemplates that only Notes denominated and payable in U.S. dollars
will be issued as Book-Entry Notes. So long as the Depositary or its nominee is
the registered owner of such Book-Entry Notes, the Depositary or such nominee,
as the case may be, will be considered the sole owner or Holder of the Notes for
all purposes under the applicable Indenture. Except as set forth under
"Description of Notes -- Book-Entry System" in this Prospectus Supplement and as
set forth under "Description of J.P. Morgan Debt Securities -- Global J.P.
Morgan Debt Securities" in the Prospectus, Book-Entry Notes will not be issuable
in certificated form.
Interest on the Notes will be payable at the office of First Trust of New York,
National Association, which will act as the Company's paying agent and note
registrar (the "Paying Agent and Note Registrar"), currently located at 100 Wall
Street, Suite 1600, New York, New York 10005, provided that payment of interest,
other than interest at maturity or upon earlier redemption or repayment, may be
made at the option of the Company by check mailed to the address of the person
entitled thereto as it appears on the Note Register at the close of business on
March 1 and September 1 of each year or as otherwise indicated in the applicable
Pricing Supplement (each a "Regular Record Date") corresponding to the relevant
Interest Payment Date. The principal, interest and premium, if any, payable at
maturity or upon earlier redemption or repayment in respect of each Note will be
paid in immediately available funds against presentation of the Note at the
office of First Trust of New York, National Association, 100 Wall Street, New
York, New York 10005. In the case of a Global Security representing Book-Entry
Notes, such payments of principal, interest and premium, if any, will be made to
the Depositary or its nominee. Payments to beneficial owners of Book-Entry Notes
will be made through the Depositary and its participants. See "Description of
J.P. Morgan Debt Securities -- Global J.P. Morgan Debt Securities" in the
Prospectus.
Notes may be issued in the form of Original Issue Discount Securities which will
be offered at a discount from the principal amount thereof due at the Stated
Maturity of such Notes. There may not be any periodic payments of interest on
Original Issue Discount Securities. In the event of an acceleration of the
maturity of any Original Issue Discount Security, the amount payable to the
Holder of such Original Issue Discount Security upon such acceleration will be
determined in accordance with the Pricing Supplement and the terms of such
security, but will be an amount less than the amount payable at the maturity of
the principal of such Original Issue Discount Security. For Federal income tax
considerations with respect to Original Issue Discount Securities, see "United
States Taxation -- Tax Consequences to United States Holders -- Original Issue
Discount" in this Prospectus Supplement.
The Pricing Supplement relating to each Note will describe the following terms:
(1) the specified currency with respect to such Note (and, if such currency is
other than U.S. dollars, certain other terms relating to such Note, including
the authorized denominations); (2) whether such Note is a Debt Security or a
Subordinated Debt Security; (3) whether such Note is a Fixed Rate Note or a
Floating Rate Note; (4) the price (expressed as a percentage of the aggregate
principal amount thereof) at which such Note will be issued (the "Issue Price");
(5) the date on which such Note will be issued; (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, if any; (8) if such Note is a Floating Rate Note,
the interest rate basis, the Initial Interest Rate, the Interest Reset Dates,
the Interest Payment Dates, the Index Maturity, the maximum interest rate and
the minimum interest rate, if any, and the Spread and/or Spread Multiplier, if
any, (all as defined below) and any other terms relating to the particular
method of calculating the interest rate for such Note; (9) whether such Note may
be redeemed or repaid prior to the date of Maturity (the "Maturity Date"), and,
if so, the provisions relating to such redemption payment; and (10) any other
terms of such Notes not inconsistent with the provisions of the related
Indenture.
S-4
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PAYMENT CURRENCY
If the applicable Pricing Supplement provides for payments of interest and
principal on a non-U.S. dollar denominated Note to be made, at the option of the
Holder, in U.S. dollars, conversion of the Specified Currency into U.S. dollars
will be based on the highest bid quotation in The City of New York received by
the exchange rate agent specified in the applicable Pricing Supplement (the
"Exchange Rate Agent") at approximately 11:00 a.m., New York City time, on the
second Business Day (as defined below) preceding the applicable payment date
from three recognized foreign exchange dealers (one of which may be the Exchange
Rate Agent) for the purchase by the quoting dealer of the Specified Currency for
U.S. dollars for settlement on such payment date in the aggregate amount of
Specified Currency payable to the Holders of Notes and at which the applicable
dealer commits to execute a contract. If such bid quotations are not available,
payments will be made in the Specified Currency. All currency exchange costs
will be borne by the holders of Notes by deductions from such payments.
Except as set forth below, 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 or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then 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 Market Exchange Rate on the date of
such payment or, if the Market Exchange Rate is not available on such date, as
of the most recent practicable date. 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.
If payment in respect of a Note is required to be made in ECUs and ECUs are
unavailable due to the imposition of exchange controls or other circumstances
beyond the Company's control or are no longer used in the European Monetary
System, then all payments in respect of such Note shall be made in U.S. dollars
until ECUs are again available or so used. The amount of each payment in U.S.
dollars shall be computed on the basis of the equivalent of the ECU in U.S.
dollars, determined as described below, as of the second Business Day (as
defined below) prior to the day on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date shall be determined by
the Company or the Exchange Rate Agent on the following basis. The component
currencies of the ECU for this purpose (the "Components") shall be the currency
amounts that were components of the ECU as of the last date on which the ECU was
used in the European Monetary System. The equivalent of the ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Company or the Exchange Rate Agent on the basis of the most
recently available Market Exchange Rates for such Components.
If the official unit of any Component is altered by way of combination or
subdivision, the number of units of that currency as a Component shall be
divided or multiplied in the same proportion. If two or more Components are
consolidated into a single currency, the amounts of those currencies as
Components shall be replaced by an amount in such single currency equal to the
sum of the appropriate amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or more
currencies, the amount of the original component currency shall be replaced by
the appropriate amounts of such two or more currencies, the sum of which shall
be equal to the amount of the original component currency.
All determinations referred to above made by the Company or its agent shall be
at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on Holders of Notes.
INTEREST AND INTEREST RATES
Each Note will bear interest at either (a) a fixed rate or (b) a floating rate
determined by reference to an interest rate formula, which may be adjusted by a
Spread and/or Spread Multiplier (each as defined below). Any Floating Rate Note
may also have either or both of the following: (i) a maximum interest rate
limitation, or ceiling, on the rate of interest which may accrue during any
interest period ("Maximum Interest Rate"); and (ii) a minimum interest rate
limitation, a floor, on the rate of interest which may accrue during any
interest period ("Minimum Interest Rate").
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<PAGE> 6
The applicable Pricing Supplement will designate one or more of the following
interest rate bases as applicable to each Note: (a) a fixed rate per annum, in
the case of a Fixed Rate Note; (b) the Commercial Paper Rate, in which case such
Note will be a "Commercial Paper Rate Note"; (c) the Federal Funds Rate, in
which case such Note will be a "Federal Funds Rate Note"; (d) LIBOR, in which
case such Note will be a "LIBOR Note"; (e) the Treasury Rate, in which case such
Note will be a "Treasury Rate Note"; (f) the Prime Rate, in which case such Note
will be a "Prime Rate Note"; or (g) such other interest rate basis or formula as
is set forth in such Pricing Supplement.
The interest rate on each Note will be equal to (a) in the case of a Fixed Rate
Note, a fixed rate; or (b) in the case of a Floating Rate Note, either (i) the
interest rate, determined by reference to the specified interest rate formula
(as specified in the applicable Pricing Supplement) (the "Base Rate") plus or
minus the Spread, if any, and/or (ii) the Base Rate, multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points specified in the
applicable Pricing Supplement as being applicable to such Floating Rate Note,
and the "Spread Multiplier" is the percentage specified in the applicable
Pricing Supplement as being applicable to such Floating Rate Note.
Each Note will bear interest from its date of issue or, except as otherwise
specified herein with respect to certain Floating Rate Notes, from the most
recent Interest Payment Date to which interest on such Note has been paid or
duly provided for until the principal thereof is paid or made available for
payment. Interest on each Note will accrue at the annual rate or at a rate
determined pursuant to an interest rate formula, stated therein and in the
applicable Pricing Supplement. Interest will be payable on each Interest Payment
Date and at maturity or upon earlier redemption or repayment (each such date, a
"Maturity"). Interest will be payable to the person in whose name a Note is
registered at the close of business on the Regular Record Date next preceding
the Interest Payment Date (which in the case of Global Securities representing
Book-Entry Notes, will be the Depositary or the nominee of the Depositary);
provided, however, that interest payable at Maturity will be payable to the
person to whom principal shall be payable. The first payment of interest on any
Note originally issued between a Regular Record Date and an Interest Payment
Date will be made on the Interest Payment Date following the next succeeding
Regular Record Date to the registered owner on such next Regular Record Date.
Interest rates and interest rate formulas are subject to change by the Company
from time to time but no such change will affect any Note theretofore issued or
which the Company has agreed to issue. Unless otherwise indicated in the
applicable Pricing Supplement, the Interest Payment Dates and the Regular Record
Dates for Fixed Rate Notes shall be as described below under "Fixed Rate Notes".
The Interest Payment Dates for Floating Rate Notes shall be as indicated in the
applicable Pricing Supplement and each Regular Record Date for a Floating Rate
Note will be the fifteenth day (whether or not a Business Day) next preceding
each Interest Payment Date.
If any Interest Payment Date, other than at Maturity, for any Floating Rate Note
would otherwise be a day that is not a Business Day, such Interest Payment Date
shall 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 shall be the immediately preceding Business
Day. If the Maturity for any Fixed Rate Note or Floating Rate Note or the
Interest Payment Date for any Fixed Rate Note falls on a day which is not a
Business Day, payment of principal, premium, if any, and interest with respect
to such Note will be paid on the next succeeding Business Day with the same
force and effect as if made on such date and no interest on such payment will
accrue from and after such date.
"Business Day" means any day (other than a Saturday or Sunday) on which banking
institutions in The City of New York are open for business (and, (i) with
respect to LIBOR Notes, which is also a London Banking Day (as defined below),
and (ii) with respect to Notes denominated in a Specified Currency other than
U.S. dollars, on which banking institutions in the principal financial center of
the country of the Specified Currency are open for business).
Unless otherwise specified in a Pricing Supplement, all percentages resulting
from any calculation on Floating Rate Notes will be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point, with five one-
millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545)
being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544) being
rounded to 9.87654% (or .0987654)), and all dollar amounts used in or resulting
from such calculation on Floating Rate Notes will be rounded to the nearest cent
(with one-half cent being rounded upwards).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest at the annual rate specified therein and
in the applicable Pricing Supplement. Unless otherwise specified in the
applicable Pricing Supplement, the Interest Payment Dates for Fixed Rate Notes
will
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be on March 15 and September 15 of each year and the Regular Record Dates will
be on March 1 and September 1 of each year. Unless otherwise specified in the
applicable Pricing Supplement, the first payment of interest on any Fixed Rate
Note originally issued between a Regular Record Date and an Interest Payment
Date shall be made on the Interest Payment Date following the succeeding Regular
Record Date. Unless otherwise specified in the applicable Pricing Supplement,
interest on Fixed Rate Notes will be computed and paid on the basis of a 360-day
year of twelve 30-day months.
FLOATING RATE NOTES
Except as provided below and unless otherwise specified in the applicable
Pricing Supplement, interest on Floating Rate Notes will be payable in the case
of Floating Rate Notes with a daily, weekly or monthly Interest Reset Date (as
defined below) on the third Wednesday of each month, as specified in the
applicable Pricing Supplement; in the case of Floating Rate Notes with a
quarterly Interest Reset Date, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes with a semi-annual
Interest Reset Date, on the third Wednesday of two months of the year, as
specified in the applicable Pricing Supplement; and in the case of Floating Rate
Notes with an annual Interest Reset Date, on the third Wednesday of one month of
each year, as specified in the applicable Pricing Supplement.
The applicable Pricing Supplement will specify the Issue Price, the interest
rate basis, the interest payment period, the Spread and/or Spread Multiplier, if
any, and the Maximum Interest Rate or the Minimum Interest Rate, if any,
applicable to each Floating Rate Note. In addition, such Pricing Supplement will
define or particularize for each Note the following terms, if applicable: the
period to maturity of the instrument or obligation on which the interest rate
formula is based (the "Index Maturity"), Initial Interest Rate, Interest Payment
Dates, Regular Record Dates and Interest Reset Dates with respect to such Note.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually, as specified in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, the date or dates on which interest will be reset (each an "Interest
Reset Date") will be, in the case of Floating Rate Notes that reset daily, each
Business Day; in the case of Floating Rate Notes (other than Treasury Rate
Notes) that reset weekly, the Wednesday of each week; in the case of any
Treasury Rate Notes that reset weekly, the Tuesday of each week (except as
provided below); in the case of Floating Rate Notes that reset monthly, the
third Wednesday of each month; in the case of Floating Rate Notes that reset
quarterly, the third Wednesday of March, June, September and December; in the
case of Floating Rate Notes that reset semi-annually, the third Wednesday of two
months of each year, as specified in the applicable Pricing Supplement; and in
the case of Floating Rate Notes that reset annually, the third Wednesday of one
month of each year, as specified in the applicable Pricing Supplement; provided,
however, that (i) the interest rate in effect from the date of issue to the
first Interest Reset Date with respect to a Floating Rate Note ( the "Initial
Interest Rate") will be as set forth in the applicable Pricing Supplement and
(ii) unless otherwise specified in the applicable Pricing Supplement, the
interest rate in effect for the ten days immediately prior to Maturity will be
that in effect on the tenth day preceding such Maturity. If the Interest Reset
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, the Interest Reset Date for such Floating Rate Note shall 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 Rate
Date shall be the immediately preceding Business Day.
The interest determination date (the "Interest Determination Date") pertaining
to an Interest Reset Date for a Commercial Paper Rate Note, a Federal Funds Rate
Note or a Prime Rate Note (the "Commercial Paper Interest Determination Date",
the "Federal Funds Interest Determination Date" and the "Prime Interest
Determination Date", respectively) will be the second Business Day prior to the
Interest Reset Date. The interest determination date pertaining to an Interest
Reset Date for a LIBOR Note (the "LIBOR Interest Determination Date") will be
the second London Banking Day (as defined below) preceding such Interest Reset
Date. The Interest Determination Date pertaining to an Interest Reset Date for a
Treasury Rate Note (the "Treasury Interest Determination Date") will be the day
of the week on which Treasury bills would normally be auctioned in the week in
which such Interest Reset Date falls. Treasury bills are usually sold at auction
on Monday of each week, unless that day is a legal holiday, in which case the
auction is usually held on the following Tuesday, except that such auction may
be held on the preceding Friday. If, as the result of a legal holiday, an
auction is so held on the preceding Friday, such Friday will be the Treasury
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Interest Determination Date pertaining to the Interest Reset Date occurring in
the next succeeding week. If an auction date shall fall on any Interest Reset
Date for a Treasury Rate Note, then such Interest Reset Date shall instead be
the first Business Day immediately following such auction date.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments on an Interest Payment Date for a Floating Rate Note will include
interest accrued from and including the next preceding Interest Payment Date in
respect of which interest has been paid (or from and including the date of issue
if no interest has been paid with respect to such Floating Rate Note) to, but
excluding, such Interest Payment Date or Maturity, as the case may be. However,
in the case of Floating Rate Notes that reset daily or weekly, unless otherwise
specified in the applicable Pricing Supplement, interest payable on any Interest
Payment Date, other than interest payable on any date on which principal for
such Note is payable, will include interest accrued only from, but excluding,
the last date in respect of which interest has been paid (or from and including
the date of issue if no interest has been paid with respect to such Floating
Rate Note) through and including the Regular Record Date immediately preceding
the applicable Interest Payment Date, except that the interest payment at the
Maturity Date will include interest accrued through, but excluding, such
Maturity Date. Accordingly, any Floating Rate Note that has a rate of interest
which is reset daily or weekly will bear interest from and including its issue
date or the day following the most recent Regular Record Date to which interest
on such Note has been paid or duly provided for. Accrued interest from the date
of issue or from the last date to which interest has been paid will be
calculated by multiplying the face amount of a Note by an accrued interest
factor. This accrued interest factor will be computed by adding together the
interest factors calculated for each day in the period for which accrued
interest is being calculated. Unless otherwise specified in the applicable
Pricing Supplement, the interest factor for each such day will be computed by
dividing the interest rate applicable to such day by 360, in the case of
Commercial Paper Rate Notes, Federal Funds Rate Notes, Prime Rate Notes, and
LIBOR Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes. The interest rate in effect on each day for a Floating Rate
Note will be (a) if such day is an Interest Reset Date, the interest rate
(calculated with reference to the Spread and/or Spread Multiplier, if any) with
respect to the interest determination date pertaining to such Interest Reset
Date or, (b) if such day is not an Interest Reset Date, the interest rate
(calculated with reference to the Spread and/or Spread Multiplier, if any) with
respect to the interest determination date pertaining to the next preceding
Interest Reset Date. Notwithstanding the foregoing, the interest rate in effect
on any Floating Rate Note shall be subject to any Maximum Interest Rate or
Minimum Interest Rate limitation referred to above.
The applicable Pricing Supplement shall specify a calculation agent (the
"Calculation Agent") with respect to any issue of Floating Rate Notes. The
Calculation Agent will determine the interest rate for each Interest Reset Date
as described below. The Company will notify the Paying Agent of each
determination of the interest rate applicable to any such Floating Rate Note
promptly after such determination is made. The Paying Agent will, upon the
request of the holder of any Floating Rate Note, provide the interest rate then
in effect and, if determined, the interest rate which will become effective as a
result of a determination made on the most recent interest determination date
with respect to such Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date", where applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if any such day is not a Business Day, the next
succeeding Business Day, or (ii) the Business Day preceding the applicable
Interest Payment Date or the Maturity, as the case may be.
Commercial Paper Rate Notes. Commercial Paper Rate Notes will bear interest at
the interest rates (calculated with reference to the Commercial Paper Rate and
the Spread and/or Spread Multiplier, if any) specified in the Commercial Paper
Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on that
date for commercial paper having the Index Maturity designated in the applicable
Pricing Supplement as such rate is published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates", or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)"), under the heading "Commercial Paper". In the event
that such rate is not published by 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate
on that Commercial Paper Interest Determination Date for commercial paper having
the Index Maturity designated in the applicable Pricing Supplement as published
by the Federal Reserve Bank of New York in its daily statistical release,
"Composite 3:30 p.m. Quotations
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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 Composite Quotations, the Commercial
Paper Rate for that Commercial Paper Interest Determination Date shall be
calculated by the Calculation Agent and shall be the Money Market Yield of the
arithmetic mean of the offered rates of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent as of 11:00
a.m., New York City time, on that Commercial Paper Interest Determination Date,
for commercial paper having the Index Maturity designated in the applicable
Pricing Supplement placed for an industrial issuer whose bond rating is "AA", or
the equivalent, from a nationally recognized securities rating agency; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the Commercial Paper Rate with
respect to such Commercial Paper Interest Determination Date will be the
Commercial Paper Rate 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 per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Federal Funds Rate Notes. Federal Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Federal Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in the Federal Funds Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal Funds
Rate" means, with respect to any Federal Funds Interest Determination Date, the
rate on that day 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 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
3:00 p.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 calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight Federal Funds arranged by three leading dealers of Federal Funds
transactions in The City of New York selected by the Calculation Agent as of
9:00 a.m., New York City time, on such Federal Funds Interest Determination
Date; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate will be the Federal Funds Rate in effect on such Federal Funds
Interest Determination Date.
LIBOR Notes. LIBOR Notes will bear interest at the interest rates (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 will be
determined by the Calculation Agent in accordance with the following provisions:
(i) With respect to a LIBOR Interest 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 having the Index Maturity designated in the applicable
Pricing Supplement, commencing on such LIBOR Interest Determination Date,
that appear on the Designated LIBOR Page as of 11:00 a.m., London time, on
that LIBOR Interest 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, or if such Pricing Supplement does not
specify a source, the rate for deposits in the Index Currency having the
Index Maturity designated in the applicable Pricing Supplement, commencing
on such LIBOR Interest Determination Date, that appears on the Designated
LIBOR Page as of 11:00 a.m., London time, on that LIBOR Interest
Determination Date. If fewer than two offered rates appear (if "LIBOR
Reuters" is specified in the applicable Pricing Supplement) or no rate
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appears (if "LIBOR Telerate" is specified in the applicable Pricing
Supplement), LIBOR in respect of the related Interest Determination Date
will be determined as if the parties had specified the rate described in
clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear (if "LIBOR Reuters" is specified in the
applicable Pricing Supplement) or no rate appears (if "LIBOR Telerate" is
specified in the applicable Pricing Supplement), 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 the second London Banking Day
immediately following such LIBOR Interest Determination Date, to prime
banks in the London interbank market at approximately 11:00 a.m., London
time, on such LIBOR Interest 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
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR determined on such LIBOR
Interest Determination Date will be the arithmetic mean of the rates quoted
at approximately 11:00 a.m. (or such other time specified in the applicable
Pricing Supplement), in the applicable principal financial center for the
country of the Index Currency on such LIBOR Interest 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 a principal amount of not less than $1,000,000 commencing
on the second London Banking Day immediately following such LIBOR Interest
Determination Date (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 with respect to such LIBOR
Interest Determination Date will be LIBOR in effect on such LIBOR Interest
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 on the Reuters Monitor Money Rates
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 on the Dow Jones Telerate Service
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.
"London Banking Day" means any day on which dealings in deposits in the Index
Currency are transacted in the London interbank market.
Prime Rate Notes. Prime Rate Notes will bear interest at the interest rate
(calculated with reference to the Prime Rate and Spread and/or Spread
Multiplier, if any) specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Prime Interest Determination Date, the rate set forth
in H.15(519) for such date opposite the caption "Bank Prime Loan". If such rate
is not yet published by 9:00 a.m., New York City time, on the Calculation Date
pertaining to such Prime Interest Determination Date, the Prime Rate for such
Prime Interest Determination Date will be the arithmetic mean of the rates of
interest publicly announced by each bank named on the Reuters Screen USPRIME1
Page (as defined below) as such bank's prime rate or base lending rate as in
effect for such Prime Interest Determination Date as quoted on the Reuters
Screen USPRIME1 Page on such Prime Interest Determination Date, or, if fewer
than four such rates appear on the Reuters Screen USPRIME1 Page for such Prime
Interest Determination Date, the rate shall be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in the year divided by
360 as of the
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close of business on such Prime Interest Determination Date by at least two of
the three major money center banks in The City of New York selected by the
Calculation Agent from which quotations are requested. If fewer than two
quotations are provided, the Prime Rate shall be calculated by the Calculation
Agent and shall be determined as the arithmetic mean on the basis of the prime
rates in The City of New York by the appropriate number of substitute banks or
trust companies organized and doing business under the laws of the United
States, or any State thereof, in each case having total equity capital of at
least U.S. $500 million and being subject to supervision or examination by
federal or state authority, selected by the Calculation Agent to quote such rate
or rates; provided, however, that if the banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting as set forth above, the Prime
Rate will be the Prime Rate in effect on such Prime Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as Page "USPRIME1"
on the Reuters Monitor Money Rates Services (or such other page as may replace
the USPRIME1 Page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
Treasury Rate Notes. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread and/or
Spread Multiplier, if any) specified in the Treasury Rate Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury Rate"
means, with respect to any Treasury Interest Determination Date, the rate for
the most recent auction of direct obligations of the United States ("Treasury
bills") having the Index Maturity designated in the applicable Pricing
Supplement as published in H.15(519) under the heading "Treasury
bills -- auction average (investment)" or, if not so published by 9:00 a.m., New
York City time, on the Calculation Date pertaining to such Treasury Interest
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
Maturity designated in the applicable Pricing Supplement are not otherwise
reported as provided above by 3:00 p.m., New York City time, on such Calculation
Date or no such auction is held in a particular week 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 3:30 p.m., New York City time, on such
Treasury Interest Determination Date, of three leading primary, United States
government securities dealers selected by the Calculation Agent, for the issue
of Treasury bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate with respect to such Treasury
Interest Determination Date will be the Treasury Rate in effect on such Treasury
Interest Determination Date.
INDEXED NOTES
The Notes may be issued, from time to time, as Notes of which the principal
amount payable on a date from nine months to 30 years from the date of original
issue (the "Stated Maturity") and/or on which the amount of interest payable on
an Interest Payment Date will be determined by reference to currencies, currency
units, commodity prices, financial or non-financial indices or other factors
(the "Indexed Notes"), as indicated in the applicable Pricing Supplement.
Holders of Indexed Notes may receive a principal amount at maturity that is
greater than or less than the face amount of such Indexed Notes, or an interest
rate that is greater than or less than the stated interest rate on the Indexed
Notes, or both, depending upon the structure of the Indexed Note and fluctuation
of the relative value at Maturity or at the relevant Interest Payment Date, as
the case may be, of the specified indexed item. Specific information pertaining
to the method for determining the principal amount payable at Maturity the
manner of determining the interest rate, certain historical information with
respect to the specified indexed item and certain additional United States
federal tax considerations will be described in the applicable Pricing
Supplement.
An investment in Indexed Notes entails significant risks that are not associated
with similar investments in a conventional fixed-rate debt security. If the
interest rate of an Indexed Note is indexed, it may result in an interest rate
that is less than that payable on a conventional Fixed Rate Note issued by the
Company at the same time, and it is possible that no interest will be paid. If
the principal amount of an Indexed Note is indexed, the principal amount payable
at Maturity may be less than the original purchase price of such Indexed Note,
and it is possible that no principal will be paid (but in no event shall the
amount of interest or principal paid with respect to an Indexed Notes be less
than zero). The
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secondary market for Indexed 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, but not
limited to, the volatility of the applicable currency or interest rate index,
the time remaining to the Maturity of such Indexed Notes, the amount outstanding
of such Indexed 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 Indexed Notes contains
a multiple or leverage factor, the effect of any change in the applicable
currency, commodity or interest rate index may be increased. 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 Indexed Note.
Accordingly, prospective investors should consult their own financial and legal
advisors as to the risk entailed by an investment in Indexed Notes and the
suitability of Indexed Notes in light of their particular circumstances. See
also "Foreign Currency Risks."
EXTENSION OF MATURITY
The Pricing Supplement relating to certain Notes (other than an Amortizing Note)
may provide that the Company has the option to extend the Maturity of such Notes
for one or more periods of one or more whole years (each an "Extension Period")
up to but not beyond the date (the "Final Maturity Date") set forth in such
Pricing Supplement. If the Company has such option with respect to any such Note
(an "Extendible Note"), the following procedures will apply, unless modified as
set forth in the applicable Pricing Supplement.
The Company may exercise such option with respect to an Extendible Note by
notifying the Trustee and the Paying Agent, in writing, of such exercise at
least 45 but not more than 60 days prior to the Maturity Date originally in
effect with respect to such Note (the "Original Maturity Date") or, if the
Maturity Date of such Note has already been extended, prior to the Maturity Date
then in effect (an "Extended Maturity Date"). No later than 38 days prior to the
Original Maturity Date or an Extended Maturity Date, as the case may be, the
Paying Agent will mail to the Holder of such Note a notice (the "Extension
Notice") relating to such Extension Period, by first class mail, postage
prepaid, setting forth (a) the election of the Company to extend the Maturity of
such Note; (b) the new Extended Maturity Date; (c) the interest rate applicable
to the Extension Period (which, in the case of a Floating Rate Note, will be
calculated with reference to a Base Rate and the Spread and/or Spread
Multiplier, if any); and (d) the provisions, if any, for redemption during the
Extension Period, including the date or dates on which, the period or periods
during which and the price or prices at which such redemption may occur during
the Extension Period. Upon the mailing by the Paying Agent of an Extension
Notice to the Holder of an Extendible Note, the Maturity of such Note shall be
extended automatically, and, except as modified by the Extension Notice and as
described in the next paragraph, such Note will have the same terms it had prior
to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 10:00 a.m., New York City time, on
the twentieth calendar day prior to the Maturity Date then in effect for an
Extendible Note (or, if such day is not a Business Day, not later than 10:00
a.m., New York City time, on the immediately succeeding Business Day), the
Company may, at its option, revoke the interest rate provided for in the
Extension Notice and establish a higher interest rate (or, in the case of a
Floating Rate Note, a higher Spread and/or Spread Multiplier, if any) for the
Extension Period by causing the Paying Agent to send notice of such higher
interest rate (or, in the case of a Floating Rate Note, a higher Spread and/or
Spread Multiplier, if any) to the Holder of such Note by first class mail,
postage prepaid, or by such other means as shall be agreed between the Company
and the Paying Agent. Such notice shall be irrevocable. All Extendible Notes
with respect to which the Maturity Date is extended in accordance with an
Extension Notice will bear such higher interest rate (or, in the case of a
Floating Rate Note, a higher Spread and/or Spread Multiplier, if any) for the
Extension Period, whether or not tendered for repayment.
If the Company elects to extend the Maturity of an Extendible Note, the Holder
of such Note will have the option to require the Company to repay such Note on
the Maturity Date then in effect at a price equal to the principal amount
thereof plus any accrued and unpaid interest to such date. In order for an
Extendible Note to be repaid on such Maturity Date, the Holder thereof must
follow the procedures set forth below under "Repayment and Repurchase" for
optional repayment, except that the period for delivery of such Note or
notification to the Paying Agent shall be at least 25 but not more than 35 days
prior to the Maturity Date then in effect and except that a Holder who has
tendered an Extendible Note for repayment pursuant to an Extension Notice may,
by written notice to the Paying Agent, revoke any
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such tender for repayment until 3:00 p.m., New York City time, on the twentieth
calendar day prior to the Maturity Date then in effect (or if such day is not a
Business Day, until 3:00 p.m., New York City time, on the immediately succeeding
Business Day).
AMORTIZING NOTES
Amortizing Notes are Fixed Rate Notes for which payments combining principal and
interest are made in installments over the life of each Note ("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. 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.
ORIGINAL ISSUE DISCOUNT NOTES
Original Issue Discount Notes are Notes issued at a discount from the principal
amount payable at Maturity and which are considered to be issued with original
issue discount which must be included in income for United States federal income
tax purposes at a constant rate ("Original Issue Discount Notes"). See "United
States Taxation." Certain additional considerations relating to Original Issue
Discount Notes may be described in the Pricing Supplement relating thereto.
OTHER PROVISIONS, ADDENDA
Any provisions with respect to Notes, including the determination of an Interest
Rate Basis, the specification of Interest Rates Basis, calculation of the
interest rate applicable to a Floating Rate Note, its Interest Payment Dates or
any other matter relating thereto may be modified by the terms specified under
"Other Provisions" on the face thereof or in an Addendum relating thereto, if so
specified on the face thereof and in the applicable Pricing Supplement.
REDEMPTION
Although Notes will not generally be redeemable prior to maturity, the Company
may specify in the Pricing Supplement relating to a Note that such Note will be
redeemable at the option of the Company on a date or dates specified prior to
maturity at a price or prices, set forth in the applicable Pricing Supplement,
together with accrued interest to the date of redemption. The Notes will not be
subject to any sinking fund. Unless otherwise specified in the applicable
Pricing Supplement, the Company may redeem any of the Notes which 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. If less than all of the Notes with
like tenor and terms are to be redeemed, the Notes to be redeemed shall be
selected by the applicable Note Registrar by such method as such Note Registrar
shall deem fair and appropriate.
REPAYMENT AND REPURCHASE
Although Notes will not generally be repayable at the option of the Holder prior
to Maturity, the Company in the Pricing Supplement relating to a Note may
specify that such Note will be repayable at the option of the Holder on a date
or dates specified prior to Maturity at a price or prices set forth in the
applicable Pricing Supplement, together with accrued interest to the date of
repayment.
Unless otherwise specified in the applicable Pricing Supplement, in order for a
Note to be repaid, the Paying Agent must receive at least 30, but not 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 of America 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, 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 Paying Agent not later than five
Business Days after the date of such telegram, telex,
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facsimile transmission or letter and such Note and form duly completed are
received by the Paying Agent by such fifth Business Day. Except in the case of
Renewable Notes or Extendible Notes, and unless otherwise specified in the
applicable Pricing Supplement, exercise of the repayment option by the Holder of
a Note shall be irrevocable. 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.
If a Note is represented by a Master Security (as defined below), the
Depositary's (as defined below) nominee will be the Holder of such Note and
therefore will be the only entity that can exercise a right to repayment. In
order to ensure that the Depositary's nominee will timely exercise a right to
repayment with respect to a particular Note, the beneficial owner of such Note
must instruct the broker or other direct or indirect Participant (as defined
below) through which it holds an interest in such Note to notify the Depositary
of its desire to exercise a right to repayment. Different firms have various
cut-off times for accepting instructions from their customers and, accordingly,
each beneficial owner should consult the broker or other direct or indirect
participant through which it holds an interest in a Note in order to ascertain
the cut-off time by which such an instruction must be given in order for timely
notice to be delivered to the Depositary.
The Company may at any time purchase Notes at any price in the open market or
otherwise. Notes so purchased by the Company may be held or resold or, at the
discretion of the Company, may be surrendered to the Trustee for cancellation.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes will be represented by two Global Securities
(as defined in the Prospectus) in the form of master securities evidencing
Senior Debt Securities and Subordinated Debt Securities, respectively
(individually, the "Master Security" and collectively, the "Master Securities").
The Master Security representing Book-Entry Notes will be deposited with, or on
behalf of, The Depository Trust Company, as Depositary (the "Depositary"), and
registered in the name of a nominee of the Depositary. Book-Entry Notes will not
be exchangeable for Certificated Notes, provided that 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 Certificated Notes in exchange for the Master Security or Master
Securities representing Book-Entry Notes. In addition, the Company may at any
time and in its sole discretion determine not to have Book-Entry Notes
represented by Master Securities, and, in such event, will issue Certificated
Notes in exchange for all Master Securities representing such Book-Entry Notes.
The Depositary has advised the Company and the Agents as follows: The Depositary
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 Uniform Commercial Code and a "clearing agency" registered pursuant to
provisions of Section 17A of the Securities Exchange Act of 1934. 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 certificates.
"Direct Participants" include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. 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 ("Indirect
Participants"). The rules applicable to The Depositary and its Participants are
on file with the Securities and Exchange Commission. See "Description of J.P.
Morgan Debt Securities -- Global J.P. Morgan Debt Securities" in the Prospectus.
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
Any investment in Notes that are denominated in, or the payment of which is
related to the value of, a Specified Currency other than U.S. dollars entails
significant risks that are not associated with a similar investment in a
security denominated 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 (or composite currencies) and the
possibility of
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the imposition or modification of exchange controls by either the U.S. or a
foreign government. 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 against the U.S. dollar of the currency in which a
Note is payable would result in a decrease in the effective yield of such Note
below its coupon rate and, in certain circumstances, could result in a loss to
the investor on a U.S. dollar basis. In addition, depending on the specific
terms of a currency-linked Note, changes in exchange rates relating to any of
the currencies involved may result in a decrease in its effective yield and, in
certain circumstances, could result in a loss of all or substantial portion of
the principal of a Note to the investor.
THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS AND ANY PRICING
SUPPLEMENT OR MULTI-CURRENCY PROSPECTUS SUPPLEMENT DO NOT DESCRIBE ALL THE RISKS
OF AN INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO
THE VALUE OF, A FOREIGN CURRENCY OR A COMPOSITE CURRENCY 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, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, 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.
Except as set forth below in "United States Taxation-Tax Consequences to United
States Alien Holders," 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,
premium, if any, and interest on the Notes. Such persons should consult their
own counsel with regard to such matters.
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 currency at the time of payment of principal of, premium, if any,
or interest on a Note. Even if there are no actual exchange controls, it is
possible that the Specified Currency for any particular Note not denominated in
U.S. dollars would not be available when payments on such Note are due. 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 practicable date. See "Description of Notes--Payment Currency."
With respect to any Note denominated in, or the payment of which is related to
the value of, a foreign currency or currency unit, the applicable Pricing
Supplement will include information with respect to applicable current exchange
controls, if any, and historic exchange rate information on such currency or
currency unit. The information contained therein shall constitute a part of this
Prospectus Supplement and is furnished as a matter of information only and
should not be regarded as indicative of the range of or trends in fluctuations
in currency exchange rates that may occur in the future.
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 court in the
United States, it is likely that such court would grant judgment relating to the
Notes only in U.S. dollars. If an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a New York court,
however, such court should render or enter a judgment or decree in the Specified
Currency. Such judgment should then be converted into U.S. dollars at the rate
of exchange prevailing on the date of entry of the judgment or decree.
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UNITED STATES TAXATION
In the opinion of Margaret M. Foran, Vice President, Associate General Counsel
and Assistant Secretary of the Company, the following summary accurately
describes the principal United States federal income tax consequences of
ownership and disposition of the Notes to initial Holders purchasing Notes at
the "issue price" (as defined below). This summary is 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 regulations concerning the treatment of debt instruments
issued with original issue discount (the "OID Regulations") and proposed
regulations concerning the treatment of debt obligations providing for
contingent payments (the "Proposed Regulations"), changes to any of which
subsequent to the date of this Prospectus may affect the tax consequences
described herein. This summary discusses only Notes held as capital assets
within the meaning of Section 1221 of the Code. It does not discuss all of the
tax consequences that may be relevant to a Holder in light of his particular
circumstances or to Holders subject to special rules, such as certain financial
institutions, insurance companies, dealers in securities or foreign currencies,
persons holding Notes as part of a straddle with other institutions, or as a
hedge against, or which are hedged against, currency risks, or United States
Holders whose functional currency (as defined in Code Section 985) is not the
U.S. dollar. Finally, this summary does not discuss Original Issue Discount
Notes (as defined below) which qualify as "applicable high-yield discount
obligations" under Section 163(i) of the Code. Holders of Original Issue
Discount Notes which are "applicable high-yield discount obligations" may be
subject to special rules. Persons considering the purchase of Notes should
consult their tax advisors with regard to the application of the United States
federal income tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.
As used herein, the term "United States Holder" means an owner of a Note 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 U.S. Holder but whose income from a Note is effectively connected
with such Holder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States.
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 paid on a Note will generally be taxable to a
United States Holder as ordinary interest income at the time it accrues or is
received in accordance with the United States Holder's method of accounting for
federal income tax purposes. 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 the Notes and will be
taxed in the manner described below under "Original Issue Discount Notes."
Special rules governing the treatment of interest paid with respect to Original
Issue Discount Notes, including certain Floating Rate Notes and Indexed Notes,
Foreign Currency Notes and Currency Indexed Notes, are described under "Original
Issue Discount Notes," "Foreign Currency Notes" and "Currency Indexed Notes"
below.
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 substantial amount of the Notes is sold for money. The
stated redemption price at maturity of a Note will equal the sum of all payments
required under the Note other than payments of "qualified stated interest".
"Qualified stated interest" is stated interest unconditionally payable as a
series of payments in cash or property (other than 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, Floating Rate Notes providing for one or
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more qualified floating rates of interest, a single fixed rate and one or more
qualified floating rates, an 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 sentences if the
values of the applicable rates on the issue date are within 1/4 of one 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 since 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 restrictions.
Proposed Regulations 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 only to contingent payment debt
instruments issued on or after 60 days after the date final regulations are
published. Prospective Holders of Indexed Notes or Floating Rate Notes providing
for contingent payments should refer to the discussion regarding taxation in the
applicable Pricing Supplement.
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 one 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 generally include such original issue discount in income, as capital gain,
on a pro rata basis as principal payments are made on the Note.
A United States Holder of Original Issue Discount Notes will be required to
include any qualified stated interest payments in income in accordance with the
Holder's method of accounting for federal income tax purposes. United States
Holders of Original Issue Discount Notes that mature more than one year from
their date of issuance will be required to include original issue discount in
income for federal income tax purposes as it accrues, in accordance with a
constant yield method based on a compounding of interest, before the receipt of
cash payments attributable to 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 Note that matures one year or less from its date of
issuance will be treated as a "short-term Original Issue Discount Note". In
general, a cash method United States Holder of a short-term Original Issue
Discount Note is not required to accrue original issue discount for United
States federal income tax purposes unless it elects to do so. Holders who make
such an election, Holders who report income for federal income tax purposes on
the accrual method and certain other Holders, including banks and dealers in
securities, are required to include original issue discount in income on such
short-term Original Issue Discount Notes as it accrues on a straight-line basis,
unless an election is made to accrue the original issue discount according to a
constant yield method based on daily compounding. In the case of a Holder who is
not required and who does not elect to include original issue discount in income
currently, any gain realized on the sale, exchange or retirement of the
short-term Original Issue Discount Note will be ordinary income to the extent of
the original issue discount accrued on a straight-line basis (or, if elected,
according to a constant yield method based on daily compounding) 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
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or carry short-term Original Issue Discount Notes in an amount not exceeding the
deferred interest income, until such deferred interest income is recognized.
Under the OID Regulations, a Holder may make an election (the "Constant Yield
Election") to include in gross income all interest that accrues on a Note
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) in accordance with a constant yield method based on the
compounding of interest.
Certain of the Original Issue Discount Notes may be redeemed prior to maturity.
Original Issue Discount Notes containing such a feature may be subject to rules
that differ from the general rules discussed above. Purchasers of Original Issue
Discount Notes with such a feature should carefully examine the applicable
Pricing Supplement and should consult their tax advisors with respect to such a
feature since the tax consequences with respect to original issue discount will
depend, in part, on the particular terms and the particular features of the
purchased Note.
The OID Regulations contain aggregation rules stating that in certain
circumstances if more than one type of Note is issued as part of the same
issuance of securities to a single holder, some or all of 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 related 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.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange or
retirement of a Note, a United States Holder will recognize taxable gain or loss
equal to the difference between the amount realized on the sale, exchange or
retirement and such Holder's adjusted tax basis in the Note. For these purposes,
the amount realized does not include any amount attributable to accrued interest
on the Note. Amounts attributable to accrued interest are treated as interest as
described under "Payments of Interest" above. A United States Holder's adjusted
tax basis in a Note will equal the cost of the Note to such Holder, increased by
the amount of any original issue discount previously included in 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 above).
Subject to the discussion under "Foreign Currency Notes" below, gain or loss
realized on the sale, exchange or retirement of a Note will be capital gain or
loss (except in the case of a short-term Original Issue Discount Note, to the
extent of any original issue discount not previously included in the Holder's
taxable income), and will be long-term capital gain or loss if at the time of
sale, exchange or retirement the Note has been held for more than one year. See
"Original Issue Discount Notes" above. The excess of net long-term capital gains
over net short-term capital losses is taxed at a lower rate than ordinary income
for certain non-corporate taxpayers. The distinction between capital gain or
loss and ordinary income or loss is also relevant for purposes of, among other
things, limitations on the deductibility of capital losses.
Amortizable Bond Premium. If a United States Holder purchases a Note for an
amount that is greater than the amount payable at maturity, such Holder will be
considered to have purchased such Note with "amortizable bond premium" equal in
amount to such excess, and 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 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 earlier redemption date, with
reference to the amount payable on the earlier redemption date. A Holder who
elects to amortize bond premium must reduce his tax basis in the Note by the
amount of the premium amortized in any year. An election to amortize bond
premium applies to all taxable debt obligations then owned and thereafter
acquired by the taxpayer and may be revoked only with the consent of the
Internal Revenue Service.
If a Holder makes a Constant Yield Election for a Note with amortizable bond
premium, such election will result in a deemed election to amortize bond premium
for all of the Holder's debt instruments with amortizable bond premium and
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may be revoked only with the permission of the Internal Revenue Service with
respect to debt instruments acquired after revocation.
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").
A United States Holder who uses the cash method of accounting and who receives a
payment of interest in a foreign currency with respect to a Foreign Currency
Note (other than an Original Issue Discount Note on which original issue
discount is accrued on a current basis (except to the extent any qualified
stated interest is received)) will be required to include in income the U.S.
dollar value of the foreign currency payment (determined on the date such
payment is received) regardless of whether the payment is in fact converted to
U.S. dollars at that time, and such U.S. dollar value will be the United States
Holder's tax basis in the foreign currency. A cash method 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, but reduced by 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. 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 the taxable year. Such United States
Holder will recognize ordinary income or loss with respect to accrued interest
income on the date such income is actually received. The amount of ordinary
income or loss recognized will equal the difference between the U.S. dollar
value of the foreign currency payment received (determined on the date such
payment is received) in respect of such accrual period (or, where a Holder
receives U.S. dollars, the amount of such payment in respect of such accrual
period) and the U.S. dollar value of interest income that has accrued during
such accrual period (as determined above). A United States Holder may elect to
translate interest income (including original issue discount) into U.S. dollars
at the spot rate on the last day of the interest accrual period (or, in the case
of a partial accrual period, the spot rate on the last day of the taxable year)
or, if the date of receipt is within five business days of the last day of the
interest accrual period, the spot rate on the date of receipt. A United States
Holder that makes such an election must apply it consistently to all debt
instruments from year to year and cannot change the election without the consent
of the Internal Revenue Service.
Original issue discount and amortizable bond premium on a Foreign Currency Note
are to be determined in the relevant foreign currency.
Any loss realized on the sale, exchange or retirement of a Foreign Currency Note
with amortizable bond premium by a United States Holder who has not elected to
amortize such premium under Section 171 of the Code will be a capital loss to
the extent of such bond premium. If such an election is made, amortizable bond
premium taken into account on a current basis shall reduce interest income in
units of the relevant foreign currency. Exchange gain or loss is realized on
such amortized bond premium with respect to any period by treating the bond
premium amortized in such period as a return of principal.
A United States Holder's tax basis in a Foreign Currency Note, and the amount of
any subsequent adjustment to such Holder's tax basis, will be the U.S. dollar
value of the foreign currency amount paid for such Foreign Currency Note, or of
the foreign currency amount of the adjustment, determined on the date of such
purchase or adjustment. A United States Holder who purchases a Foreign 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.
Gain or loss realized upon the sale, exchange or retirement of a Foreign
Currency Note that is attributable to fluctuations in currency exchange rates
will be ordinary income or loss which will not be treated as interest income or
expense. Gain or loss attributable to fluctuations in exchange rates will equal
the difference between (i) the U.S. dollar value of the foreign currency
principal amount of such Note, and any payment with respect to accrued interest,
determined on the date such payment is received or 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 relevant exchange rate for the
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accrual period as discussed above. 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 Holder or the "qualified business unit" of the Holder on
whose books the Note is properly reflected. Any gain or loss realized by such a
Holder in excess of such foreign currency gain or loss will be capital gain or
loss (except in the case of a short-term Original Issue Discount Note, to the
extent of any original issue discount not previously included in the Holder's
income).
A United States Holder will have a tax basis in any foreign currency received on
the sale, exchange or retirement of a Foreign Currency Note equal to the U.S.
dollar value of such foreign currency, determined at the time of such sale,
exchange or retirement. Regulations issued under Section 988 of the Code provide
a special rule for purchases and sales of publicly traded Foreign Currency Notes
by a cash method taxpayer under which units of foreign currency paid or received
are translated into U.S. dollars at the spot rate on the settlement date of the
purchase or sale. Accordingly, no exchange gain or loss will result from
currency fluctuations between the trade date and the settlement date of such a
purchase or sale. An accrual method taxpayer may elect the same treatment
required of cash-method taxpayers with respect to the purchase and sale of
publicly traded Foreign Currency Notes provided the election is applied
consistently. 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.
Currency Indexed Notes. The proper treatment of payments of principal of and
interest on Currency Indexed Notes is uncertain at this time. Holders of
Currency Indexed Notes should consult with their tax advisors as to the federal
income tax consequences of the ownership and disposition of such Notes.
Backup Withholding and Information Reporting. Certain noncorporate United
States Holders may be subject to backup withholding at a rate of 31% on payments
of principal, premium and interest (including original issue discount, if any)
on, and the proceeds of disposition of, a Note. Backup withholding will apply
only if the 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. United States Holders should consult their tax advisors
regarding their qualification for exemption from backup withholding and the
procedure for obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a United States Holder
will be allowed as a credit against such Holder's United States federal income
tax liability and may entitle such Holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
Under present United States federal law, and subject to the discussion below
concerning backup withholding:
(a) payments of principal, interest (including original issue discount, if
any) and premium on the Notes by the Company or any paying agent to any
United States Alien Holder will not be subject to United States federal
withholding tax, provided that, in the case of interest, (i) such Holder
does not own, actually or constructively, ten percent or more of the total
combined voting power of all classes of stock of the Company entitled to
vote, is not a controlled foreign corporation related, directly or
indirectly, to the Company through stock ownership, and is not a bank
receiving interest described in Section 881(c)(3)(A) of the Code and (ii)
if the Note is a registered note, the statement requirement set forth in
Section 871(h) or Section 881(c) of the Code has been fulfilled with
respect to the beneficial owner, as discussed below;
(b) a United States Alien Holder of a Note will not be subject to United
States federal income tax on gain realized on the sale, exchange or other
disposition of such Note, unless (i) such Holder is an individual who is
present in the United States for 183 days or more in the taxable year of
disposition, and either (a) such individual has a "tax home" (as defined in
Code Section 911(d)(3)) in the United States (unless such gain is
attributable to a
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fixed place of business in a foreign country maintained by such individual
and has been subject to foreign tax of at least ten percent) or (b) the
gain is attributable to an office or other fixed place of business
maintained by such individual in the United States or (ii) such gain is
effectively connected with the conduct by such Holder of a trade or
business in the United States.
Sections 871(h) and 881(c) of the Code require that, in order to obtain the
portfolio interest exemption from withholding tax described in paragraph (a)
above in the case of a registered note, either the beneficial owner of the Note,
or 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 that is holding the Note on behalf of such
beneficial owner, file a statement with the withholding agent to the effect that
the beneficial owner of the Note is not a United States Holder. Under temporary
United States Treasury Regulations, such requirement will be fulfilled if the
beneficial owner of a Note certified on Internal Revenue Service Form W-8, under
penalties of perjury, that it is not a United States Holder and provides its
name and address, and any Financial Institution holding the Note on behalf of
the beneficial owner files a statement with the withholding agent to the effect
that it has received such a statement from the Holder (and furnishes the
withholding agent with a copy thereof). The portfolio interest exemption from
withholding tax described in paragraph (a) above will not apply to contingent
interest if the amount of such interest is determined with reference to the
profitability of the Company or a related person. Unless otherwise provided in
the applicable Pricing Supplement, the Company does not expect any interest on
the Notes to be subject to this provision.
If a United States Alien Holder of a Note is engaged in a trade or business in
the United States, and if interest (including original issue discount) on the
Note 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, will generally be subject to regular United States
income tax on interest (including any original issue discount) and on any gain
realized on the sale, exchange or other disposition of a Note in the same manner
as if it were a United States Holder. See "United States Taxation--Tax
Consequences to United States Holders" above. In lieu of the certificate
described in the preceding paragraph, 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 United States
Alien Holder is a foreign corporation, it may be subject to a branch profits tax
equal to 30% (or such lower rate provided by an applicable treaty) or its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For purposes of the branch profits tax, interest (including
original issue discount) on and any gain recognized on the sale, exchange or
other disposition of a Note will be included in the effectively connected
earnings and profits of such United States Alien Holder if such interest or
gain, as the case may be, is effectively connected with the conduct by the
United States Alien Holder of a trade or business in the United States.
Under Section 2105(b) of the United States federal estate tax law, a Note or
coupon held by an individual who is not a citizen or resident of the United
States at the time of his death will not be subject to United States federal
estate tax as a result of such individual's death, provided that the individual
does not own, actually or constructively, ten percent or more of the total
combined voting power of all classes of stock of the Company entitled to vote
and, at the time of such individual's death, payments with respect to such Note
would not have been effectively connected to the conduct by such individual of a
trade or business in the United States.
Backup Withholding and Information Reporting. Under current United States
federal income tax law, a 31% backup withholding tax and information reporting
requirements apply to certain payments of principal, premium and interest
(including original issue discount) made to, and to the proceeds of sale before
maturity by, certain noncorporate United States persons. Under current Treasury
Regulations, backup withholding will not apply to payments made on a Registered
Note if the certifications required by Sections 871(h) and 881(c) are received,
provided in each case that the Company or such paying agent, as the case may be,
does not have actual knowledge that the payee is a United States person.
Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker generally
will not be subject to backup withholding. However, if such broker is a United
States person, a controlled foreign corporation for United States tax purposes
or a foreign person 50 percent or more of whose gross income is effectively
connected with 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
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an exemption. Under proposed Treasury Regulations, backup withholding may apply
to any payment which such broker is required to report if such broker has actual
knowledge that the payee is a United States person. Payments to or through the
United States office of a broker will be subject to backup withholding and
information reporting unless the Holder certifies, under penalties of perjury,
that it is not a United States person or otherwise establishes an exemption.
United States Alien Holders of Notes should consult their tax advisers regarding
the application of information reporting and backup withholding in their
particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from a payment to a United States Alien Holder under the backup withholding
rules will be allowed as a credit against such Holder's United States federal
income tax liability and may entitle such Holder to a refund, provided that the
required information is furnished to the United States Internal Revenue Service.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through the
Agent, who has agreed to use reasonable efforts to solicit offers to purchase
Notes. The Company will have the sole right to accept offers to purchase Notes
and may reject any offer to purchase Notes in whole or in part. The Agent will
have the right to reject any offer to purchase Notes solicited by it in whole or
in part. Payment of the purchase price of the Notes will be required to be made
in immediately available funds. The Company will pay the Agent, in connection
with sales of Notes resulting from a solicitation made or an offer to purchase
received by the Agent, unless otherwise specified in the applicable Pricing
Supplement, a commission ranging from .125% to .750% of the principal amount of
Notes to be sold.
The Company may also sell Notes to the Agent as principal for its own account at
discounts to be agreed upon at the time of sale. Such Notes may be resold to
investors and other purchasers at prevailing market prices, or prices related
thereto at the time of such resale, as determined by the Agent or, if so agreed,
at a fixed public offering price. In addition, the Agent may offer the Notes it
has purchased as principal to other dealers. The Agent may sell Notes to any
dealer at a discount and, unless otherwise specified in the applicable Pricing
Supplement, such discount allowed to any dealer will not be in excess of the
discount to be received by the Agent from the Company. After the initial public
offering of Notes to be resold to investors and other purchasers, the public
offering price (in the case of Notes to be resold at a fixed public offering
price), concession and discount may be changed.
The Company has reserved the right to sell Notes directly to, and may solicit
and accept offers to purchase Notes directly from, investors from time to time
on its own behalf in those jurisdictions in which it is permitted to do so.
The Company may also sell Notes from time to time through one or more additional
agents, acting either as agent or principal, on substantially the same terms as
those applicable to sales to or through the Agent. Any such additional agent
shall, with respect to such Notes, be deemed to be included in all references to
an "Agent" hereunder.
The Company reserves the right to withdraw, cancel or modify the offer without
notice.
The Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company and the
Agent have agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments made in
respect thereof.
The Company does not intend to apply for the listing of the Notes on a national
securities exchange. The Company has been advised by the Agent that the Agent
intends to make a market in the Notes, as permitted by applicable laws and
regulations. The Agent is not obligated to do so, however, and the Agent may
discontinue making a market at any time without notice. No assurance can be
given as to the liquidity of any trading market for the Notes.
Concurrently with the offering of Notes through the Agent as described herein,
the Company may issue other Debt Securities pursuant to the Indentures referred
to herein.
JPMSI is an indirect wholly-owned subsidiary of the Company. The participation
of JPMSI in the offer and sale of the Notes complies with the requirements of
Schedule E of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD") regarding the offer and sale of securities of an affiliate and
complies with any restrictions imposed on JPMSI by the Board of Governors of the
Federal Reserve System. In addition, each NASD member participating in
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<PAGE> 23
offers and sales of the Notes will not execute a transaction in the Notes in a
discretionary account without the prior written specific approval of the
member's customer.
This Prospectus Supplement and Prospectus may be used by JPMSI in connection
with offers and sales related to secondary market transactions in the Notes.
JPMSI may act as principal or agent in such transactions. Such sales will be
made at prices related to prevailing market prices at the time of sale.
In addition to offering Notes through the Agent as described herein, J.P. Morgan
Debt Securities which are medium-term notes and which may have terms
substantially similar to the terms of the Notes offered hereby may be offered
concurrently with the offering of the Notes, on a continuing basis outside the
United States by the Company or its agents. Any such J.P. Morgan Debt Securities
sold by the Company or its agents outside the United States will reduce the
principal amount of Notes which may be offered by this Prospectus Supplement and
the Prospectus.
LEGAL OPINIONS
The validity of the Notes will be passed upon for the Company by Margaret M.
Foran, Vice President, Assistant General Counsel and Assistant Secretary of the
Company and for the Agent by Cravath, Swaine & Moore, Worldwide Plaza, New York,
New York.
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GLOSSARY
"Amortizing Notes" has the meaning set forth on page S-13.
"Base Rate" has the meaning set forth on page S-6.
"Book-Entry Note" has the meaning set forth on the cover page.
"Business Day" has the meaning set forth on page S-6.
"Calculation Date" has the meaning set forth on page S-8.
"Certificated Note" has the meaning set forth on the cover page.
"Code" has the meaning set forth on page S-16.
"Commercial Paper Rate" has the meaning set forth on page S-8.
"Commercial Paper Interest Determination Date" has the meaning set forth on page
S-7.
"Commercial Paper Rate Note" has the meaning set forth on page S-6.
"Company" has the meaning set forth on the cover page.
"Components" has the meaning set forth on page S-5.
"Composite Quotations" has the meaning set forth on page S-9.
"Constant Yield Election" has the meaning set forth on page S-18.
"Debt Securities" has the meaning set forth on the cover page.
"Depositary" has the meaning set forth on page S-14.
"Designated LIBOR Page" has the meaning set forth on page S-10.
"ECU's" has the meaning set forth on the cover page.
"Exchange Rate Agent" has the meaning set forth on page S-4.
"Extended Maturity Date" has the meaning set forth on page S-12.
"Extendible Note" has the meaning set forth on page S-12.
"Extension Notice" has the meaning set forth on page S-12.
"Extension Period" has the meaning set forth on page S-12.
"Federal Funds Rate" has the meaning set forth on page S-9.
"Federal Funds Interest Determination Date" has the meaning set forth on page
S-7.
"Federal Funds Rate Note" has the meaning set forth on page S-6.
"Final Maturity Date" has the meaning set forth on page S-12.
"Fixed Rate Note" has the meaning set forth on the cover page.
"Floating Rate Note" has the meaning set forth on the cover page.
"Foreign Currency Notes" has the meaning set forth on page S-19.
"Indentures" has the meaning set forth on page S-3.
"Index Maturity" has the meaning set forth on page S-7.
"Index Currency" has the meaning set forth on page S-10.
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"Indexed Notes" has the meaning set forth on page S-11.
"Initial Interest Rate" has the meaning set forth on page S-7.
"Interest Reset Date" has the meaning set forth on page S-7.
"Interest Determination Date" has the meaning set forth on page S-7.
"Issue Price" has the meaning set forth on page S-4.
"LIBOR Interest Determination Date" has the meaning set forth on page S-7.
"LIBOR Reuters" has the meaning set forth on page S-9.
"LIBOR Note" has the meaning set forth on page S-6.
"LIBOR Telerate" has the meaning set forth on page S-9.
"London Banking Day" has the meaning set forth on page S-10.
"Market Exchange Rate" has the meaning set forth on page S-4.
"Master Security" has the meaning set forth on the cover page.
"Maturity" has the meaning set forth on page S-6.
"Maturity Date" has the meaning set forth on page S-4.
"Maximum Interest Rate" has the meaning set forth on page S-5.
"Minimum Interest Rate" has the meaning set forth on page S-5.
"Money Market Yield" has the meaning set forth on page S-9.
"Notes" has the meaning set forth on the cover page.
"OID Regulations" has the meaning set forth on page S-16.
"Original Maturity Date" has the meaning set forth on page S-12.
"Original Issue Discount Notes" has the meaning set forth on page S-13.
"Paying Agent and Note Registrar" has the meaning set forth on page S-4.
"Prime Rate Note" has the meaning set forth on page S-6.
"Prime Interest Determination Date" has the meaning set forth on page S-7.
"Prime Rate" has the meaning set forth on page S-10.
"Proposed Regulations" has the meaning set forth on page S-16.
"Qualified stated interest" has the meaning set forth on page S-16.
"Reuters Screen USPRIME1 Page" has the meaning set forth on page S-11.
"Senior Indenture" has the meaning set forth on page S-3.
"Spread" has the meaning set forth on page S-6.
"Spread Multiplier" has the meaning set forth on page S-6.
"Stated Maturity" has the meaning set forth on page S-11.
"Subordinated Indenture" has the meaning set forth on page S-3.
"Subordinated Debt Securities" has the meaning set forth on the cover page.
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"Treasury Interest Determination Date" has the meaning set forth on page S-7.
"Treasury bills" has the meaning set forth on page S-11.
"Treasury Rate" has the meaning set forth on page S-11.
"Treasury Rate Note" has the meaning set forth on page S-6.
"United States Holder" has the meaning set forth on page S-16.
"United States Alien Holder" has the meaning set forth on page S-16.
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