<PAGE>
PROSPECTUS SUPPLEMENT Filed pursuant to Rule 424(b)(3)
(To Prospectus dated November 20, 1995) SEC File No. 33-63895
$125,000,000
Southwestern Energy Company
MEDIUM-TERM NOTES
--------------
Due More Than Nine Months From Date of Issue
--------------
SOUTHWESTERN ENERGY COMPANY (THE "COMPANY") MAY OFFER FROM TIME TO TIME UP TO
$125,000,000 AGGREGATE PRINCIPAL AMOUNT OF MEDIUM-TERM NOTES (THE "NOTES"),
WHICH ARE ISSUABLE IN ONE OR MORE SERIES AND MAY BE OFFERED AND SOLD IN THE
UNITED STATES. SUCH AGGREGATE PRINCIPAL AMOUNT IS SUBJECT TO REDUCTION AS A
RESULT OF THE SALE BY THE COMPANY OF CERTAIN OTHER DEBT SECURITIES REFERRED TO
IN THE ACCOMPANYING PROSPECTUS. SEE "PLAN OF DISTRIBUTION". THE INTEREST RATE ON
EACH NOTE WILL BE EITHER A FIXED RATE ESTABLISHED BY THE COMPANY AT THE DATE OF
ISSUE OF SUCH NOTE, WHICH MAY BE ZERO IN THE CASE OF CERTAIN ORIGINAL ISSUE
DISCOUNT NOTES (A "FIXED RATE NOTE"), OR A FLOATING RATE (A "FLOATING RATE
NOTE"), IN EITHER CASE AS SET FORTH THEREIN AND SPECIFIED IN THE APPLICABLE
PRICING SUPPLEMENT (A "PRICING SUPPLEMENT"). 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").
UNLESS OTHERWISE SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT, INTEREST ON
EACH FIXED RATE NOTE IS PAYABLE EACH DECEMBER 1, AND JUNE 1, AND AT MATURITY OR,
IF APPLICABLE, UPON EARLIER REDEMPTION OR REPAYMENT. INTEREST ON EACH FLOATING
RATE NOTE IS PAYABLE ON THE DATES SET FORTH HEREIN AND IN THE APPLICABLE PRICING
SUPPLEMENT. UNLESS OTHERWISE SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT,
AMORTIZING NOTES WILL PAY PRINCIPAL AND INTEREST SEMIANNUALLY EACH DECEMBER 1,
AND JUNE 1, OR QUARTERLY EACH DECEMBER 1, MARCH 1, JUNE 1 AND SEPTEMBER 1, AND
AT MATURITY OR, IF APPLICABLE, UPON EARLIER REDEMPTION OR REPAYMENT. EACH NOTE
WILL MATURE ON ANY DAY MORE THAN NINE MONTHS FROM THE DATE OF ISSUE, AS SET
FORTH IN THE APPLICABLE PRICING SUPPLEMENT. SEE "DESCRIPTION OF NOTES". UNLESS
OTHERWISE SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT, THE NOTES MAY NOT BE
REDEEMED BY THE COMPANY OR THE HOLDER PRIOR TO MATURITY AND WILL BE ISSUED IN
FULLY REGISTERED FORM IN DENOMINATIONS OF $1,000 OR ANY AMOUNT IN EXCESS THEREOF
WHICH IS AN INTEGRAL MULTIPLE OF $1,000. EACH NOTE WILL BE REPRESENTED EITHER BY
A GLOBAL SECURITY REGISTERED IN THE NAME OF A NOMINEE OF THE DEPOSITORY TRUST
COMPANY, AS DEPOSITORY (A "GLOBAL NOTE"), OR BY A CERTIFICATE ISSUED IN
DEFINITIVE FORM (A "DEFINITIVE NOTE"), AS SET FORTH IN THE APPLICABLE PRICING
SUPPLEMENT. INTERESTS IN GLOBAL SECURITIES REPRESENTING GLOBAL NOTES WILL BE
SHOWN ON, AND TRANSFERS THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS
MAINTAINED BY THE DEPOSITORY (WITH RESPECT TO PARTICIPANTS' INTERESTS) AND ITS
PARTICIPANTS. GLOBAL NOTES WILL NOT BE ISSUABLE AS OR EXCHANGEABLE FOR
DEFINITIVE NOTES EXCEPT UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY SUPPLEMENT HERETO OR THE
ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
--------- -------------- -------------
<S> <C> <C> <C>
Per Note.............. 100% .125%-.750% 99.875%-99.250%
Total................. $125,000,000 $156,250-$937,500 $124,843,750-$124,062,500
</TABLE>
- -------
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes
will be sold at 100% of their principal amount. If the Company issues any
Note at a discount from or at a premium over its principal amount, the
Price to Public of any Note issued at a discount or premium will be set
forth in the applicable Pricing Supplement.
(2) The commission payable to an Agent for each Note sold through such Agent
shall range from .125% to .750% of the principal amount of such Note,
provided, however, that commissions with respect to Notes maturing in
thirty years or more will be negotiated.
(3) Assuming Notes are issued at 100% of their principal amount and before
deducting expenses payable by the Company estimated at $178,200.
--------------
The Notes are being offered on a continuing basis by the Company through
Morgan Stanley & Co. Incorporated, Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and NationsBanc Capital Markets, Inc.
(individually, an "Agent" and collectively, the "Agents"). The Company or an
Agent may reject any offer in whole or in part. The Agents have agreed to use
their best efforts to solicit purchases of such Notes. The Company may also
sell Notes to an Agent acting as principal for its own account or otherwise,
to be determined by such Agent, subject to the express authorization of the
Company with respect to sales of such Notes to other dealers. No termination
date for the offering of the Notes has been established. Payment of the
Purchase Price of Notes will be required to be made in immediately available
funds. The Notes will not be listed on any securities exchange, and there can
be no assurance that the Notes offered hereby will be sold or that there will
be a secondary market for the Notes. See "Plan of Distribution".
--------------
MORGAN STANLEY & CO.
Incorporated
MERRILL LYNCH & CO.
NATIONSBANC CAPITAL MARKETS, INC.
February 21, 1997
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE DISTRIBUTORS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES
OFFERED HEREBY AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company................................................................ S-3
Use of Proceeds............................................................ S-3
Description of Notes....................................................... S-3
United States Federal Income Taxation...................................... S-16
Plan of Distribution....................................................... S-20
Validity of Notes.......................................................... S-21
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Information by Reference........................... 2
The Company................................................................. 3
Use of Proceeds............................................................. 3
Ratio of Earnings to Fixed Charges.......................................... 4
Description of Debt Securities.............................................. 4
Plan of Distribution........................................................ 14
Experts..................................................................... 15
</TABLE>
----------------
S-2
<PAGE>
THE COMPANY
Southwestern Energy Company (the "Company") is an integrated natural gas
company. Through its wholly-owned subsidiaries, the Company is engaged in gas
and oil exploration and production, natural gas gathering, transmission and
marketing, as well as natural gas distribution. The principal sites for the
Company's exploration and production program are the Arkoma Basin of Arkansas,
the Gulf Coast (both onshore and shallow waters offshore) and the Anadarko
Basin of Oklahoma. The Company's natural gas gathering, transmission and
distribution properties are located in Arkansas and Missouri. The Company is
an exempt holding company under the Public Utility Holding Company Act of
1935.
USE OF PROCEEDS
Unless otherwise specified in the applicable Pricing Supplement, the Company
intends to use the net proceeds from the sale of Notes to refinance
outstanding indebtedness and for other general corporate purposes. To the
extent proceeds are used to refinance outstanding indebtedness, certain terms
of the indebtedness being refinanced will be set forth in the applicable
Pricing Supplement.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set
forth in the accompanying Prospectus, to which reference is hereby made. The
Notes will be issued under the Indenture dated as of December 1, 1995 (the
"Indenture") between the Company and The First National Bank of Chicago, as
trustee (the "Trustee"). The Notes issued under the Indenture will constitute
one or more series under such Indenture. The particular terms of the Notes
sold pursuant to any Pricing Supplement will be described therein. The terms
and conditions set forth in "Description of Notes" will apply to each Note
unless otherwise specified in the applicable Pricing Supplement and in such
Note. Whenever a defined term is referred to and not herein defined, the
definition thereof is contained in the accompanying Prospectus or the
Indenture.
GENERAL
The Notes will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company. The Notes may be issued from time to time in an
aggregate principal amount of up to $125,000,000, subject to reduction as a
result of the sale by the Company of other Debt Securities referred to in the
accompanying Prospectus. For the purpose of this Prospectus Supplement, the
principal amount of any Original Issue Discount Note (as defined below) means
the Issue Price (as defined below) of such Note.
The Notes will mature on any day more than nine months from the date of
issue, as set forth in the applicable Pricing Supplement. Except as may be
provided in the applicable Pricing Supplement, the Notes will be issued only
in fully registered form. Unless otherwise provided in the applicable Pricing
Supplement, Notes will be denominated in Authorized Denominations (as defined
below).
The Notes will be offered on a continuing basis, and each Note will be
issued initially as either a Global Note or a Definitive Note. Except as set
forth in the Prospectus under "Description of Debt Securities--Global Debt
Securities", Global Notes will not be issuable as Definitive Notes. The laws
of some states may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limitations and such laws
may impair the ability to own, transfer or pledge beneficial interests in
Global Securities. See "Book-Entry System" below.
The Notes may be presented for payment of principal and interest, transfer
of the Notes will be registrable and the Notes will be exchangeable at the
agency in The City of New York, maintained by the Company for such purpose;
provided that Global Notes will be exchangeable only in the manner and to the
extent set forth in
S-3
<PAGE>
the Prospectus under "Description of Debt Securities--Global Debt Securities".
On the date hereof, the agent for the payment, transfer and exchange of the
Notes (the "Paying Agent") is The First National Bank of Chicago, c/o First
Chicago Trust Company of New York, 14 Wall Street, 8th Floor, Window 2, New
York, New York 10005, Attention: Corporate Trust Administration. No service
charge will be made for any registration of transfer or exchange of any Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charges that may be imposed in connection therewith.
The applicable Pricing Supplement will specify the price (the "Issue Price")
of each Note to be sold pursuant thereto (unless such Note is to be sold at
100% of its principal amount), the interest rate or interest rate formula,
maturity and principal amount and any other terms on which each Note will be
issued.
As used herein, the following terms shall have the meanings set forth below:
"Authorized Denominations" means, unless otherwise provided in the
applicable Pricing Supplement, $1,000 or any amount in excess thereof which is
an integral multiple of $1,000.
"Business Day" means any day, other than a Saturday or Sunday, that is (i)
neither a legal holiday nor a day on which banking institutions are authorized
or required by law, regulation, or executive order to close in The City of New
York and (ii) with respect to LIBOR Notes (as defined below), a London Banking
Day.
An "Interest Payment Date" with respect to any Note shall be a date on
which, under the terms of such Note, regularly scheduled interest shall be
payable.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
"Original Issue Discount Note" means any Note that provides for an amount
less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to the Indenture.
The "Record Date" with respect to any Interest Payment Date shall be the
date 15 calendar days prior to such Interest Payment Date, whether or not such
date shall be a Business Day.
INTEREST AND PRINCIPAL PAYMENTS
Interest will be payable to the person in whose name a Note is registered at
the close of business on the applicable Record Date (the "Holder"); provided
that the interest payable upon maturity, redemption or repayment (whether or
not the date of maturity, redemption or repayment is an Interest Payment Date)
will be payable to the person to whom principal is payable. The initial
interest payment on a Note will be made on the first Interest Payment Date
falling after the date the Note is issued; provided, however, that payments of
interest (or, in the case of an Amortizing Note, principal and interest) on a
Note issued less than 15 calendar days before an Interest Payment Date will be
paid on the next succeeding Interest Payment Date to the Holder of record on
the Record Date with respect to such succeeding Interest Payment Date, unless
otherwise specified in the applicable Pricing Supplement. See "United States
Federal Income Taxation--Original Issue Discount" below.
Payments of interest, other than interest payable at maturity (or on the
date of redemption or repayment, if a Note is redeemed or repaid by the
Company prior to maturity), will be made by check mailed to the address of the
person entitled thereto as shown on the Note register. Payments of principal,
premium, if any, and interest upon maturity, redemption or repayment will be
made in immediately available funds against presentation and surrender of the
Note. Notwithstanding the foregoing, (a) the Depository, as Holder of Global
Notes, shall be entitled to receive payments of interest by wire transfer of
immediately available funds and (b) a Holder of $10,000,000 or more in
aggregate principal amount of Definitive Notes having the same Interest
Payment Date shall be entitled to receive payments of interest by wire
transfer of immediately available funds upon written request to the Paying
Agent, provided such request is received not later than 15 calendar days prior
to the applicable Interest Payment Date.
S-4
<PAGE>
Certain Notes, including Original Issue Discount Notes, may be 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. See "United
States Federal Income Taxation--Original Issue Discount" below. Unless
otherwise specified in the applicable Pricing Supplement, if the principal of
any Original Issue Discount Note is declared to be due and payable immediately
as described under "Description of Debt Securities--Events of Default, Notice
and Certain Rights on Default" in the Prospectus, the amount of principal due
and payable with respect to such Note shall be limited to the aggregate
principal amount of such Note multiplied by the sum of its Issue Price
(expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the "interest
method" (computed in accordance with generally accepted accounting principles
in effect on the date of declaration). Special considerations applicable to
any such Notes will be set forth in the applicable Pricing Supplement.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issuance at the
annual rate stated on the face thereof, except as described below under
"Extendible Notes", until the principal thereof is paid or made available for
payment. Unless otherwise specified in the applicable Pricing Supplement, such
interest will be computed on the basis of a 360-day year of twelve 30-day
months. Unless otherwise specified in the applicable Pricing Supplement,
payments of interest on Fixed Rate Notes other than Amortizing Notes will be
made semiannually on each December 1 and June 1 and at maturity or, if
applicable, upon any earlier redemption or repayment. Unless otherwise
specified in the applicable Pricing Supplement, payments of principal and
interest on Amortizing Notes, which are securities on which payments of
principal and interest are made in equal installments over the life of the
security, will be made either quarterly on each December 1, March 1, June 1
and September 1 or semiannually on each December 1 and June 1, as set forth in
the applicable Pricing Supplement, and at maturity or, if applicable, upon any
earlier redemption or repayment. Payments with respect to Amortizing Notes
will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount thereof. A table setting forth
repayment information in respect of each Amortizing Note will be provided to
the original purchaser and will be available, upon request, to subsequent
holders.
If any Interest Payment Date for any Fixed Rate Note falls on a day that is
not a Business Day, the interest payment shall be made on the next day that is
a Business Day, and no interest on such payment shall accrue for the period
from and after the Interest Payment Date. If the maturity (or, if applicable,
the date of redemption or repayment) of any Fixed Rate Note falls on a day
that is not a Business Day, the payment of interest and principal (and
premium, if any) will be made on the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after the
maturity date (or, if applicable, the date of redemption or repayment).
Interest payments for Fixed Rate Notes will include accrued interest from
and including the date of issue or from and including the last date in respect
of which interest has been paid, as the case may be, to, but excluding, the
Interest Payment Date or the date of maturity or earlier redemption or
repayment, as the case may be. The interest rates the Company will agree to
pay on newly issued Fixed Rate Notes are subject to change without notice by
the Company from time to time, but no such change will affect any Fixed Rate
Notes theretofore issued or that the Company has agreed to issue.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from the date of issuance until
the principal thereof is paid or made available for payment at a rate
determined by reference to an interest rate basis or formula (the "Base
Rate"), which may be adjusted by a Spread and/or Spread Multiplier (each as
defined below). The applicable Pricing Supplement will designate one or more
of the following Base Rates as applicable to each Floating Rate Note: (a) the
CD Rate (a "CD Rate Note"), (b) the Commercial Paper Rate (a "Commercial Paper
Rate Note"), (c) the Federal Funds Rate (a "Federal Funds Rate Note"), (d)
LIBOR (a "LIBOR Note"), (e) the Prime Rate (a "Prime Rate Note"), (f) the
Treasury Rate (a "Treasury Rate Note"), (g) the CMT Rate (a "CMT Rate Note")
or (h) such other Base Rate or interest rate formula as is set forth in such
Pricing Supplement and in
S-5
<PAGE>
such Floating Rate Note. The "Index Maturity" for any Floating Rate Note is
the period of maturity of the instrument or obligation from which the Base
Rate is calculated and will be specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to
the specified Base Rate (i) plus or minus the Spread, if any, and/or (ii)
multiplied by the Spread Multiplier, if any. The "Spread" is the number of
basis points (one one-hundredth of a percentage point) specified in the
applicable Pricing Supplement to be added to or subtracted from the Base Rate
for such Floating Rate Note, and the "Spread Multiplier" is the percentage
specified in the applicable Pricing Supplement to be applied to the Base Rate
for such Floating Rate Note.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or
ceiling, on the rate of interest which may accrue during any interest period
("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the
rate of interest which may accrue during any interest period ("Minimum
Interest Rate"). In addition to any Maximum Interest Rate that may be
applicable to any Floating Rate Note pursuant to the above provisions, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by United
States law of general application. Under current New York law, the maximum
rate of interest, subject to certain exceptions, for any loan in an amount
less than $250,000 is 16% and for any loan in the amount of $250,000 or more
but less than $2,500,000 is 25% per annum on a simple interest basis. These
limits do not apply to loans of $2,500,000 or more.
Unless otherwise specified in the applicable Pricing Supplement, the rate of
interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" for such Note, and the first day of each Interest Reset Period being
an "Interest Reset Date"), as specified in the applicable Pricing Supplement.
Unless otherwise specified in the Pricing Supplement, the Interest Reset Date
will be, in the case of Floating Rate Notes which reset daily, each Business
Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) which
reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes
which reset weekly, the Tuesday of each week, except as provided below; in the
case of Floating Rate Notes which reset monthly, the third Wednesday of each
month; in the case of Floating Rate Notes which reset quarterly, the third
Wednesday of March, June, September and December; in the case of Floating Rate
Notes which reset semiannually, the third Wednesday of two months of each
year, as specified in the applicable Pricing Supplement; and in the case of
Floating Rate Notes which reset annually, the third Wednesday of one month of
each year, as specified in the applicable Pricing Supplement; provided,
however, that (a) the interest rate in effect from the date of issue to the
first Interest Reset Date with respect to a Floating Rate Note will be the
initial interest rate set forth in the applicable Pricing Supplement (the
"Initial Interest Rate") and (b) unless otherwise specified in the applicable
Pricing Supplement, the interest rate in effect for the ten calendar days
immediately prior to maturity, or, if applicable, the redemption or repayment
date, will be that in effect on the tenth calendar day preceding such maturity
or, if applicable, the redemption or repayment date. If any Interest Reset
Date for any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be postponed to the next
succeeding Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day.
Except as provided below, unless otherwise specified in the applicable
Pricing Supplement, interest on Floating Rate Notes will be payable: (i) in
the case of Floating Rate Notes (including Treasury Rate Notes) with a daily,
weekly or monthly Interest Reset Date, on the third Wednesday of each month or
on the third Wednesday of March, June, September and December, as specified in
the applicable Pricing Supplement; (ii) in the case of Floating Rate Notes
with a quarterly Interest Reset Date, on the third Wednesday of March, June,
September and December; (iii) in the case of Floating Rate Notes with a
semiannual Interest Reset Date, on the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (iv) in the case of
Floating Rate Notes with an annual Interest Reset Date, on the third Wednesday
of the month specified in the applicable
S-6
<PAGE>
Pricing Supplement. If any Interest Payment Date for any Floating Rate Note
would fall on a day that is not a Business Day with respect to such Floating
Rate Note, such Interest Payment Date will be postponed to the following day
that is a Business Day with respect to such Floating Rate Note, 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
day that is a Business Day. If the maturity date or any earlier redemption or
repayment date of a Floating Rate Note would fall on a day that is not a
Business Day, the payment of principal, premium, if any, and interest will be
made on the next succeeding Business Day, and no interest on such payment
shall accrue for the period from and after such maturity, redemption or
repayment date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments for Floating Rate Notes shall be the amount of interest accrued from
and including the date of issue or from and including the last date to which
interest has been paid to, but excluding, the Interest Payment Date or
maturity date or, if applicable, the date of redemption or repayment.
With respect to a Floating Rate Note, accrued interest shall be calculated
by multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which interest is
being paid. Unless otherwise specified in the applicable Pricing Supplement,
the interest factor for each such day is computed by dividing the interest
rate applicable to such day by 360, in the case of CD Rate Notes, Commercial
Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes
or by the actual number of days in the year, in the case of Treasury Rate
Notes and CMT Rate Notes. All percentages used in or resulting from any
calculation of the rate of interest on a Floating Rate Note will be rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point,
with five one-millionths of a percentage point rounded upward, and all dollar
amounts used in or resulting from such calculation on Floating Rate Notes will
be rounded to the nearest cent, with one-half cent rounded upward. The
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date. The interest rate applicable to any other day is the
interest rate from the immediately preceding Interest Reset Date (or, if none,
the Initial Interest Rate).
Unless otherwise stated in the applicable Pricing Supplement, the
calculation agent (the "Calculation Agent") with respect to any issue of
Floating Rate Notes shall be The First National Bank of Chicago. Upon the
request of the Holder of any Floating Rate Note, the Calculation Agent will
provide the interest rate then in effect and, if determined, the interest rate
that will become effective on the next Interest Reset Date with respect to
such Floating Rate Note.
The "Interest Determination Date" pertaining to an Interest Reset Date for
CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate
Notes and Prime Rate Notes will be the second Business Day next preceding such
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for a LIBOR Note will be the second London Banking Day preceding
such Interest Reset Date. The Interest Determination Date pertaining to an
Interest Reset Date for a Treasury Rate Note will be the day of the week in
which such Interest Reset Date falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is normally held
on the following Tuesday, but 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 Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week.
If an auction falls on a day that is an Interest Reset Date, such Interest
Reset Date will be the next following Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date", where applicable, pertaining to an Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date, or, if such day is not a Business Day, the next succeeding
Business Day, or (ii) the Business Day preceding the applicable Interest
Payment Date or Maturity Date, as the case may be.
S-7
<PAGE>
Interest rates will be determined by the Calculation Agent as follows:
CD Rate Notes
CD Rate Notes will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published by the Board of Governors of
the Federal Reserve System in "Statistical Release H.15(519), Selected
Interest Rates", or any successor publication of the Board of Governors of the
Federal Reserve System ("H.15(519)") under the heading "CDs (Secondary
Market)", or, if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the CD Rate
will be the rate on such Interest Determination Date for negotiable
certificates of deposit of the 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 for U.S. Government
Securities" (the "Composite Quotations") under the heading "Certificates of
Deposit". If such rate is not yet published in either H.15(519) or the
Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New
York City time, on such Interest Determination Date for certificates of
deposit in an amount that is representative for a single transaction at that
time with a remaining maturity closest to the Index Maturity designated in the
Pricing Supplement of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United States money
center banks; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as set forth above, the CD Rate in
effect for the applicable period will be the same as the CD Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the CD Rate Notes for which such
CD Rate is being determined shall be the Initial Interest Rate).
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Commercial Paper Rate Notes
and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date, the Money
Market Yield (as defined below) of the rate on such date for commercial paper
having the Index Maturity specified in the applicable Pricing Supplement, as
such rate shall be published in 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 Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of the
rate on such Interest Determination Date for commercial paper of the specified
Index Maturity as published in 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 available in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate shall be the Money Market Yield of
the arithmetic mean of the offered rates as of 11:00 A.M., New York City time,
on such Interest Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for commercial
paper of the specified Index Maturity, placed for an industrial issuer whose
bond rating is "AA", or the equivalent, from a nationally recognized
statistical rating agency; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting offered rates as mentioned
in this sentence, the Commercial Paper Rate in effect for the applicable
period will be the same as the
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Commercial Paper Rate for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the rate of interest payable on
the Commercial Paper Rate Notes for which such Commercial Paper Rate is being
determined shall be the Initial Interest Rate).
"Money Market Yield" shall be a yield (expressed as a percentage) calculated
in accordance with the following formula:
D X 360
Money Market Yield = ________ X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper, quoted
on a bank discount basis and expressed as a decimal; and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rate (calculated
with reference to the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the Federal Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" means, with respect to any Interest Determination Date,
the rate on such date for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)", or, if not so published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate will be the rate on such Interest
Determination Date as published in the Composite Quotations under the heading
"Federal Funds/Effective Rate". If such rate is not yet published in either
H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the Federal
Funds Rate for such Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds, as of 9:00 A.M., New York City time,
on such Interest Determination Date, arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by the Calculation
Agent; provided, however, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as set forth above, the Federal Funds Rate
in effect for the applicable period will be the same as the Federal Funds Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable on the Federal Funds Rate
Notes for which such Federal Funds Rate is being determined shall be the
Initial Interest Rate).
LIBOR Notes
LIBOR Notes will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for
each Interest Determination Date will be determined by the Calculation Agent
as follows:
(i) As of the 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 U.S. dollars
having the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following such
Interest Determination Date, that appear on the Designated LIBOR Page as of
11:00 A.M., London time, on that 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
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Pricing Supplement, the rate for deposits in U.S. dollars having the Index
Maturity designated in the applicable Pricing Supplement, commencing on the
second London Banking Day immediately following such Interest Determination
Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London
time, on that Interest Determination Date. If 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), 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 an 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 U.S.
dollars for the period of the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Banking Day immediately
following such Interest Determination Date, to prime banks in the London
interbank market at approximately 11:00 A.M., London time, on such Interest
Determination Date and in a principal amount of not less than $1,000,000
that is representative of a single transaction in such market at such time.
If at least two such quotations are provided, LIBOR determined on such
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR determined on such
Interest Determination Date will be the arithmetic mean of the rates quoted
at approximately 11:00 A.M. (or such other time specified in the applicable
Pricing Supplement), in The City of New York on such Interest Determination
Date, by three major banks selected by the Calculation Agent for loans in
U.S. dollars 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 Interest Determination Date that is
representative for a single transaction 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 in effect for the
applicable period will be the same as LIBOR for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
rate of interest payable on the LIBOR Notes for which such LIBOR is being
determined shall be the Initial Interest Rate).
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in
the applicable Pricing Supplement, the display designated as LIBOR Page on the
Reuters Monitor Money Rates Service (or such other page as may replace the
LIBOR page on that service for the purpose of displaying the London interbank
offered rates of major banks for U.S. dollars), or (b) if "LIBOR Telerate" is
designated in the applicable Pricing Supplement, the display on page 3750 of
the Dow Jones Telerate Service (or such other page as may replace page 3750 on
that service for the purpose of displaying the London interbank offered rates
of major banks for U.S. dollars or such other service or services as may be
nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates for U.S. dollar deposits). If neither LIBOR
Reuters nor LIBOR Telerate is specified in the applicable Pricing Supplement,
LIBOR will be determined as if LIBOR Telerate had been specified.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any,
and subject to the Minimum Interest Rate and the Maximum Interest Rate, if
any) specified in the Prime Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date, the rate set
forth in H.15(519) for 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 Interest Determination Date, the Prime
Rate for such Interest Determination Date will be the arithmetic mean of the
rates of interest publicly announced by each bank named on the Reuters Screen
USPRIME1 (as
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defined below) as such bank's prime rate or base lending rate as in effect for
such Interest Determination Date as quoted on the Reuters Screen USPRIME1 on
such Interest Determination Date, or, if fewer than four such rates appear on
the Reuters Screen USPRIME1 for such Interest Determination Date, the rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business
on such Interest Determination Date by at least three major money center banks
in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than three 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"
in effect for the applicable period will be the same as the Prime Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the Prime Rate Notes for which
such Prime Rate is being determined shall be the Initial Interest Rate).
"Reuters Screen USPRIME1" means the display designated as page "USPRIME1" on
the Reuters Monitor Money Rates Services (or such other page as may replace
USPRIME1 on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rate (calculated with
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any, and subject to the Minimum Interest Rate and the Maximum Interest Rate,
if any) specified in the Treasury Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Interest Determination Date, the
rate for the auction held on such date of direct obligations of the United
States ("Treasury Bills") having the Index Maturity designated in the
applicable Pricing Supplement, as published in H.15(519) under the heading
"Treasury Bills--auction average (Investment)" or, if not so published by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate on such Interest Determination
Date (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) as otherwise announced by
the United States Department of the Treasury. In the event that the results of
the auction of Treasury Bills having the Index Maturity designated in the
applicable Pricing Supplement are not published or reported as provided above
by 3:00 P.M., New York City time, on such Calculation Date or if no such
auction is held in a particular week, then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) calculated using the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York
City time, on such Interest Determination Date, of three leading primary
United States government securities dealers 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 any of the dealers selected as aforesaid by the Calculation Agent are
not quoting bid rates as mentioned in this sentence, the Treasury Rate for
such Interest Reset Date will be the same as the Treasury Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the Treasury Rate Notes for
which the Treasury Rate is being determined shall be the Initial Interest
Rate).
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the CMT Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page (as defined below) under
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the caption ". . . Treasury Constant Maturities . . . Federal Reserve Board
Release H.15 . . . Mondays Approximately 3:45 p.m.", under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, such Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the week or the month, as applicable,
ended immediately preceding the week or month, as applicable in which the
related Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 p.m., New York
City time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant Maturity rate for
the Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate is no longer published, or, if not published by 3:00 p.m., New York
City time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant Maturity rate for
the Designated CMT Maturity Index (or other United States Treasury rate for
the Designated CMT Maturity Index) for the Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the
Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided
by 3:00 p.m., New York City time, on the related Calculation Date, then the
CMT Rate for the Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately
3:30 p.m., New York City time on the Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York (which may include the Agents or their affiliates) selected by the
Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent, after consultation with the Company, and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury notes") with an original maturity of approximately the
Designated CMT Maturity Index and remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent
cannot obtain three such Treasury notes quotations, the CMT Rate for such
Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the secondary
market offer side prices as of approximately 3:30 p.m., New York City time, on
the Interest Determination Date of three Reference Dealers in The City of New
York (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100,000,000. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate for such Interest Reset Date will be the same
as the CMT Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the rate of interest payable on the
CMT Rate Notes for which the CMT Rate is being determined shall be the Initial
Interest Rate). If two Treasury notes with an original maturity as described
in the second preceding sentence have remaining terms to maturity equally
close to the Designated CMT Maturity Index, the quotes for the Treasury note
with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in an applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519).
If no such page is specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in an applicable Pricing Supplement with respect to which the
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CMT Rate will be calculated. If no such maturity is specified in the
applicable Pricing Supplement, the Designated CMT Maturity Index shall be two
years.
RENEWABLE NOTES
The applicable Pricing Supplement will indicate whether a Note (other than
an Amortizing Note) will mature unless the term of all or any portion of any
such Note is renewed in accordance with the procedures described in such
Pricing Supplement.
INDEXED NOTES
The Notes may be issued, from time to time, as Notes of which the principal
amount payable on a date more than nine months 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 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 Notes depending upon the fluctuation of the relative
value, rate or price of the specified index. Specific information pertaining
to the method for determining the principal amount payable at maturity, a
historical comparison of the relative value, rate or price of the specified
index and the face amount of the Indexed Note and certain additional United
States federal tax considerations will be described in the applicable Pricing
Supplement.
EXTENDIBLE NOTES
The Pricing Supplement relating to each Note (other than an Amortizing Note)
will indicate whether the Company has the option to extend the maturity of
such Note for one or more whole calendar periods (e.g., weeks, months or
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 procedures
relating thereto will be as specified in the applicable Pricing Supplement.
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 day following the end of the initial interest period, and on the
day immediately following the end of each Extension Period, at a price equal
to the principal amount thereof plus any accrued and unpaid interest to such
date. The applicable Pricing Supplement will specify the procedures that must
be followed in order to effect such repayment.
INTEREST RATE RESET
If the Company has the option with respect to any Note to reset the interest
rate, in the case of a Fixed Rate Note, or to reset the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, the Pricing Supplement
relating to such Note will indicate such option, and, if so, (i) the date or
dates on which such interest rate or such Spread and/or Spread Multiplier, as
the case may be, may be reset (each an "Optional Reset Date") and (ii) the
basis or formula, if any, for such resetting.
Unless otherwise specified in the applicable Pricing Supplement, the Company
may exercise such option with respect to a Note by notifying the Paying Agent
with respect to such Note of such exercise at least 45 but not more than 60
days prior to an Optional Reset Date for such Date for such Note. Not later
than 40 days prior to such Optional Reset Date, such Paying Agent will mail to
the Holder of such Note a notice (the "Reset Notice"), first class, postage
prepaid, setting forth (i) the election of the Company to reset the interest
rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, (ii) such new interest rate
or such new Spread and/or Spread Multiplier, as the case may be, and (iii) the
provisions, if any, for redemption during the period from such Optional Reset
Date to the next Optional Reset Date or, if there is no such next Optional
Reset Date, to the Stated Maturity of such Note (each period an "Optional
Reset
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Interest Period"), including the date or dates on which or the period or
periods during which and the price or prices at which such redemption may
occur during such Optional Reset Interest Period.
Notwithstanding the foregoing, unless otherwise specified in the applicable
Pricing Supplement, not later than 20 days prior to an Optional Reset Date for
a Note, the Company may, at its option, revoke the interest rate, in the case
of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, in either case provided for in the Reset Notice and
establish a higher interest rate, in the case of a Fixed Rate Note, or a
higher Spread and/or Spread Multiplier, in the case of a Floating Rate Note,
for the Subsequent Interest Period commencing on such Option Reset Date by
mailing or causing such Paying Agent to mail notice of such higher interest
rate or higher Spread and/or Spread Multiplier, as the case may be, first
class, postage prepaid, to the Holder of such Note. Such notice shall be
irrevocable. All Notes with respect to which the interest rate or Spread
and/or Spread Multiplier is reset on an Optional Reset Date will bear such
higher interest rate, in the case of a Fixed Rate Note, or higher Spread
and/or Spread Multiplier, in the case of a Floating Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, if the
Company elects to reset the Interest rate or the Spread and/or Spread
Multiplier of a Note, the Holder of such Note will have the option to elect
repayment of such Note by the Company on any Optional Reset Date at a price
equal to the principal amount thereof plus any accrued interest on such
Optional Reset Date. In order for a Note to be so repaid on an Optional Reset
Date on which the interest is reset, the Holder thereof must follow the
procedures set forth below under "Repayment at the Noteholder's Option;
Repurchase" for optional repayment, except that the period for delivery of
such Note or notification to the Paying Agent with respect to such Note shall
be at least 25 but not more than 35 days prior to such Optional Reset Date and
except that a Holder who has tendered a Note for repayment pursuant to a Reset
Notice may, by written notice to such Paying Agent, revoke any such tender for
repayment until 5:00 p.m. New York City time on the tenth day, whether or not
a Business Day, prior to such Optional Reset Date.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Interest Rate Reset", "Extendible Notes" and "Renewable
Notes".
BOOK-ENTRY SYSTEM
Upon issuance, all Fixed Rate Global Notes having the same Issue Date,
interest rate, if any, amortization schedule, if any, maturity date and other
terms, if any, will be represented by one or more Global Securities, and all
Floating Rate Global Notes having the same Issue Date, Initial Interest Rate,
Base Rate, Interest Reset Period, Interest Payment Dates, Index Maturity,
Spread and/or Spread Multiplier, if any, Minimum Interest Rate, if any,
Maximum Interest Rate, if any, maturity date and other terms, if any, will be
represented by one or more Global Securities. Each Global Security
representing Global Notes will be deposited with, or on behalf of, The
Depository Trust Company ("DTC"), New York, New York, as the Depository, and
registered in the name of a nominee of the Depository. Global Notes will not
be exchangeable for Definitive Notes, except under the circumstances described
in the Prospectus under "Description of Debt Securities--Global Debt
Securities". Definitive Notes will not be exchangeable for Global Notes and
will not otherwise be issuable as Global Notes.
A further description of the Depository's procedures with respect to Global
Securities representing Global Notes is set forth in the Prospectus under
"Description of Debt Securities--Global Debt Securities." The Depository has
confirmed to the Company, each Agent and the Trustee that it intends to follow
such procedures.
OPTIONAL REDEMPTIONS
The Notes will be redeemable at the option of the Company prior to the
Stated Maturity, if any, only if an Initial Redemption Date ("Initial
Redemption Date") is specified in the applicable Pricing Supplement. If so
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specified, and subject to any other terms set forth in the applicable Pricing
Supplement, the Notes will be subject to redemption at the option of the
Company on any date on and after the applicable Redemption Date in whole or
from time to time in part in increments of $1,000 or the minimum denomination
specified in such Pricing Supplement (provided that any remaining principal
amount thereof shall be at least $1,000 or such minimum denomination), at the
applicable Redemption Price (as defined below) on notice given not more than
60 days, nor less than 30 days prior to the date of redemption and in
accordance with the provisions of the Indenture. "Redemption Price", with
respect to a Note, means, unless otherwise specified in the applicable Pricing
Supplement, an amount equal to the sum of (i) the Initial Redemption
Percentage specified in such Pricing Supplement (as adjusted by the Annual
Redemption Percentage Reduction, if applicable (as specified in such Pricing
Supplement)) multiplied by the unpaid principal amount or the portion to be
redeemed plus (ii) accrued interest, if any, to the date of redemption. Unless
otherwise specified in the applicable Pricing Supplement, the Initial
Redemption Percentage, if any, applicable to a Note shall decline at each
anniversary of the Initial Redemption Date by an amount equal to the
applicable Annual Redemption Percentage Reduction, if any, until the
Redemption Price is equal to 100% of the unpaid principal amount thereof or
the portion thereof to be redeemed.
The Company may purchase Notes at any price in the open market or otherwise.
Notes so purchased by the Company may, at the discretion of the Company, be
held or resold or surrendered to the relevant Trustee for cancellation. If the
Notes and any applicable Pricing Supplement provide for mandatory sinking fund
payments with respect to such Notes, the Indenture provides that, in lieu of
making all or any part of the mandatory sinking fund payment in cash, the
Company may deliver Notes previously purchased or otherwise acquired (to the
extent not previously credited).
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund.
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASE
If applicable, the Pricing Supplement will indicate the terms on which a
Note will be repayable at the option of the Holder prior to its maturity date.
Unless otherwise specified in such Pricing Supplement, Notes will be repayable
at a price equal to 100% of the principal amount thereof, together with
accrued interest to the date of repayment, unless such Note was issued with
original issue discount, in which case the Pricing Supplement will specify the
amount payable upon such repayment.
In order for such a Note to be repaid, the Paying Agent must receive at
least 30 days but not more than 60 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) if a Note is represented by a Global Security held
by or on behalf of DTC or its nominee, a telegram, telex, facsimile
transmission or a letter from the applicable Participant 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, together with the duly completed form entitled "Option to Elect
Repayment" on the reverse of the Note, will be received by the Paying Agent
not later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter, provided, however, that such telegram,
telex, facsimile transmission or letter shall only be effective if such Note
and form duly completed are received by the Paying Agent by such fifth
Business Day. Unless otherwise specified in the applicable Pricing Supplement,
exercise of the repayment option by the Holder of a Note will be irrevocable.
The repayment option may be exercised by the Holder of a Note for less than
the entire principal amount of the Note but, in that event, the principal
amount of the Note remaining outstanding after repayment must be an Authorized
Denomination.
If a Note is represented by a Global Security, the Depository's nominee will
be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depository's
nominee will timely exercise a right to repayment with respect to a particular
Note, the beneficial
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owner of such Note must instruct the broker or other direct or indirect
participant through which it holds an interest in such Note to notify the
Depository of its desire to exercise a right to repayment. Different firms
have different deadlines 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 deadline by which such an instruction must be given in order
for timely notice to be delivered to the Depository.
UNITED STATES FEDERAL INCOME TAXATION
The following is a summary of certain United States federal income tax
considerations that may be relevant to a holder of a Note that is a "United
States person" (as defined below) or that otherwise is subject to United
States federal income taxation on a net income basis in respect of a Note (a
"United States holder"). This summary is based on laws, regulations, rulings
and decisions now in effect, all of which are subject to change. This summary
deals only with United States holders that will hold Notes as capital assets,
and does not address tax considerations applicable to investors that may be
subject to special tax rules, such as banks, tax-exempt entities, insurance
companies or dealers in securities or currencies, persons that will hold Notes
as a part of an integrated investment (including a "straddle") comprised of a
Note and one or more other positions or persons that have a "functional
currency" other than the U.S. dollar. Any special United States federal income
tax considerations relevant to a particular issue of Notes, including any
Indexed Notes, will be provided in the applicable Pricing Supplement.
As used herein, the term "United States person" means a holder of a Note who
is a citizen or resident of the United States, or that is a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate the income of
which is subject to United States federal income taxation regardless of its
source or a trust if (i) a U.S. court is able to exercise primary supervision
over the trust's administration and (ii) one or more U.S. fiduciaries have the
authority to control all of the trust's substantial decisions, and the term
"United States" means the United States of America (including the States and
the District of Columbia).
Investors should consult their own tax advisors in determining the tax
consequences to them of holding Notes, including the application to their
particular situations of the United States federal income tax considerations
discussed below, as well as the application of state, local, foreign or other
tax laws.
PAYMENTS OF INTEREST
Payments of "qualified stated interest" (as defined below under "Original
Issue Discount") on a Note will be taxable to a United States holder as
ordinary interest income at the time that such payments are accrued or are
received (in accordance with the United States holder's method of tax
accounting).
PURCHASE, SALE AND RETIREMENT OF NOTES
A United States holder's tax basis in a Note generally will equal the cost
of such Note to such holder, increased by any amounts includible in income by
the holder as original issue discount and market discount and reduced by any
amortized premium (each as described below) and any payments other than
payments of qualified stated interest made on such Note.
Upon the sale, exchange or retirement of a Note, a United States holder
generally will recognize gain or loss equal to the difference between the
amount realized on the sale, exchange or retirement (less any accrued
qualified stated interest, which will be taxable as such) and the United
States holder's tax basis in such Note.
Except as discussed below with respect to market discount and Short-Term
Notes (as defined below), gain or loss recognized by a United States holder
will generally be a long term capital gain or loss if the United States holder
has held the Note for more than one year at the time of disposition. The
distinction between capital gain
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or loss and ordinary income or loss is important for purposes of the
limitations on a United States holder's ability to offset capital losses
against ordinary income and because United States holders that are individuals
may be entitled to a preferential tax rate on long-term capital gains.
ORIGINAL ISSUE DISCOUNT
United States holders of OID Notes generally will be subject to the special
tax accounting rules for obligations issued with original issue discount
("OID") provided by the Internal Revenue Code of 1986, as amended (the
"Code"), and certain regulations promulgated thereunder (the "OID
Regulations"). United States holders of such Notes should be aware that, as
described in greater detail below, they generally must include OID in ordinary
gross income for United States federal income tax purposes as it accrues, in
advance of the receipt of cash attributable to that income.
As used herein, "OID Note" means (a) a Note that has a stated redemption
price at maturity that exceeds the first price at which a substantial amount
of the Notes having the same date of issue and otherwise identical terms as
such Note are sold for money (other than to an underwriter, placement agent or
wholesaler) (its "issue price") by at least 0.25% of such stated redemption
price at maturity multiplied by the number of full years from the date of
issue to the date of maturity of such Note; and (b) any other Note designated
by the Company in the applicable Pricing Supplement as issued with original
issue discount for United States federal income tax purposes. For this
purpose, the "stated redemption price at maturity" of a Note is the total of
all payments to be made in respect of the Note other than payments of
"qualified stated interest" (as defined below).
In general, each United States holder of an OID Note, whether such holder
uses the cash or the accrual method of tax accounting, will be required to
include in ordinary gross income the sum of the "daily portions" of OID on the
Note for all days during the taxable year that the United States holder owns
the Note. The daily portions of OID on an OID Note are determined by
allocating to each day in any accrual period a ratable portion of the OID
allocable to that accrual period. Accrual periods may be any length and may
vary in length over the term of an OID Note, provided that no accrual period
is longer than one year and each scheduled payment of principal or interest
occurs on either the final day or the first day of an accrual period. In the
case of an initial holder, the amount of OID on an OID Note allocable to each
accrual period is determined by (a) multiplying the "adjusted issue price" (as
defined below) of the OID Note at the beginning of the accrual period by the
yield to maturity of such OID Note (appropriately adjusted to reflect the
length of the accrual period) and (b) subtracting from that product the amount
(if any) of qualified stated interest (as defined below) allocable to that
accrual period. The yield to maturity of a Note is the discount rate that
causes the present value of all payments on the Note as of its original issue
date to equal the issue price of such Note. The "adjusted issue price" of an
OID Note at the beginning of any accrual period will generally be the sum of
its issue price (generally including accrued interest, if any) and the amount
of OID allocable to all prior accrual periods, reduced by the amount of all
payments other than payments of qualified stated interest (if any) made with
respect to such Note in all prior accrual periods. The term "qualified stated
interest" generally means stated interest that is unconditionally payable in
cash or property (other than debt instruments of the issuer) at least annually
during the entire term of an OID Note at a single fixed rate of interest or,
subject to certain conditions, based on one or more interest indices. In the
case of an OID Note that is a Floating Rate Note, both the "yield to maturity"
and "qualified stated interest" will generally be determined for these
purposes as though the OID Note will bear interest in all periods at a fixed
rate generally equal to the rate that would be applicable to the interest
payments on the Note on its date of issue or, in the case of certain Floating
Rate Notes, the rate that reflects the yield that is reasonably expected for
the Note, as indicated in the applicable Pricing Supplement. (Additional rules
may apply if interest on a Floating Rate Note is based on more than one
interest index.) As a result of this "constant yield" method of including OID
in income, the amounts includible in income by a United States holder in
respect of an OID Note generally are lesser in the early years and greater in
the later years than the amounts that would be includible on a straight-line
basis.
All payments on an OID Note (other than payments of qualified stated
interest, or payments made pursuant to a pro rata prepayment) will generally
be viewed first as payments of previously-accrued OID (to the extent thereof),
with payments attributed first to the earliest-accrued OID, and then as
payments of principal.
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A United States holder generally may make an irrevocable election to include
in its income its entire return on a Note (i.e., the excess of all remaining
payments to be received on the Note, including payments of qualified stated
interest, over the amount paid by such United States holder for such Note)
under the constant-yield method described above. For Notes purchased at a
premium or bearing market discount in the hands of the United States holder,
the United States holder making such election will also be deemed to have made
the election (discussed below in "--Premium and Market Discount") to amortize
premium or to accrue market discount in income currently on a constant-yield
basis.
A subsequent United States holder of an OID Note that purchases the Note at
a cost less than its remaining redemption amount (as defined below), or an
initial United States holder that purchases an OID Note at a price other than
the Note's issue price, also generally will be required to include in gross
income the daily portions of OID, calculated as described above. However, if
the United States holder acquires the OID Note at a price greater than its
adjusted issue price, such holder may reduce its periodic inclusions of OID
income to reflect the premium paid over the adjusted issue price. The
"remaining redemption amount" for a Note is the total of all future payments
to be made on the Note other than payments of qualified stated interest.
Certain of the Notes may be subject to special redemption, repayment or
interest rate reset features, as indicated in the applicable Pricing
Supplement. Notes containing such features, in particular OID Notes, may be
subject to special rules that differ from the general rules discussed above.
Purchasers of Notes with such features should carefully examine the applicable
Pricing Supplement and should consult their own tax advisors with respect to
such Notes since the tax consequences with respect to such features, and
especially with respect to OID, will depend, in part, on the particular terms
of the purchased Notes.
PREMIUM AND MARKET DISCOUNT
A United States holder of a Note that purchases the Note at a cost greater
than its remaining redemption amount (as defined in the second preceding
paragraph) will be considered to have purchased the Note at a premium, and may
elect to amortize such premium (as an offset to interest income), using a
constant-yield method, over the remaining term of the Note. Such election,
once made, generally applies to all bonds held or subsequently acquired by the
United States holder on or after the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. A United States
holder that elects to amortize such premium must reduce its tax basis in a
Note by the amount of the premium amortized during its holding period. OID
Notes purchased at a premium will not be subject to the OID rules described
above. With respect to a United States holder that does not elect to amortize
bond premium, the amount of bond premium will be included in the United States
holder's tax basis when the Note matures or is disposed of by the United
States holder. Therefore, a United States holder that does not elect to
amortize such premium and that holds the Note to maturity will generally be
required to treat the premium as capital loss when the Note matures.
If a United States holder of a Note purchases the Note at a price that is
lower than its remaining redemption amount, or in the case of an OID Note, its
adjusted issue price, by at least 0.25% of its remaining redemption amount
multiplied by the number of remaining whole years to maturity, the Note will
be considered to have "market discount" in the hands of such United States
holder. In such case, gain realized by the United States holder on the
disposition of the Note generally will be treated as ordinary income to the
extent of the market discount that accrued on the Note while held by such
United States holder. In addition, the United States holder could be required
to defer the deduction of a portion of the interest paid on any indebtedness
incurred or maintained to purchase or carry the Note. In general terms, market
discount on a Note will be treated as accruing ratably over the term of such
Note, or, at the election of the holder, under a constant yield method.
A United States holder may elect to include market discount in income on a
current basis as it accrues (on either a ratable or constant-yield basis), in
lieu of treating a portion of any gain realized on a sale of a Note as
ordinary income. If a United States holder elects to include market discount
on a current basis, the interest deduction deferral rule described above will
not apply. Any such election, if made, applies to all market discount
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bonds acquired by the taxpayer on or after the first day of the first taxable
year to which such election applies and is revocable only with the consent of
the IRS.
SHORT-TERM NOTES
The rules set forth above will also generally apply to Notes having
maturities of not more than one year ("Short-Term Notes"), but with certain
modifications.
First, the OID Regulations treat none of the interest on a Short-Term Note
as qualified stated interest (but instead treat such interest payments as part
of the Short-Term Note's stated redemption price at maturity, thereby giving
rise to OID). Thus, all Short-Term Notes will be OID Notes. OID will be
treated as accruing on a Short-Term Note ratably, or at the election of a
United States holder, under a constant yield method.
Second, a United States holder of a Short-Term Note that uses the cash
method of tax accounting and is not a bank, securities dealer, regulated
investment company or common trust fund, and does not identify the Short-Term
Note as part of a hedging transaction, will generally not be required to
include OID in income on a current basis. Such a United States holder may not
be allowed to deduct all of the interest paid or accrued on any indebtedness
incurred or maintained to purchase or carry such Note until the Maturity of
the Note or its earlier disposition in a taxable transaction. In addition,
such a United States holder will be required to treat any gain realized on a
sale, exchange or retirement of the Note as ordinary income to the extent such
gain does not exceed the OID accrued with respect to the Note during the
period the United States holder held the Note. Notwithstanding the foregoing,
a cash-basis United States holder of a Short-Term Note may elect to accrue
original issue discount into income on a current basis (in which case the
limitation on the deductibility of interest described above will not apply). A
United States holder using the accrual method of tax accounting and certain
cash-basis United States holders (including banks, securities dealers,
regulated investment companies and common trust funds) generally will be
required to include original issue discount on a Short-Term Note in income on
a current basis.
Third, any United States holder (whether cash or accrual basis) of a Short-
Term Note can elect to accrue the "acquisition discount", if any, with respect
to the Note on a current basis. If such an election is made, the OID rules
will not apply to the Note. Acquisition discount is the excess of the
remaining redemption amount of the Note at the time of acquisition over the
purchase price. Acquisition discount will be treated as accruing ratably or,
at the election of the United States holder, under a constant-yield method
based on daily compounding.
Finally, the market discount rules will not apply to a Short-Term Note.
As described above, certain of the Notes may be subject to special
redemption features. These features may affect the determination of whether a
Note has a maturity of not more than one year and thus is a Short-Term Note.
Purchasers of Notes with such features should carefully examine the applicable
Pricing Supplement and should consult their own tax advisors with respect to
such features.
INDEXED NOTES AND OTHER NOTES PROVIDING FOR CONTINGENT PAYMENT
On June 11, 1996, the IRS released final regulations (the "Contingent
Payment Regulations") governing the tax treatment of debt obligations that
provide for contingent payments ("contingent debt obligations"). The
Contingent Payment Regulations generally require accrual of interest income on
a constant yield basis in respect of a contingent debt obligation at a yield
determined at the time of issuance of the obligation, and may require
adjustments to such accruals when any contingent payments are made. A detailed
description of the tax considerations relevant to United States holders of any
contingent debt obligations will be provided in the applicable Pricing
Supplement.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
The Paying Agent will be required to file information returns with the IRS
with respect to payments made to certain United States holders of Notes. In
addition, certain United States holders may be subject to a 31 percent backup
withholding tax in respect of such payments if they do not provide their
taxpayer identification numbers to the Paying Agent. Persons holding Notes who
are not United States holders may be required to comply with application
certification procedures to establish that they are not United States holders
in order to avoid the application of such information reporting requirements
and backup withholding tax.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through the
Agents, who have agreed to use their best 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.
An 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 an
Agent, in connection with sales of Notes resulting from a solicitation made or
an offer to purchase received by such Agent, a commission ranging from .125%
to .750% of the principal amount of Notes to be sold, provided, however, that
commissions with respect to Notes maturing in thirty years or greater will be
determined at the time of such sale and will be disclosed in the applicable
Pricing Supplement.
The Company may also sell Notes to an Agent as principal for its own account
at discounts to be agreed upon at the time of sale. Unless otherwise specified
in the Pricing Supplement applicable to any Note sold to an Agent as
principal, such Note will be purchased at a price equal to 100% of the
principal or face amount thereof, less a percentage equal to the commission
applicable to an agency sale of a Note having an identical maturity. 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,
subject to the express authorization by the Company in the agreement related
to the purchase of such Notes, the Agents may offer the Notes they have
purchased as principal to other dealers. The Agents 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 such 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 the Notes directly to investors,
and may solicit and accept offers to purchase Notes directly from investors
from time to time on its own behalf. No commissions will be payable by the
Company to any Agent in connection with such sales. The Company may accept
(but not solicit) offers to purchase Notes through additional agents and may
appoint additional agents for the purpose of soliciting offers to purchase
Notes, in either case on terms substantially identical to the terms contained
in the Distribution Agreement. Such other agents, if any, will be named in the
applicable Pricing Supplement.
An Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933 (the "Securities Act"). The Company and the Agents 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 has also agreed to reimburse the Agents for
certain expenses.
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 Agents that
the Agents intend to make a market in the Notes, as permitted by applicable
laws and regulations. The Agents are not obligated to do so, however, and the
Agents 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.
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Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Debt Securities pursuant to the Indenture
referred to herein.
The Agents and/or certain of their affiliates may engage in investment or
commercial banking or other transactions with and perform services for the
Company and certain of its affiliates in the ordinary course of business.
NationsBank of Texas, N.A., an affiliate of NationsBanc Capital Markets, Inc.,
is a lender under a credit agreement with the Company.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by Cleary,
Gottlieb, Steen & Hamilton, counsel for the Company, or such other attorney of
the Company as the Company may designate, and for the Agents by Davis Polk &
Wardwell.
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