<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 33-57833
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 29, 1995)
U.S.$4,829,469,782
Morgan Stanley Group Inc.
GLOBAL MEDIUM-TERM NOTES, SERIES D
GLOBAL MEDIUM-TERM NOTES, SERIES E
----------------
Due More Than Nine Months from Date of Issue
----------------
Morgan Stanley Group Inc. (the "Company") may offer from time to time its
Global Medium-Term Notes, which are issuable in one or more series and may be
offered and sold in the United States, outside the United States or both in
and outside the United States simultaneously. The Global Medium-Term Notes,
Series D (the "Series D Notes") and the Global Medium-Term Notes, Series E
(the "Series E Notes" and, together with the Series D Notes, the "Notes")
offered hereby are offered outside the United States at an aggregate initial
offering price of up to U.S.$4,829,469,782, or the equivalent thereof in other
currencies, including composite currencies such as the ECU (the "Specified
Currency"). See "Description of Notes--Payment Currency." Such aggregate
offering price is subject to reduction as a result of the sale by the Company
of certain other Debt Securities and Warrants to purchase Debt Securities,
including the sale in the United States of the Company's Global Medium-Term
Notes, Series C. See "Plan of Distribution." The Notes may be issued as Senior
Indebtedness or Subordinated Indebtedness. Subordinated Indebtedness will be
subordinate to all Senior Indebtedness. See "Description of Debt Securities--
Subordinated Debt" in the accompanying Prospectus. 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, or a floating rate as set forth therein and specified in the
applicable 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").
The terms and conditions set forth in "Description of Notes" in this
Prospectus Supplement will apply to each Note unless otherwise specified in
the applicable Pricing Supplement and in such Note. Interest on each Note (and
principal on each Amortizing Note) is payable on the dates set forth herein
and/or in the applicable Pricing Supplement. Each Fixed Rate Note will mature
on any day more than nine months from the date of issue, as set forth in the
applicable Pricing Supplement. Each Floating Rate Note will mature on an
Interest Payment Date more than nine months from the date of issue, as set
forth in the applicable Pricing Supplement. The Notes may be redeemed by the
Company or the holder prior to maturity (including upon the occurrence of
certain events involving United States taxation or information reporting
requirements) and will be issued in fully registered form, in bearer form, or
in any combination of such registered and bearer forms. See "Description of
Notes." The Notes will be issued only in denominations of $1,000 (or, in the
case of Notes not denominated in U.S. dollars, the equivalent thereof in the
Specified Currency, rounded to the nearest 1,000 units of the Specified
Currency) or any amount in excess thereof which is an integral multiple of
$1,000 (or, in the case of Notes not denominated in U.S. dollars, 1,000 units
of the Specified Currency). Any terms relating to Notes being denominated in a
Specified Currency other than U.S. dollars will be as set forth in the
applicable Pricing Supplement.
Payments on the Notes will be increased by the amount of any deduction for
United States withholding taxes to the extent described under "Description of
Notes--Payment of Additional Amounts."
Application has been made to The International Stock Exchange of the United
Kingdom and the Republic of Ireland Limited (the "London Stock Exchange") for
Series D Notes offered hereby during the twelve months after the date of this
Prospectus Supplement to be admitted to the Official List of the London Stock
Exchange. Application will, in certain circumstances as described herein, be
made to list Series D Notes denominated in French Francs or Series D Notes
denominated in another currency but which provide for payments that are linked
directly or indirectly to French Francs ("French Franc Notes") on the Bourse
de Paris (the "Paris Bourse"). For the sole purpose of listing Series D Notes
on the Paris Bourse, this Prospectus Supplement and the accompanying
Prospectus have been submitted to the clearance procedures of the Commission
des Operations de Bourse (the "COB") and have been registered by the COB under
visa no. 95-112 on March 27, 1995. The Series E Notes will not be listed on
any stock exchange.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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>
PRICE TO AGENT'S PROCEEDS TO
PUBLIC (1) COMMISSION (2) COMPANY (2)(3)
------------------ -------------------------- --------------------------------
<S> <C> <C> <C>
Per Note................ 100.000% .125%-.750% 99.875%-99.250%
Total(4)................ U.S.$4,829,469,782 U.S.$6,036,837-$36,221,023 U.S$4,823,432,945-$4,793,248,759
</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) Unless otherwise specified in the applicable Pricing Supplement, the
commission payable to an Agent for each Note sold through such Agent will
range from .125% to .750% of the principal amount of such Note; provided,
however, that commissions with respect to Notes having a maturity of 30
years or greater will be negotiated. The Company may also sell Notes to an
Agent, as principal, at negotiated discounts, for resale to investors or
other purchasers.
(3) Before deducting expenses payable by the Company estimated at
U.S.$2,290,000.
(4) Or the equivalent thereof in other currencies, including composite
currencies.
----------------
Offers to purchase the Notes are being solicited from time to time by Morgan
Stanley & Co. International Limited, Bank Morgan Stanley AG, Morgan Stanley
S.A. (the French Franc arranger) and Morgan Stanley Bank AG (the Deutsche Mark
arranger), each of which is an affiliate of the Company (each an "Agent" and,
together, the "Agents"). The Agents have agreed to use reasonable efforts to
solicit purchases of such Notes. The Company may also sell Notes to an Agent
acting as principal for its own account for resale to one or more investors
and other purchasers at a fixed offering price or at varying prices related to
prevailing market prices at the time of resale or otherwise, to be determined
by such Agent and specified in the applicable Pricing Supplement. No
termination date for the offering of the Notes has been established. The
Company or the Agents may reject any order in whole or in part. 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."
This Prospectus Supplement and the accompanying Prospectus may be used by
the Agents in connection with offers and sales of the Notes in market-making
transactions at negotiated prices related to prevailing market prices at the
time of sale or otherwise. The Agents may act as principal or agent in such
transactions.
----------------
MORGAN STANLEY & CO.
International
March 29, 1995
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED 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 THE AGENTS. THIS PROSPECTUS SUPPLEMENT, ANY PRICING
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY SECURITIES 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.
References herein to "U.S. dollars" or "U.S.$" or "$" are to the currency
of the United States of America.
A copy of this Prospectus Supplement and the accompanying Prospectus dated
March 29, 1995, which together comprise listing particulars with regard to the
issuance by the Company of the Series D Notes in compliance with the rules of
the London Stock Exchange and in accordance with Part IV of the Financial
Services Act 1986, will be delivered for registration to the Registrar of
Companies in England and Wales as required by Section 149 of such Act. The
issuance of French Franc Notes will comply with the rules and regulations
relating to the marche de l'eurofranc from time to time of the Comite des
Emissions de Bourse ("French EuroFranc Regulations") and any French Franc Notes
must be admitted to the Paris Bourse if (i) such Notes are, or are intended to
be, listed on any other stock exchange, or (ii) such Notes are, or are intended
to be, distributed as a public offer (within the meaning of the French EuroFranc
Regulations). The minimum aggregate principal amount of French Franc Notes
listed on the Paris Bourse and distributed in a public offer shall be
300,000,000 French Francs. Under current applicable French regulations, "private
placements" shall be construed as issuances of Notes placed on a firm basis with
a small number of pre-determined non-resident investors. So long as any Notes
are listed on the Paris Bourse, copies of this Prospectus Supplement and the
accompanying Prospectus (and all publicly available documents incorporated by
reference herein) will be available from the principal office of Morgan Stanley
S.A. as the listing agent for Notes listed on the Paris Bourse. The Company
accepts responsibility for the information contained in this Prospectus
Supplement and the accompanying Prospectus. To the best of the knowledge and
belief of the Company (which has taken all reasonable care to ensure that such
is the case), the information contained in this Prospectus Supplement and the
accompanying Prospectus (including the existing publicly available documents
incorporated by reference therein) is in accordance with the facts and does not
omit anything likely to affect the import of such information.
IN CONNECTION WITH THIS OFFERING, THE AGENT WHO IS SPECIFIED IN THE
RELEVANT PRICING SUPPLEMENT MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH
STABILISE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A LEVEL WHICH MIGHT NOT
OTHERWISE PREVAIL. SUCH STABILISING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME. SUCH TRANSACTIONS WILL BE CARRIED OUT IN ACCORDANCE WITH ALL RELEVANT
LAWS AND REGULATIONS.
___________________
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements the description of the general terms and provisions of the
Debt Securities set forth in the Prospectus, to which reference is hereby made.
In particular, as used under this caption, the term "Company" means Morgan
Stanley Group Inc. The particular terms of the Notes sold pursuant to any
pricing supplement (a "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.
If any Note is not to be denominated in U.S. dollars, the applicable
Pricing Supplement will specify the currency or currencies, including composite
currencies such as the ECU, in which the principal, premium, if any,
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<PAGE>
and interest with respect to such Note are to be paid, along with any other
terms relating to the non-U.S. dollar denomination. See "Foreign Currency
Risks."
GENERAL
The Notes may be issued under the Senior Debt Indenture ("Senior Notes") or
the Subordinated Debt Indenture ("Subordinated Notes"). The Notes issued under
each Indenture, together with the Company's Global Medium-Term Notes, Series C,
referred to below under "Plan of Distribution," will constitute a single series
under such Indenture, together with any medium-term notes of the Company issued
in the future under such Indenture which are designated by the Company as
constituting a single series of securities with the Notes and the Global Medium-
Term Notes, Series C, for purposes of such Indenture. Neither Indenture limits
the amount of additional indebtedness the Company may incur. At October 31,
1994, the Company had approximately U.S.$4.3 billion aggregate principal amount
of medium-term notes outstanding under the Senior Debt Indenture and
approximately U.S. $100 million aggregate principal amount of medium-term notes
outstanding under the Subordinated Debt Indenture. Such aggregate principal
amounts may be increased from time to time as authorized by, or pursuant to
authority delegated by, the Board of Directors of the Company. For the purpose
of this paragraph, (i) the principal amount of any Original Issue Discount Note
(as defined below) means the Issue Price (as defined below) 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.
Notes issued under the Senior Debt Indenture will rank pari passu with all
other Senior Indebtedness of the Company and with all other unsecured and
unsubordinated indebtedness of the Company. Notes issued under the Subordinated
Debt Indenture will rank pari passu with all other subordinated indebtedness of
the Company and, together with such other subordinated indebtedness, will be
subordinated in right of payment to the prior payment in full of the Senior
Indebtedness of the Company. See "Description of Debt Securities --
Subordinated Debt" in the Prospectus. At October 31, 1994, the aggregate
principal amount of Senior Indebtedness outstanding was approximately U.S.$14.2
billion and approximately U.S. $100 million of subordinated indebtedness was
outstanding.
Fixed Rate Notes, Amortizing Notes and Original Issue Discount Notes will
mature on any day more than nine months from the date of issue, as set forth in
the applicable Pricing Supplement. Floating Rate Notes will mature on an
Interest Payment Date (as defined below) more than nine months from the date of
issue, as set forth in the applicable Pricing Supplement. Notes denominated or
payable in Deutsche Marks will mature at least two years after the date of issue
and Notes denominated or payable in pounds sterling will mature at least one
year, but not more than five years, after the date of issue. French Franc Notes
or notes denominated in Japanese yen will mature at least one year after the
date of issue. The Notes will be offered on a continuing basis, and any Note
purchased on original issuance by or on behalf of a United States person must,
subject to certain exceptions, be a Registered Note. Bearer Notes purchased on
original issuance by any other purchaser initially will be represented by a
temporary global Bearer Note to be deposited with a common depositary for Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System (the "Euroclear Operator"), Cedel Bank, societe anonyme
("Cedel") and/or any other relevant clearing system (including Societe
Interprofessionelle pour la Compensation des Valeurs Mobilieres and the
Intermediaires financiers habilites authorized to maintain accounts therein
("SICOVAM")). Interests in each temporary global Bearer Note will be
exchangeable for interests in permanent global Bearer Notes or for definitive
Registered or Bearer Notes in the manner and upon compliance with the procedures
described under "Description of Notes--Forms, Denominations, Exchange and
Transfer."
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,
ranking, maturity, currency or composite currency, any redemption amount
calculation or formula and principal amount and any other terms on which each
such Note will be issued.
As used herein, the following terms shall have the meanings set forth
below:
S-3
<PAGE>
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York or in the City
of London and (i) with respect to LIBOR Notes (as defined below), that is also a
London Banking Day, (ii) with respect to Notes denominated in a Specified
Currency other than U.S. dollars, Australian dollars or ECUs, in the principal
financial center of the country of the Specified Currency, (iii) with respect to
Notes denominated in Australian dollars, in Sydney and (iv) with respect to
Notes denominated in ECUs, that is not a non-ECU clearing day, as determined by
the ECU Banking Association in Paris.
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 the
relevant Index Currency (as defined below) 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 relevant Indenture.
The "Record Date" with respect to any Interest Payment Date for a
Registered Note shall be the date 15 calendar days prior to such Interest
Payment Date, whether or not such date shall be a Business Day.
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 of such Note, 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 (as defined below) at approximately 11:00
A.M., New York City time, on the second Business Day preceding the applicable
payment date from three recognized foreign exchange dealers (one of which may be
the Exchange Rate Agent unless the Exchange Rate Agent is an affiliate of the
Company) 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 the
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. Unless
otherwise indicated in the applicable Pricing Supplement, the Exchange Rate
Agent will be Morgan Stanley & Co. International Limited.
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 (as defined
below) 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. "Market Exchange Rate" means the noon U.S. dollar buying rate in The
City of New York for wire transfers of the relevant currency or composite
currency as certified for customs purposes by the Federal Reserve Bank of New
York.
S-4
<PAGE>
SPECIAL PROVISIONS RELATING TO NOTES DENOMINATED IN ECU
Valuation of the ECU
Subject to the provisions under "Payment in a Component Currency" below,
the value of the ECU, in which the Notes may be denominated or may be payable,
is equal to the value of the ECU that is currently used as the unit of account
of the European Community ("EC") and which is at the date hereof valued on the
basis of specified amounts of the currencies of 12 of the 15 member states of
the EC as shown below.
Pursuant to Council Regulation (EC) No. 3320/94 of December 22, 1994, the
ECU is at the date hereof defined as the sum of the following amounts of the
following components:
<TABLE>
<CAPTION>
<C> <S> <C> <C>
0.6242 German mark 0.130 Luxembourg franc
0.08784 Pound sterling 0.1976 Danish krone
1.332 French francs 0.008552 Irish pound
151.8 Italian lire 1.440 Greek drachmas
0.2198 Dutch guilder 6.885 Spanish pesetas
3.301 Belgian francs 1.393 Portuguese escudos
</TABLE>
Under the treaty establishing the EC, as amended by the treaty on
European Union (the "Treaty"), the currency composition of the ECU as set forth
above may not be changed. The Treaty provides that at or before January 1, 1999,
and subject to the fulfillment of certain conditions, the ECU may become a
currency in its own right, replacing all or some of the currencies of the member
states of the EC. Once the ECU becomes a currency in its own right in accordance
with the Treaty, all references to ECU in the Notes shall be construed as
references to such currency. Other changes as to the nature or composition of
the ECU may be made by the EC in conformity with the Treaty and EC law (changes
in composition would require amendment of the Treaty), in which event the
composition of the ECU will change accordingly and references to ECU in the
Notes shall thereafter be construed as references to the ECU as so changed.
Payment in a Component Currency
With respect to each due date for the payment of principal of, or
interest on, the Notes on or after the first business day in London on which the
ECU is used neither as the unit of account of the EC nor as the currency of the
European Union, the Company shall choose a substitute currency (the "Chosen
Currency"), which may be any currency which was, on the last day on which the
ECU was used as the unit of account of the EC, a component currency of the ECU
or U.S. dollars, in which all payments due on or after that date with respect to
the Notes and coupons shall be made. Notice of the Chosen Currency so selected
shall, where practicable, be published in the manner described in "Notices"
below. The amount of each payment in such Chosen Currency shall be computed on
the basis of the equivalent of the ECU in that currency, determined as described
below, as of the fourth business day in London prior to the date on which such
payment is due.
On the first business day in London on which the ECU is used neither as
the unit of account of the EC nor as the currency of the European Union, the
Company shall choose a Chosen Currency in which all payments with respect to
Notes and coupons having a due date prior thereto but not yet presented for
payment are to be made. Notice of the Chosen Currency so selected shall, where
practicable, be published in the manner described in "Notices" below. The
amount of each payment in such Chosen Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as of
such first business day.
The equivalent of the ECU in the relevant Chosen Currency as of any date
(the "Day of Valuation") shall be determined by, or on behalf of, the Exchange
Rate Agent on the following basis. The amounts and components composing the ECU
for this purpose (the "Components") shall be the amounts and components that
composed the ECU as of the last date on which the ECU was used as the unit of
account of the EC. The equivalent of the ECU in the Chosen Currency shall be
calculated by, first, aggregating the U.S. dollar equivalents of the Components;
and then, in the case of a Chosen Currency other than U.S. dollars, using the
rate used for determining the U.S.
S-5
<PAGE>
dollar equivalent of the Components in the Chosen Currency as set forth below,
calculating the equivalent in the Chosen Currency of such aggregate amount in
U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be determined
by, or on behalf of, the Exchange Rate Agent on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m. London time on the Day of Valuation,
as obtained by, or on behalf of, the Exchange Rate Agent from one or more major
banks, as selected by the Company, in the country of issue of the component
currency in question.
If for any reason no direct quotations are available for a Component as
of a Day of Valuation from any of the banks selected for this purpose, in
computing the U.S. dollar equivalent of such Component, the Exchange Rate Agent
shall (except as provided below) use the most recent direct quotations for such
Component obtained by it or on its behalf, provided that such quotations were
prevailing in the country of issue not more than two Business Days before such
Day of Valuation. If such most recent quotations were so prevailing more than
two Business Days in the country of issue before such Day of Valuation, the
Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component
on the basis of cross rates derived from the middle spot delivery quotations for
such component currency and for the U.S. dollar prevailing at 2:30 p.m. London
time on such Day of Valuation, as obtained by, or on behalf of, the Exchange
Rate Agent from one or more major banks, as selected by the Company, in a
country other than the country of issue of such component currency.
Notwithstanding the foregoing, the Exchange Rate Agent shall determine the U.S.
dollar equivalent of such Component on the basis of such cross rates if the
Company or such agent judges that the equivalent so calculated is more
representative than the U.S. dollar equivalent calculated as provided in the
first sentence of this paragraph. Unless otherwise specified by the Company, if
there is more than one market for dealing in any component currency by reason of
foreign exchange regulations or for any other reason, the market to be referred
to in respect of such currency shall be that upon which a non-resident issuer of
securities denominated in such currency would purchase such currency in order to
make payments in respect of such securities.
Payments in the Chosen Currency will be made at the specified office of a
paying agent in the country of the Chosen Currency, or, if none, or at the
option of the holder, at the specified office of any Paying Agent either by a
check drawn on, or by transfer to an account maintained by the holder with, a
bank in the principal financial center of the country of the Chosen Currency.
All determinations referred to above made by, or on behalf of, the
Company or by, or on behalf of, the Exchange Rate 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 and coupons.
NOTES DENOMINATED IN THE CURRENCIES OF EC MEMBER STATES
If, pursuant to the Treaty, all or some of the currencies of the member
countries of the EC are replaced by the ECU as a currency in its own right, the
payment of principal of, or interest on, the Notes denominated in such
currencies may be effected in ECU in conformity with legally applicable measures
taken pursuant to the Treaty.
FORMS, DENOMINATIONS, EXCHANGE AND TRANSFER
Unless otherwise specified in the applicable Pricing Supplement, the
Notes may be issued (i) in fully registered definitive form without coupons
("Registered Notes") or (ii) in definitive bearer form with coupons attached or
in temporary or permanent global bearer form without coupons attached (in each
case, "Bearer Notes") or in any combination of the above such registered or
bearer forms.
Except as provided below or as otherwise specified in the applicable
Pricing Supplement, Notes denominated in U.S. dollars will be issued only in
denominations of $1,000 or any amount in excess thereof that is an integral
multiple of $1,000, Notes denominated in Japanese yen ("(Yen)") will be issued
with a minimum denomination of (Yen)1,000,000 and Notes denominated in a
Specified Currency other than U.S. dollars or Japanese yen will be issued in
denominations of the equivalent of $1,000 (rounded to an integral multiple of
1,000 units of
S-6
<PAGE>
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 Market Exchange Rate of such Specified Currency on the Business Day
immediately preceding the date of issuance; provided, however, that, in the case
of the ECU, 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.
Each Bearer Note and interest coupon, if any, will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
United States Internal Revenue Code of 1986, as amended to the date hereof."
Registered Notes will be exchangeable for Registered Notes in other
authorized denominations, in an equal aggregate principal amount in accordance
with the provisions set forth in the applicable Indenture. Bearer Notes will
not be issuable in exchange for Registered Notes. Registered Notes may be
presented for registration of transfer or exchange at the offices of the
Registrar (as defined below) or at the offices of any transfer agent designated
by the Company for such purpose. See "Registrar, Paying Agents and Transfer
Agents." Bearer Notes may be presented for exchange in the manner set forth
below. No service charge will be made for any registration of transfer or
exchange of Notes but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Bearer Notes and any coupons appertaining thereto will be transferable by
delivery.
Each Bearer Note will be represented initially by a temporary global
Bearer Note, without interest coupons, and which, unless otherwise specified in
the applicable Pricing Supplement, will be deposited with a common depositary (a
"Common Depositary") for the Euroclear Operator and Cedel, for credit to the
account designated by or on behalf of the subscriber thereof. Upon deposit of
each such temporary global Bearer Note, the Euroclear Operator or Cedel, as the
case may be, will credit each subscriber with a principal amount of Notes equal
to the principal amount thereof for which it has subscribed and paid. The
interests of the beneficial owner or owners in a temporary global Bearer Note
will be exchangeable, after the date (the "Exchange Date") that is 40 days after
the date on which the Company receives the proceeds of the sale of such Note
(the "Closing Date"), for an interest in a permanent global Bearer Note to be
held by a Common Depositary for the Euroclear Operator and Cedel, for credit to
the account designated by or on behalf of the beneficial owner thereof; provided
that (i) the Exchange Date for any Note held by an Agent as part of an unsold
allotment or subscription more than 40 days after the Closing Date for such Note
shall be the day after the date such Note is sold by such Agent and (ii) such
exchange will be made only upon receipt of Ownership Certificates (as defined
below). No principal or interest may be paid on a temporary global Bearer Note
until the person entitled to receive such interest furnishes an Ownership
Certificate. An "Ownership Certificate" is a signed certificate in writing (or
an electronic certificate described in United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(3)(ii)) stating that on such date such Bearer Note
(i) is owned by a person that is not a United States person (as defined in the
Prospectus), (ii) is owned by a United States person that (a) is a foreign
branch of a United States financial institution (as defined in United States
Treasury Regulations Section 1.165-12(c)(1)(v)) (a "financial institution")
purchasing for its own account or for resale, or (b) is acquiring such Bearer
Note through a foreign branch of a United States financial institution and who
holds the Bearer Note through such financial institution through such date (and
in either case (a) or (b), each such United States financial institution agrees,
on its own behalf or through its agent, that the Company may be advised that it
will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) is owned by a United States or foreign financial institution for the
purposes of resale during the restricted period (as defined in United States
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7) (the "Restricted Period")),
and in addition if the owner of such Bearer Note is a United States or foreign
financial institution described in clause (iii) above (whether or not also
described in clause (i) or (ii)), such financial institution certifies that it
has not acquired the Bearer Note for purposes of resale directly or indirectly
to a United States person or to a person within the United States or its
possessions.
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The beneficial owner of a Note represented by a permanent global Bearer
Note may, upon 30 days' written notice to the Principal Paying Agent (as defined
below), given by the beneficial owner through either the Euroclear Operator or
Cedel, exchange such owner's interest in such permanent global Bearer Note for a
definitive Bearer Note or Notes, which will be serially numbered, with coupons,
if any, attached or a definitive Registered Note or Notes, of any authorized
denominations. Upon receipt by the Principal Paying Agent of an initial request
to exchange an interest in a permanent global Bearer Note for a definitive
Bearer Note or Notes, all other interests in such permanent global Bearer Note
shall be exchanged for definitive Bearer Notes. The Common Depositary for the
Euroclear Operator and Cedel will instruct the Principal Paying Agent regarding
the aggregate principal amount and denominations of definitive Bearer Notes that
must be authenticated and delivered to each of the Euroclear Operator and Cedel.
Such exchanges shall occur at no expense to the beneficial owners as soon as
practicable after the receipt of the initial request for definitive Bearer
Notes. No Bearer Note will be delivered in the United States. References
herein to "Bearer Notes" shall, except where otherwise indicated, include
interests in a permanent or temporary global Bearer Note as well as definitive
Bearer Notes and any appurtenant coupons.
At the option of the holder, and subject to the terms of the applicable
Indenture or procedures established pursuant thereto, definitive Bearer Notes
(with all unmatured coupons, and all matured coupons, if any, in default) will
be exchangeable into Registered Notes of any authorized denominations of like
tenor and in an equal aggregate principal amount at the office of the Registrar
(as defined below) or at the office of any transfer agent designated by the
Company for such purpose. See "Registrar, Paying Agents and Transfer Agents."
Definitive Bearer Notes surrendered in exchange for Registered Notes after the
close of business at any such office on any Record Date for the payment of
interest on a Registered Note and before the opening of business at such office
on the relevant Interest Payment Date shall be surrendered without the coupon
relating to such payment of interest. Definitive Bearer Notes will be
exchangeable for definitive Bearer Notes in other authorized denominations, in
an equal aggregate principal amount, in accordance with the provisions of the
applicable Indenture and at the offices of the Principal Paying Agent in London,
England or at the office of any transfer agent designated by the Company for
such purpose. See "Registrar, Paying Agents and Transfer Agents."
The Company will not be required (i) to register the transfer of or
exchange Notes to be redeemed for a period of fifteen calendar days preceding
the first publication of the relevant notice of redemption, or if Registered
Notes are outstanding and there is no publication, the mailing of the relevant
notice of redemption or, (ii) to register the transfer of or exchange any
Registered Note selected for redemption or surrendered for optional repayment,
in whole or in part, except the unredeemed or unpaid portion of any such
Registered Note being redeemed or repaid, as the case may be, in part, or (iii)
to exchange any Bearer Note selected for redemption or surrendered for optional
repayment, except that such Bearer Note may be exchanged for a Registered Note
of like tenor, provided that such Registered Note shall be simultaneously
surrendered for redemption or repayment, as the case may be.
INTEREST AND PRINCIPAL PAYMENTS
Interest payable on a Bearer Note represented by a temporary global
Bearer Note or any portion thereof will, unless otherwise specified in the
applicable Pricing Supplement, be paid to each of the Euroclear Operator and
Cedel, as the case may be, with respect to that portion of such temporary global
Bearer Note held for its account upon delivery to the Principal Paying Agent of
an Ownership Certificate signed by the Euroclear Operator or Cedel, as the case
may be, dated no earlier than such Interest Payment Date, which certificate must
be based on Ownership Certificates provided to the Euroclear Operator or Cedel,
as the case may be, by its member organizations. Each of the Euroclear Operator
and Cedel will in such circumstances credit the interest received by it in
respect of such temporary global Bearer Note or any portion thereof to the
accounts of or for the beneficial owners thereof.
Each permanent global Bearer Note will, unless otherwise specified in the
applicable Pricing Supplement, provide that principal of, and premium, if any,
and interest on such permanent global Bearer Note will be paid to each of the
Euroclear Operator and Cedel, as the case may be, with respect to that portion
of such permanent global Bearer Note held for its account. Each of the
Euroclear Operator and Cedel will in such circumstances credit such principal,
premium, if any, and any interest received by it in respect of such permanent
global Bearer Note to the respective accounts of or for the beneficial owners of
such permanent global Bearer Note at maturity, redemption
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or repayment or on an Interest Payment Date, as the case may be. If a
Registered Note is issued in exchange for any portion of a permanent global
Bearer Note after the close of business at the office or agency where such
exchange occurs on any Record Date and before the opening of business at such
office or agency on the relevant Interest Payment Date, any interest (or any
principal and interest in the case of an Amortizing Note) will not be payable on
such Interest Payment Date in respect of such Registered Note, but will be
payable on such Interest Payment Date only to the Euroclear Operator and Cedel,
and the Euroclear Operator and Cedel will in such circumstances credit any such
interest to the account of or for the beneficial owner of such portion of such
permanent global Bearer Note on such Record Date. Payment of principal of,
premium, if any, and any interest in respect of any permanent global Bearer Note
will, unless otherwise specified in the applicable Pricing Supplement, be made
to the Euroclear Operator and Cedel in immediately available funds.
Payment of principal of, premium, if any, and any interest on a
definitive Bearer Note at maturity or upon redemption or repayment will be made
in immediately available funds, subject to any applicable laws and regulations,
only against presentation and surrender of such Note and any coupons at the
offices of a Paying Agent (as defined below) outside the United States, at the
option of the holder, by check or by wire transfer of immediately available
funds to an account maintained by the payee with a bank located outside the
United States if appropriate wire transfer instructions have been received by a
Paying Agent not less than 15 calendar days prior to an applicable payment date.
Payment of interest on a definitive Bearer Note due on any Interest Payment Date
will be made only against presentation and surrender of the coupon relating to
such Interest Payment Date.
No payment with respect to any Bearer Note will be made at any office or
agency of the Company in the United States or by check mailed to any address in
the United States or by wire transfer to an account maintained with a bank
located in the United States except as may be permitted under United States
federal tax laws and regulations then in effect without adverse tax consequences
to the Company. Notwithstanding the foregoing, payments of principal of,
premium, if any, and interest on Bearer Notes payable in U.S. dollars will be
made at the office of the Company's paying agent in the Borough of Manhattan,
The City of New York, if, and only if (i) payment of the full amount thereof in
U.S. dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions and
(ii) such paying agent in the Borough of Manhattan, The City of New York, under
applicable law and regulations, would be able to make such payment.
Interest will be payable on a Registered Note to the person in whose name
the Registered Note is registered at the close of business on the applicable
Record Date; 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 Registered Note will be made on the
first Interest Payment Date falling after the date the Registered Note is
issued; provided, however, that (i) payments of interest (or, in the case of an
Amortizing Note, principal and interest) on a Registered Note originally 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 and (ii) payments of
interest (or, in the case of an Amortizing Note, principal and interest) on a
Registered Note issued in exchange for an interest in a permanent global Bearer
Note less than 15 calendar days before an Interest Payment Date will be paid as
described above. See "United States Federal Taxation -- United States Holders -
- Discount Notes" below.
U.S. dollar payments of interest on a Registered Note, 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. U.S. dollar payments of principal, premium, if any, and interest upon
maturity, redemption or repayment of a Registered Note will be made in
immediately available funds against presentation and surrender of the Note.
Notwithstanding the foregoing, a holder of $10,000,000 or more in aggregate
principal amount of Registered 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 not later than 15
calendar days prior to the applicable Interest Payment Date.
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With respect to any moneys paid by the Company and held by the applicable
Trustee or any Paying Agent for payment of the principal of, premium, if any,
or interest on any Notes that remain unclaimed at the end of two years after
such principal, premium, or interest shall have become due and payable (whether
at maturity or upon call for redemption or otherwise), (i) such Trustee or such
Paying Agent shall notify the holders of such Notes that such moneys shall be
repaid to the Company and any person claiming such moneys shall thereafter look
only to the Company for payment thereof and (ii) such moneys shall be so repaid
to the Company. Upon such repayment all liability of such Trustee or such
Paying Agent with respect to such moneys shall thereupon cease, without,
however, limiting in any way any obligation that the Company may have to pay the
principal of, premium, if any, or interest on the Notes as the same shall become
due.
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 yield. See "United
States Federal Taxation -- United States Holders -- Discount Notes" 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" 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.
REGISTRAR, PAYING AGENTS AND TRANSFER AGENTS
The Company has initially designated Chemical Bank, acting through its
principal corporate trust office in the Borough of Manhattan, The City of New
York, as its registrar and transfer agent for the Registered Notes (the
"Registrar," which term includes any successor Registrar appointed by the
Company) and as the Company's paying agent for Registered Notes in the United
States, and Chemical Bank, London Branch, as transfer and paying agent for the
Notes and as its principal paying agent for the Notes outside the United States
(the "Principal Paying Agent," which term includes any successor principal
paying agent appointed by the Company). Any initial designation by the Company
of the Registrar or a transfer agent may be rescinded at any time, except that,
so long as any Notes remain outstanding, the Company will maintain in the
Borough of Manhattan, The City of New York, one or more offices or agencies
where Registered Notes may be presented for registration of transfer and
exchange. The Company may at any time appoint additional transfer agents with
respect to the Notes and may appoint additional paying agents for the Notes
outside the United States (each a "Paying Agent," which term includes the
Principal Paying Agent and any additional or successor paying agent appointed by
the Company). So long as the Series D Notes are listed on the London Stock
Exchange and such exchange so requires, the Company will maintain a transfer
agent and a Paying Agent in London. So long as any Series D Notes are listed on
the Paris Bourse and such exchange so requires, the Company will maintain a
Paying Agent in Paris.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issuance at the
annual rate stated on the face thereof 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 annually on each March 1 and at maturity or 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 March 1, June 1, September 1 and December 1 or semiannually on
each March 1 and September 1, as set forth in the applicable Pricing Supplement,
and at maturity or 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.
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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
made to the Company, to subsequent holders.
If any Interest Payment Date for any Fixed Rate Note would fall on a day
that is not a Business Day, the interest payment shall be postponed to 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 date (or date
of redemption or repayment) of any Fixed Rate Note would fall on a day that is
not a Business Day, the payment of interest and principal (and premium, if any)
may 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 date of
redemption or repayment).
Interest payments for Fixed Rate Notes will include accrued interest from
the date of issue or from 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 (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 of the following Base Rates as
applicable to such 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
Constant-Maturity Treasury Rate (a "CMT Rate Note") or (h) such other Base Rate
as is set forth in such Pricing Supplement and in such Floating Rate Note. The
"Index Maturity" for any Floating Rate Note is the period of maturity of the
instrument or obligation from which the Base Rate is calculated and will be
specified in the applicable Pricing Supplement.
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 which may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on a
Floating Rate Note will in no event be higher than the maximum rate permitted by
New York law, as the same may be modified by United States law of general
application. Under 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
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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)
the interest rate in effect for the 15 days immediately prior to maturity,
redemption or repayment will be that in effect on the fifteenth day preceding
such maturity, 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 next 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 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 Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, if any Interest
Payment Date (other than the maturity date or any earlier redemption or
repayment 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 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 with respect to such LIBOR
Note. 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 (except Floating Rate Notes on which interest
is reset daily or weekly) 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. In the
case of a Floating Rate Note on which interest is reset daily or weekly,
interest payments shall be the amount of interest accrued from the date of issue
or from the last date to which interest has been paid, as the case may be, to
and including the Record Date immediately preceding such Interest Payment Date
in the case of Registered Notes, or the fifteenth day (whether or not such
fifteenth day is a Business Day) preceding such Interest Payment Date in the
case of Bearer Notes, except that at maturity or earlier redemption or
repayment, the interest payable will include interest accrued to, but excluding,
the maturity, redemption or repayment date, as the case may be.
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. The interest factor for each such day is computed by
dividing the interest rate applicable to such day by 360 (unless otherwise
specified in the applicable Pricing Supplement), 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
(.0000001), with five one-millionths of a percentage point rounded upward, and
all dollar amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest cent, with
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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).
The applicable Pricing Supplement shall specify a calculation agent (the
"Calculation Agent") with respect to any issue of Floating Rate Notes. Upon the
request of the holder of any Floating Rate Note, the Calculation Agent will
provide the interest rate then in effect and, if determined, the interest rate
that will become effective on the next Interest Reset Date with respect to such
Floating Rate Note. The Calculation Agent will notify the London Stock Exchange
(in the case of the Series D Notes listed on such exchange) and the Paying
Agents of each determination of the interest rate applicable to any Floating
Rate Note promptly after such determination is made.
The "Interest Determination Date" pertaining to an Interest Reset Date
for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, Prime
Rate Notes and CMT 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.
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 the denomination of
$5 million 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 of the highest
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credit standing in the market for negotiable certificates of deposit; 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 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 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 calculated in accordance with the
following formula:
Money Market Yield = D x 360
x 100
-------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Index Maturity.
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
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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 11:00 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 Reset Date will be determined by the Calculation Agent as
follows:
(i) As of the Interest Determination Date, the Calculation Agent will
determine (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 London interbank market in the Index Currency for the period of the
Index Maturity, commencing on the second London Business Day immediately
following such Interest Determination Date, which appear on the Designated
LIBOR Page at approximately 11:00 A.M., London time, on such 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, the rate for deposits in the Index Currency for the period of
the Index Maturity, commencing on such Interest Determination Date, that
appears on the Designated LIBOR Page at approximately 11:00 A.M., London
time, on such Interest Determination Date. If fewer than two offered rates
appear (if "LIBOR Reuters" is specified in the applicable Pricing
Supplement and calculation of LIBOR is based on the arithmetic mean of the
offered rates) or if no rate appears (if the applicable Pricing Supplement
specifies either (x) "LIBOR Reuters" and the Designated LIBOR Page by its
terms provides only for a single rate or (y) "LIBOR Telerate"), LIBOR in
respect of that Interest Determination Date will be determined as if the
parties had specified the rate described in (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 and calculation of LIBOR is based on the
arithmetic mean of the offered rates) or no rate appears (if the applicable
Pricing Supplement specifies either (x) "LIBOR Reuters" and the Designated
LIBOR Page by its terms provides only for a single rate or (y) "LIBOR
Telerate"), 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 (after consultation with the Company), to
provide the Calculation Agent with its offered quotations for deposits in
the Index Currency for the period of the specified Index Maturity,
commencing on the second London Banking Day immediately following such
Interest Determination Date, to prime banks in the London interbank market
at approximately 11:00 A.M., London time, on such Interest Determination
Date and in a principal amount equal to an amount of not less than U.S.$1
million (or the equivalent in the Index Currency) that is representative of
a single transaction in such Index Currency in such market at such time.
If at least two such quotations are provided, LIBOR will be the arithmetic
mean of such quotations. If fewer than two quotations are provided, LIBOR
in respect of that Interest Determination Date will be the arithmetic mean
of 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 Interest
Determination Date, by three major banks in such principal
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financial center selected by the Calculation Agent (after consultation with
the Company) on such Interest Determination Date for loans in the Index
Currency to leading European banks, for the period of the specified Index
Maturity commencing on the second London Banking Day immediately following
such Interest Determination Date and in a principal amount of not less than
U.S.$1 million (or the equivalent in the Index Currency) that is
representative of a single transaction in such Index Currency in such
market at such time; provided, however, that if the banks selected as
aforesaid by the Calculation Agent are not quoting rates as mentioned in
this sentence, "LIBOR" for such Interest Reset 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 LIBOR is being determined shall be the Initial Interest
Rate).
"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.
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 NYMF Page (as 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 NYMF Page on such Interest
Determination Date, or, if fewer than four such rates appear on the Reuters
Screen NYMF Page 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 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 $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. "Reuters Screen NYMF Page" means the display
designated as Page "NYMF" on the Reuters Monitor Money Rates Service (or such
other page as may replace the NYMF Page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks).
If in any month or two consecutive months the Prime Rate is not published
in H.15(519) and the banks or trust companies selected as aforesaid are not
quoting as stated in the preceding paragraph, the "Prime Rate" for such Interest
Reset 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 the Prime
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Rate is being determined shall be the Initial Interest Rate). If this failure
continues over three or more consecutive months, the "Prime Rate" for each
succeeding Interest Determination Date until the maturity or redemption of such
Prime Rate Notes or, if earlier, until this failure ceases, shall be LIBOR
determined as if such Prime Rate Notes were LIBOR Notes with respect to which
LIBOR Telerate had been specified and U.S. dollars had been specified as the
Index Currency in the applicable Pricing Supplement, and the Spread, if any,
shall be the number of basis points specified in the applicable Pricing
Supplement as the "Alternate Rate Event Spread."
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 9:00 A.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 on such Interest
Determination Date, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, 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 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 for
the Index Maturity designated in such CMT Rate Note on Telerate Page 7055 for
"Daily Treasury Constant Maturities and Money Markets/Federal Reserve Board
Release H.15 Monday's Approx. 3:45 P.M. EDT," for the applicable Interest
Determination Date (or such other page as may replace that page on such service
for the purpose of displaying rates or prices comparable to the CMT Rate, as
determined by the Calculation Agent). If such rate is not available by 3:00
P.M., New York City time, on the applicable Calculation Date, then the CMT Rate
for such Interest Determination Date shall be the bond equivalent yield to
maturity of the arithmetic mean (as calculated by the Calculation Agent) of the
secondary market bid rates, as of 3:00 P.M., New York City time, on the
applicable Interest Determination Date, reported by three leading primary United
States government securities dealers in The City of New York selected by the
Calculation Agent (after consultation with the Company), for the most recently
issued direct noncallable fixed rate Treasury Bills with an original maturity
approximately equal to the applicable Index Maturity; provided, however, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting bid
rates as mentioned in this sentence, the "CMT
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Rate" for such Interest Determination 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).
CURRENCY LINKED NOTES
Notes may be issued, from time to time, with the principal amount payable
on any principal payment date, or the amount of interest payable on any interest
payment date, to be determined by reference to the value of one or more
currencies (or composite currencies) as compared to the value of one or more
other currencies (or composite currencies) ("Currency Linked Notes").
Information as to the one or more currencies (or composite currencies) to which
the principal amount payable on any principal payment date or the amount of
interest payable on any interest payment date is indexed, the currency in which
the face amount of the Currency Linked Note is denominated (the "Denominated
Currency"), the currency in which principal on the Currency Linked Note will be
paid (the "Payment Currency"), specific historic exchange rate information, any
currency risks relating to the specific currencies selected, and certain
additional tax considerations, if any, will be set forth in the applicable
Pricing Supplement. The Denominated Currency and the Payment Currency may be
the same currency or different currencies. Unless otherwise specified in the
applicable Pricing Supplement, interest on Currency Linked Notes will be paid in
the Denominated Currency based on the face amount of the Currency Linked Note at
the rate per annum and on the dates set forth in the applicable Pricing
Supplement. Currency Linked Notes may include, but are not limited to, Notes of
the types described below. The issuance of Currency Linked Notes denominated or
payable in Deutsche Marks will be made in compliance with the policy of the
German Central Bank, as amended from time to time, regarding indexation of
Deutsche Mark-denominated debt obligations.
Principal Exchange Rate Linked Securities (PERLS)
PERLS are Currency Linked Notes pursuant to which the principal amount
payable on any principal payment date equals the Payment Currency equivalent at
such date of a fixed amount of a designated currency (or composite currency)
(the "Indexed Currency"). Generally, the fixed amount of Indexed Currency to
which the principal of a PERLS will be linked will be approximately equal in
value to the face amount of the PERLS in the Denominated Currency based on the
exchange rate between the Indexed Currency and the Denominated Currency in
effect at the time of pricing. The Denominated Currency, the Indexed Currency
and the Payment Currency will be identified in the applicable Pricing
Supplement. In addition, the fixed amount of the Indexed Currency to which the
principal of the PERLS is linked will be set forth in the applicable Pricing
Supplement for a specific representative face amount of the PERLS as well as for
the aggregate face amount of all PERLS forming part of the same issue (the
"Conversion Reference Amount").
Holders of PERLS may receive an amount of principal greater than, less than
or equal in value to the face amount of the PERLS, depending on the change, if
any, in the relative exchange rates of the Denominated Currency, the Payment
Currency and the Indexed Currency from the issue date to the date that is two
Exchange Rate Days (as defined below) preceding the maturity date.
The Payment Currency equivalent of any Indexed Currency amount on any date
will be determined by an exchange rate agent (identified in the applicable
Pricing Supplement) based on the arithmetic mean of the quotations obtained by
such agent from reference dealers (identified in the applicable Pricing
Supplement) at 11:00 A.M., New York City time, on the second Exchange Rate Day
preceding such date for the purchase by the reference dealers of the Conversion
Reference Amount of the Indexed Currency with the Payment Currency for
settlement on such date; provided that if there is no cross-exchange rate
available in New York City between the Indexed Currency and the Payment
Currency, the quotations will be calculated by the exchange rate agent at the
time referred to above using the U.S. dollar equivalent of the Indexed Currency
and the Payment Currency as the basis for comparing the values of such
currencies; and provided further that if the Payment Currency and the Indexed
Currency are identical, then the Payment Currency equivalent of any Indexed
Currency amount will be such amount.
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"Exchange Rate Day" means, with respect to any currency conversion, any day
other than a Saturday or Sunday or a day on which banking institutions in New
York City are authorized or required by law or executive order to close and that
is a business day in each of the cities designated in the Pricing Supplement for
the currencies being converted and, in the case of conversions involving ECUs,
that is not a non-ECU clearing day, as determined by the ECU Banking Association
in Paris.
Reverse Principal Exchange Rate Linked Securities (Reverse PERLS)
Reverse PERLS are Currency Linked Notes pursuant to which the principal
amount payable on any principal payment date equals the Payment Currency
equivalent at such date of a fixed amount of a designated currency (or composite
currency) (the "First Indexed Currency") minus the Payment Currency equivalent
at maturity of a fixed amount of another designated currency (or composite
currency) (the "Second Indexed Currency"); provided that the minimum principal
amount payable at maturity will be zero. Generally, the fixed amount of the
First Indexed Currency to which the principal of a Reverse PERLS will be linked
will be approximately equal in value to twice the face amount of the Reverse
PERLS in the Denominated Currency, and the fixed amount of the Second Indexed
Currency to which the principal of a Reverse PERLS will be linked will be
approximately equal in value to the face amount of the Reverse PERLS in the
Denominated Currency, in each case based on the exchange rate between each
Indexed Currency and the Denominated Currency in effect at the time of pricing.
Holders of Reverse PERLS may receive an amount of principal greater than,
less than (with a minimum of zero) or equal in value to the face amount of the
Reverse PERLS, depending on the change, if any, in the relative exchange rates
of the Denominated Currency, the Payment Currency and the First and Second
Indexed Currencies from the issue date to the date that is two Exchange Rate
Days preceding the maturity date.
The Denominated Currency, the First and Second Indexed Currencies and the
Payment Currency will be identified in the applicable Pricing Supplement. In
addition, the fixed amounts of the First and Second Indexed Currencies to which
the principal of the Reverse PERLS is linked will be set forth in the applicable
Pricing Supplement for a specific representative face amount of the Reverse
PERLS as well as for the aggregate face amount of all Reverse PERLS forming part
of the same issue (respectively, the "First Conversion Reference Amount" and the
"Second Conversion Reference Amount").
The Payment Currency equivalent of any First Indexed Currency amount on any
date will be determined by an exchange rate agent (identified in the applicable
Pricing Supplement) based on the arithmetic mean of the quotations obtained by
such agent from reference dealers (identified in the applicable Pricing
Supplement) at 11:00 A.M., New York City time, on the second Exchange Rate Day
preceding such date for the purchase by the reference dealers of the First
Conversion Reference Amount of the First Indexed Currency with the Payment
Currency for settlement on such date; provided that if there is no cross-
exchange rate available in New York City between the First Indexed Currency and
the Payment Currency, the quotations will be calculated by the exchange rate
agent at the time referred to above using the U.S. dollar equivalent of the
First Indexed Currency and the Payment Currency as the basis for comparing the
values of such currencies, and provided further that if the First Indexed
Currency and the Payment Currency are identical, then the Payment Currency
equivalent of any First Indexed Currency amount will be such amount.
The Payment Currency equivalent of any Second Indexed Currency amount on
any date will be determined by an exchange rate agent (identified in the
applicable Pricing Supplement) based on the arithmetic mean of the quotations
obtained by such agent from the reference dealers (identified in the applicable
Pricing Supplement) at 11:00 A.M., New York City time, on the second Exchange
Rate Day preceding such date for the sale by the reference dealers of the Second
Conversion Reference Amount of the Second Indexed Currency for the Payment
Currency for settlement on such date; provided that if there is no cross-
exchange rate available in New York City between the Second Indexed Currency and
the Payment Currency, the quotations will be calculated by the exchange rate
agent at the time referred to above using the U.S. dollar equivalent of the
Second Indexed Currency and the Payment Currency as the basis for comparing the
values of such currencies, and provided further that if the Second
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Indexed Currency and the Payment Currency are identical, then the Payment
Currency equivalent of any Second Indexed Currency amount will be such amount.
Multicurrency Principal Exchange Rate Linked Securities (Multicurrency
PERLS)
Multicurrency PERLS are Currency Linked Notes pursuant to which the
principal amount payable on any principal payment date equals the Payment
Currency equivalent at such date of a fixed amount of a designated currency (or
composite currency) (the "First Indexed Currency") plus or minus the Payment
Currency equivalent at maturity of a fixed amount of a second designated
currency (or composite currency) (the "Second Indexed Currency") plus or minus
the Payment Currency equivalent at maturity of a fixed amount of a third
designated currency (or composite currency) (the "Third Indexed Currency");
provided that the minimum principal amount payable at maturity will be zero.
Generally, the added and subtracted fixed amounts of the First, Second and Third
Indexed Currencies (each, an "Indexed Currency") to which the principal of a
Multicurrency PERLS will be linked will have an aggregate value approximately
equal to the face amount of the Multicurrency PERLS in the Denominated Currency
based on exchange rates between each Indexed Currency and the Denominated
Currency in effect at the time of pricing.
Holders of Multicurrency PERLS may receive an amount of principal greater
than, less than (with a minimum of zero) or equal in value to the face amount of
the Multicurrency PERLS, depending on the change, if any, in the relative
exchange rates for the Denominated Currency, the Payment Currency and the First,
Second and Third Indexed Currencies from the issue date to the date that is two
Exchange Rate Days preceding the maturity date.
The Denominated Currency, each Indexed Currency, the Payment Currency and
whether the fixed amounts of the Second and Third Indexed Currencies are to be
added or subtracted to determine the principal amount payable at maturity of the
Multicurrency PERLS will be set forth in the applicable Pricing Supplement. In
addition, the fixed amounts of the First, Second and Third Indexed Currencies to
which the principal of the Multicurrency PERLS is linked will be set forth in
the applicable Pricing Supplement for a specific representative face amount of
the Multicurrency PERLS as well as for the aggregate face amount of all
Multicurrency PERLS forming part of the same issue (respectively, the "First
Conversion Reference Amount," the "Second Conversion Reference Amount" and the
"Third Conversion Reference Amount," each a "Conversion Reference Amount"). As
used herein, "Added Indexed Currency" means the First Indexed Currency and any
other Indexed Currency that is added to determine the principal amount payable
at maturity of the Multicurrency PERLS and a "Subtracted Indexed Currency" means
an Indexed Currency that is subtracted to determine the principal amount payable
at maturity of the Multicurrency PERLS.
The Payment Currency equivalent of any Added Indexed Currency amount on any
date will be determined by an exchange rate agent (identified in the applicable
Pricing Supplement) based on the arithmetic mean of the quotations obtained by
such agent from reference dealers (identified in the applicable Pricing
Supplement) at 11:00 A.M., New York City time, on the second Exchange Rate Day
preceding such date for the purchase by the reference dealers of the applicable
Conversion Reference Amount of the Added Indexed Currency with the Payment
Currency for settlement on such date; provided that if there is no cross-
exchange rate available in New York City between the Added Indexed Currency and
the Payment Currency, the quotations will be calculated by the exchange rate
agent at the time referred to above using the U.S. dollar equivalent of the
Added Indexed Currency and the Payment Currency as the basis for comparing the
values of such currencies, and provided further that if the Added Indexed
Currency and the Payment Currency are identical, then the Payment Currency
equivalent of any Added Indexed Currency amount will be such amount.
The Payment Currency equivalent of any Subtracted Indexed Currency amount
on any date will be determined by an exchange rate agent (identified in the
applicable Pricing Supplement) based on the arithmetic mean of the quotations
obtained by such agent from reference dealers (identified in the applicable
Pricing Supplement) at 11:00 A.M. New York City time, on the second Exchange
Rate Day preceding such date for the sale by the reference dealers of the
applicable Conversion Reference Amount of the Subtracted Indexed Currency for
the
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Payment Currency, for settlement on such date; provided that if there is no
cross-exchange rate available in New York City between the Subtracted Indexed
Currency and the Payment Currency, the quotations will be calculated by the
exchange rate agent at the time referred to above using the U.S. dollar
equivalent of the Subtracted Indexed Currency and the Payment Currency as the
basis for comparing the values of such currencies, and provided further that if
the Subtracted Indexed Currency and the Payment Currency are identical, then the
Payment Currency equivalent of any Subtracted Indexed Currency amount will be
such amount.
Payments upon Acceleration of Maturity or upon Tax Redemption
If the principal amount payable at maturity of any PERLS, Reverse PERLS or
Multicurrency PERLS is declared due and payable prior to maturity, or if any
PERLS, Reverse PERLS or Multicurrency PERLS are redeemed as set forth below
under "Tax Redemption," and unless otherwise specified in the applicable Pricing
Supplement, the amount payable with respect to such Note will be paid in the
Denominated Currency and will equal the face amount of such Note plus accrued
interest to but excluding the date of payment.
NOTES LINKED TO COMMODITY PRICES, EQUITY INDICES OR OTHER FACTORS
Notes may be issued, from time to time, with the principal amount payable
on any principal payment date, or the amount of interest payable on any interest
payment date, to be determined by reference to one or more commodity prices,
equity indices or other factors and on such other terms as may be set forth in
the relevant Pricing Supplement. The issuance of such Notes (excluding Notes
indexed to interest indices) denominated or payable in Deutsche Marks will be
made in compliance with German law and with the policies and guidelines of the
German Central Bank, as amended from time to time, regarding indexation of
Deutsche Mark-denominated debt obligations, which currently prohibits the
issuance of Deutsche Mark-denominated Notes whose payments are linked to oil,
gold or similar commodities, any index related thereto or consumer price or
similar indices. Each issue of index-linked French Franc Notes which are to be
listed on the Paris Bourse must be made in compliance with the general
principles set forth in COB bulletin no. 281 of June 1994.
An investment in such Notes or Currency Linked Notes entails significant
risks not associated with similar investments in a conventional debt security.
If the interest rate of such a Note or Currency Linked Note is so indexed, it
may result in an interest rate that is less than that payable on a conventional
fixed-rate debt security issued at the same time, including the possibility that
no interest will be paid, and, if the principal amount of such a Note or
Currency Linked Note is so indexed, the principal amount payable at maturity may
be less than the original purchase price of such Note (if permitted pursuant to
the terms of such Note) including the possibility that no principal will be
paid. The market values for such Notes will be affected by a number of factors
independent of the creditworthiness of the Company and the value of the
applicable currency, commodity or index, including the volatility of the
applicable currency, commodity or index, the time remaining to the maturity of
the Notes, the outstanding principal amount of the Notes and market interest
rates. The value of the applicable currency, commodity or 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, premium, if any, or interest payable
with respect to such Notes contains a multiple or leverage factor, the effect of
any change in the applicable currency, commodity or index may be increased. The
historical experience of the relevant currencies, commodities or indices should
not be taken as an indication of future performance of such currencies,
commodities or indices during the term of any Note.
OPTIONAL REDEMPTION
The Pricing Supplement will indicate either that the Notes cannot be
redeemed prior to maturity (other than as provided under "Tax Redemption" below)
or will indicate the terms on which the Notes will be redeemable at the option
of the Company. Notes denominated or payable in French Francs or pounds
sterling may not be redeemed at the option of the Company during the first year
after issuance and Notes denominated or payable in Deutsche Marks may not be
redeemed during the first two years after issuance, except in each case pursuant
to a Tax Redemption. Unless otherwise specified in the applicable Pricing
Supplement, notice of redemption to holders
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of Notes will be published in the manner described under "Notices" below, once
in each of three successive calendar weeks, the first publication to be not less
than 30 nor more than 60 days prior to the date set for redemption. Unless
otherwise specified in the applicable Pricing Supplement, notice of redemption
shall also be provided to holders of Registered Notes in the manner described
under "Notices" below, not less than 30 days and not more than 60 days prior to
the date fixed for redemption. Unless otherwise specified in the applicable
Pricing Supplement, the Notes, except for Amortizing Notes, will not be subject
to any sinking fund.
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASE
If applicable, the Pricing Supplement relating to each Note will indicate
that the Note will be repayable at the option of the holder on a date or dates
specified prior to its maturity date (which, in the case of Notes denominated or
payable in French Francs or pounds sterling may not occur during the first year
after issuance and, in the case of Deutsche Marks, may not occur during the
first two years after issuance) and, unless otherwise specified in such Pricing
Supplement, 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 Principal Paying Agent must
receive at least 15 days but not more than 30 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, together with any coupons appertaining thereto, 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. (the "NASD") or a commercial bank or trust company in the United States,
Western Europe or Japan setting forth the name of the holder of the Note (in the
case only of a Registered 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, together with any coupons appertaining thereto, will be received by
the Principal 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, together with any coupons
appertaining thereto, are received by the Principal 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.
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.
TAX REDEMPTION
All Notes
Notes may be redeemed as a whole, at the option of the Company at any time
prior to maturity, upon the giving of a notice of redemption as described below,
at a redemption price equal to 100% of the principal amount thereof (except as
otherwise specified in the applicable Pricing Supplement), together with accrued
interest to the date fixed for redemption, if the Company determines that, as a
result of any change in or amendment to the laws (or any regulations or rulings
promulgated thereunder) of the United States or of any political subdivision or
taxing authority thereof or therein affecting taxation, or any change in
official position regarding the application or interpretation of such laws,
regulations or rulings, which change or amendment becomes effective on or after
the date of issuance of such Notes, the Company has or will become obligated to
pay Additional Amounts with respect to such Notes as described below under
"Payment of Additional Amounts." Prior to the giving of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the
applicable Trustee (i) a certificate stating
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that the Company is entitled to effect such redemption and setting forth a
statement of facts showing that the conditions precedent to the right of the
Company to so redeem have occurred (the date on which such certificate is
delivered to the Trustee is the "Redemption Determination Date"), and (ii) an
opinion of independent counsel satisfactory to such Trustee to such effect based
on such statement of facts; provided that no such notice of redemption shall be
given earlier than 60 days prior to the earliest date on which the Company would
be obligated to pay such Additional Amounts if a payment in respect of such Note
were then due.
Notice of redemption will be given not less than 30 nor more than 60 days
prior to the date fixed for redemption, which date and the applicable redemption
price will be specified in the notice. Such notice will be given in accordance
with "Notices" below.
If any date fixed for redemption is a date prior to the Exchange Date,
definitive Bearer Notes will be issuable on and after such redemption date as if
such redemption date had been the Exchange Date, subject to receipt of Ownership
Certificates described above under "Forms, Denominations, Exchange and
Transfer," delivery of which is a condition to delivery of definitive Bearer
Notes.
Special Tax Redemption of Bearer Notes
If the Company shall determine that any payment made outside the United
States by the Company or any Paying Agent of principal, premium, if any, or
interest due in respect of any Bearer Note or coupon would, under any present or
future laws or regulations of the United States, be subject to any
certification, identification or other information reporting requirement of any
kind, the effect of which is the disclosure to the Company, any Paying Agent or
any governmental authority of the nationality, residence or identity of a
beneficial owner of such Bearer Note or coupon who is a United States Alien (as
defined below in "Payment of Additional Amounts") (other than such a requirement
(a) that would not be applicable to a payment made by the Company or any Paying
Agent (i) directly to the beneficial owner or (ii) to a custodian, nominee or
other agent of the beneficial owner, or (b) that can be satisfied by such
custodian, nominee or other agent certifying to the effect that such beneficial
owner is a United States Alien; provided that in each case referred to in
clauses (a)(ii) and (b) payment by such custodian, nominee or agent to such
beneficial owner is not otherwise subject to any such requirement), the Company
shall redeem the Bearer Notes, as a whole, at a redemption price equal to 100%
of the principal amount thereof, together with accrued interest to the date
fixed for redemption, or, at the election of the Company if the conditions of
the next paragraph are satisfied, pay the additional amounts specified in such
paragraph. The Company shall make such determination and election as soon as
practicable and publish prompt notice thereof (the "Determination Notice")
stating the effective date of such certification, identification or other
information reporting requirements, whether the Company will redeem the Bearer
Notes or has elected to pay the additional amounts specified in the next
paragraph, and (if applicable) the last date by which the redemption of the
Bearer Notes must take place, as provided in the next sentence. If the Company
redeems the Bearer Notes, such redemption shall take place on such date, not
later than one year after the publication of the Determination Notice, as the
Company shall elect by notice to the applicable Trustee at least 60 days prior
to the date fixed for redemption. Notice of such redemption of the Bearer Notes
will be given to the holders of the Bearer Notes not more than 60 nor less than
30 days prior to the date fixed for redemption. Such redemption notice shall
include a statement as to the last date by which the Bearer Notes to be redeemed
may be exchanged for Registered Notes. Notwithstanding the foregoing, the
Company shall not so redeem the Bearer Notes if the Company shall subsequently
determine, not less than 30 days prior to the date fixed for redemption, that
subsequent payments would not be subject to any such requirement, in which case
the Company shall publish prompt notice of such determination and any earlier
redemption notice shall be revoked and of no further effect. The right of the
holders of Bearer Notes called for redemption pursuant to this paragraph to
exchange Bearer Notes for Registered Notes will terminate at the close of
business of the Principal Paying Agent on the fifteenth day prior to the date
fixed for redemption, and no further exchanges of Bearer Notes for Registered
Notes shall be permitted.
If and so long as the certification, identification or other information
reporting requirements referred to in the preceding paragraph would be fully
satisfied by payment of a backup withholding tax or similar charge, the Company
may elect to pay as additional amounts such amounts as may be necessary so that
every net payment made
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outside the United States following the effective date of such requirements by
the Company or any Paying Agent of principal, premium or interest due in respect
of any Bearer Note or any coupon of which the beneficial owner is a United
States Alien (but without any requirement that the nationality, residence or
identity of such beneficial owner be disclosed to the Company, any Paying Agent
or any governmental authority, with respect to the payment of such additional
amounts), after deduction or withholding for or on account of such backup
withholding tax or similar charge (other than a backup withholding tax or
similar charge that (i) would not be applicable in the circumstances referred to
in the second parenthetical clause of the first sentence of the preceding
paragraph, or (ii) is imposed as a result of presentation of such Bearer Note or
coupon for payment more than 15 days after the date on which such payment
becomes due and payable or on which payment thereof is duly provided for,
whichever occurs later), will not be less than the amount provided for in such
Bearer Note or coupon to be then due and payable. In the event the Company
elects to pay any additional amounts pursuant to this paragraph, the Company
shall have the right to redeem the Bearer Notes as a whole at any time pursuant
to the applicable provisions of the preceding paragraph and the redemption price
of such Bearer Notes will not be reduced for applicable withholding taxes. If
the Company elects to pay additional amounts pursuant to this paragraph and the
condition specified in the first sentence of this paragraph should no longer be
satisfied, then the Company will redeem the Bearer Notes as a whole, pursuant to
the applicable provisions of the preceding paragraph.
PAYMENT OF ADDITIONAL AMOUNTS
The Company will, subject to certain exceptions and limitations set forth
below, pay such additional amounts (the "Additional Amounts") to the holder of
any Note or of any coupon appertaining thereto who is a United States Alien as
may be necessary in order that every net payment of the principal of and
interest on such Note and any other amounts payable on such Note, after
withholding for or on account of any present or future tax, assessment or
governmental charge imposed upon or as a result of such payment by the United
States (or any political subdivision or taxing authority thereof or therein),
will not be less than the amount provided for in such Note or coupon to be then
due and payable. The Company will not, however, be required to make any payment
of Additional Amounts to any such holder for or on account of:
(a) any such tax, assessment or other governmental charge that would
not have been so imposed but for (i) the existence of any present or former
connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of such holder, if such holder is an
estate, a trust, a partnership or a corporation) and the United States,
including, without limitation, such holder (or such fiduciary, settlor,
beneficiary, member or shareholder) being or having been a citizen or
resident thereof or being or having been engaged in a trade or business or
present therein or having, or having had, a permanent establishment therein
or (ii) the presentation by the holder of any such Note or coupon for
payment on a date more than 15 days after the date on which such payment
became due and payable or the date on which payment thereof is duly
provided for, whichever occurs later;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or governmental charge;
(c) any tax, assessment or other governmental charge imposed by reason
of such holder's past or present status as a personal holding company or
foreign personal holding company or controlled foreign corporation or
passive foreign investment company with respect to the United States or as
a corporation that accumulates earnings to avoid United States federal
income tax or as a private foundation or other tax-exempt organization;
(d) any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payments on or in respect of any Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal of, or interest
on, any Note, if such payment can be made without such withholding by any
other Paying Agent in a city in Western Europe;
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(f) any tax, assessment or other governmental charge that would not
have been imposed but for the failure to comply with certification,
information or other reporting requirements concerning the nationality,
residence or identity of the holder or beneficial owner of such Note, if
such compliance is required by statute or by regulation of the United
States or of any political subdivision or taxing authority thereof or
therein as a precondition to relief or exemption from such tax, assessment
or other governmental charge;
(g) any tax, assessment or other governmental charge imposed by reason
of such holder's past or present status as the actual or constructive owner
of 10% or more of the total combined voting power of all classes of stock
entitled to vote of the Company or as a direct or indirect subsidiary of
the Company; or
(h) any combination of item (a), (b), (c), (d), (e), (f) or (g);
nor shall Additional Amounts be paid with respect to any payment on a Note to a
United States Alien who is a fiduciary or partnership or other than the sole
beneficial owner of such payment to the extent such payment would be required by
the laws of the United States (or any political subdivision thereof) to be
included in the income, for tax purposes, of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a beneficial owner
who would not have been entitled to the Additional Amounts had such beneficiary,
settlor, member or beneficial owner been the holder of the Note.
The term "United States Alien" means any person who, for United States
federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership, one or more of the members of which is a foreign
corporation, a non-resident alien individual or a non-resident alien fiduciary
of a foreign estate or trust.
REPLACEMENT OF NOTES AND COUPONS
Any Notes or coupons that become mutilated, destroyed, lost or stolen or
are apparently destroyed, lost or stolen will be replaced by the Company at the
expense of the holder upon delivery of such Notes or coupons or satisfactory
evidence of the destruction, loss or theft thereof to the Company, the Principal
Paying Agent, the Registrar (in the case of Registered Notes) and the applicable
Trustee. In each case, an indemnity satisfactory to the Company, the Principal
Paying Agent, the Registrar (in the case of Registered Notes) and the applicable
Trustee may be required at the expense of the holder of such Note or coupon
before a replacement Note or coupon will be issued.
NOTICES
Notices to holders of the Notes will be given by publication in a newspaper
in the English language of general circulation in the Borough of Manhattan, The
City of New York, and London or, if publication in London is not practical, in
an English language newspaper with general circulation in Western Europe. Such
publication is expected to be made in The Wall Street Journal and the Financial
Times. Such notices will be deemed to have been given on the date of such
publication or if published in such newspapers on different dates, on the date
of the first such publication.
Notices to holders of Registered Notes will also be given by mailing such
notices to each holder by first class mail, postage prepaid, at the respective
address of each holder as that address appears upon the books of the Company.
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<PAGE>
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in, or the payment of
which is related to the value of, a Specified Currency other than the currency
of the country in which the purchaser is a resident or the currency (including
the ECU and any other such composite currency) in which the purchaser conducts
its business or activities (the "home currency") entails significant risks that
are not associated with a similar investment in a security denominated in the
home currency. Such risks include, without limitation, the possibility of
significant changes in rates of exchange between the home currency and the
various foreign currencies (or composite currencies) and the possibility of the
imposition or modification of exchange controls by either the U.S. or foreign
governments. Such risks generally depend on economic and political events over
which the Company has no control. In recent years, rates of exchange for
certain currencies have been highly volatile and such volatility may be expected
to continue in the future. Fluctuations in any particular exchange rate that
have occurred in the past are not necessarily indicative, however, of
fluctuations in such rate that may occur during the term of any Note.
Depreciation of the Specified Currency for a Note against the relevant home
currency 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 home currency 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 a substantial portion of
the principal of a Note to the investor.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN FINANCIAL AND LEGAL
ADVISORS AS TO ANY SPECIFIC RISKS ENTAILED BY AN INVESTMENT BY SUCH INVESTOR IN
NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF,
FOREIGN CURRENCY. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS
WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Foreign exchange rates can either float or be fixed by sovereign
governments. Exchange rates of most economically developed nations are
permitted to fluctuate in value relative to the U.S. dollar. National
governments, however, rarely voluntarily allow their currencies to float freely
in response to economic forces. From time to time governments use a variety of
techniques, such as intervention by a country's central bank or imposition of
regulatory controls or taxes, to affect the exchange rate of their currencies.
Governments may also issue a new currency to replace an existing currency or
alter the exchange rate or relative exchange characteristics by devaluation or
revaluation of a currency. Thus, a special risk in purchasing non-U.S. dollar
denominated Notes or Currency Linked Notes is that their U.S. dollar-equivalent
yields could be affected by governmental actions, which could change or
interfere with theretofore freely determined currency valuation, fluctuations in
response to other market forces, and the movement of currencies across borders.
There will be no adjustment or change in the terms of such Notes in the event
that exchange rates should become fixed, or in the event of any devaluation or
revaluation or imposition of exchange or other regulatory controls or taxes, or
in the event of other developments affecting the U.S. dollar or any applicable
Specified Currency.
Governments have imposed from time to time, and may in the future
impose, exchange controls that could affect exchange rates as well as the
availability of a specified foreign 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."
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GOVERNING LAW AND JUDGMENTS
The Notes will be governed by and construed in accordance with the
laws of the State of New York. The courts of the States of New York and
Delaware will have jurisdiction over claims relating to the Series D Notes. 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 would render or
enter a judgment or decree in the Specified Currency. Such judgment would then
be converted into U.S. dollars at the rate of exchange prevailing on the date of
entry of the judgment or decree.
UNITED STATES FEDERAL TAXATION - FOREIGN HOLDERS
In the opinion of Shearman & Sterling, counsel to the Company, the
following summary accurately describes the principal United States federal
income and estate tax consequences of ownership and disposition of the Notes by
a Foreign Holder (as defined below). This summary is based on the Internal
Revenue Code of 1986, as amended to the date hereof (the "Code"), and existing
and proposed Treasury regulations, revenue rulings and judicial decisions. This
summary does not discuss all of the tax consequences that may be relevant to
holders in light of their particular circumstances or to holders subject to
special rules, such as persons other than Foreign Holders, nonresident alien
individuals that have lost United States citizenship or that have ceased to be
treated as resident aliens, corporations that are treated as foreign or domestic
personal holding companies, controlled foreign corporations, or passive foreign
investment companies and Foreign Holders that are owned or controlled by persons
subject to United States income tax. Persons considering the purchase of the
Notes should consult with their own tax advisors with regard to the application
of the United States federal income and estate tax laws to their particular
situations as well as any tax consequences arising under the laws of any state,
local or foreign tax jurisdiction.
As used herein, the term "Foreign Holder" means a beneficial owner of
a Note that is for United States federal income tax purposes (i) a nonresident
alien individual, (ii) a corporation, partnership or other entity that was not
created or organized in or under the laws of the United States or any political
subdivision thereof or (iii) a nonresident alien or foreign fiduciary or grantor
of a trust or estate.
Income Taxes
A Foreign Holder will generally not be subject to United States
federal income taxes, including withholding taxes, on payments of principal,
premium, if any, or interest (including original issue discount, if any) on a
Note or coupon, or any gain arising from the sale or disposition of a Note or
coupon, provided that (i) any such income is not effectively connected with the
conduct of a trade or business within the United States, (ii) such Foreign
Holder is not a person who owns (directly or by attribution) ten percent or more
of the total combined voting power of all classes of stock of the Company, (iii)
the Foreign Holder (if an individual) is not present in the United States 183
days or more during the taxable year of the disposition, (iv) the Foreign Holder
does not have a "tax home" (as defined in section 911(d)(3) of the Code) or an
office or other fixed place of business in the United States and (v) in the case
of a Note issued in registered form, required certification of the non-United
States status of the beneficial owner is provided to the Company or the Agent.
The 31% "backup" withholding and information reporting requirements
will generally not apply to payments by the Company or its agents of principal,
premium, if any, and interest on any obligation, and to proceeds of the sale or
redemption of an obligation before maturity, with respect to a Foreign Holder of
a Bearer Note or coupon. Such requirements will likewise generally not apply to
such payments made on a Registered Note if required certification of the
holder's non-United States status is provided to the Company or the Agent.
Foreign Holders of Notes should consult their tax advisors 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 Foreign
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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 (the "Service").
Estate Taxes
A Note or coupon held by an individual who at the time of his death is
not a citizen or domiciliary of the United States will not be subject to United
States federal estate tax as a result of such individual's death, provided that
(i) interest paid to such individual on such Note or coupon would not be
effectively connected with the conduct by such individual of a trade or business
within the United States and (ii) such individual is not a person who owns
(directly or by attribution) ten percent or more of the total combined voting
power of all classes of stock of the Company.
UNITED STATES FEDERAL TAXATION - UNITED STATES HOLDERS
In the opinion of Shearman & Sterling, counsel to the Company, the
following summary accurately describes the principal United States federal
income tax consequences of ownership and disposition of the Notes by a United
States Holder (as defined below). This summary is based on the Code and
existing and proposed Treasury regulations, revenue rulings and judicial
decisions. This summary deals only with the 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 holders in light of their particular
circumstances or to holders subject to special rules, such as persons other than
United States Holders, life insurance companies, dealers in securities or
foreign currencies, persons holding the Notes as a hedge against currency risks,
persons who have hedged the interest rate risks of ownership of a Note, or
United States Holders whose functional currency (as defined in Section 985 of
the Code) is not the United States dollar. Persons considering the purchase of
the Notes should consult with their own 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 tax jurisdiction.
As used herein, the term "United States Holder" means a beneficial
owner of a Note that is for United States federal income tax purposes (i) 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.
Payments of Interest on the Notes
Interest paid on a Note (whether in United States dollars or in other
than United States dollars) that is not a Discount Note, as defined below, 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.
Special rules governing the treatment of interest paid with respect to
Discount Notes, including certain Notes that pay interest annually that are
issued less than 15 calendar days before an Interest Payment Date, Notes that
mature one year or less from their date of issuance and Notes issued for an
amount less than their stated redemption price at maturity, are described under
"Discount Notes" below.
Discount Notes
The following discussion is a summary of the principal United States
federal income tax consequences of the ownership and disposition of Discount
Notes (as defined below) by United States Holders. Additional rules applicable
to Discount Notes that are denominated in a Specified Currency other than the
U.S. dollar, or have payments of interest or principal determined by reference
to the value of one or more currencies or currency units other than the U.S.
dollar, are described under "Foreign Currency Notes" below.
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The following summary is based upon certain Treasury regulations
issued on January 27, 1994 (the "OID Regulations"). The OID Regulations are
effective for Notes issued on or after April 3, 1994.
Under the OID Regulations, a Note that has an "issue price" that is
less than its "stated redemption price at maturity" will generally be considered
to have been issued bearing original issue discount ("OID") for United States
federal income tax purposes (a "Discount Note"), unless such difference is less
than a specified de minimis amount. The issue price of a Note issued for cash
generally will be the initial offering price to the public at which price a
substantial amount of Notes is sold. Such issue price does not change even if
part of the issue is subsequently sold at a different price. The stated
redemption price at maturity of a Discount Note is the total of all payments
required to be made under the Discount Note other than "qualified stated
interest" payments. The term "qualified stated interest" is defined as stated
interest that is unconditionally payable at least annually at a single fixed
rate of interest. In addition, qualified stated interest generally includes
stated interest with respect to a variable rate debt instrument that is
unconditionally payable at least annually at a single qualified floating rate or
a rate that is determined using a single fixed formula that is based on one or
more qualified floating rates. A rate is a qualified floating rate if
variations in the rate can reasonably be expected to measure contemporaneous
fluctuations in the cost of newly borrowed funds.
Under the OID Regulations, no payment of interest on a Note that
matures one year or less from its date of issuance will be considered qualified
stated interest and accordingly such a Note will be treated as a Discount Note.
A United States Holder of Discount Notes is required to include
qualified stated interest in income at the time it is received or accrued, in
accordance with such holder's method of accounting.
In addition, United States Holders of Discount Notes that mature more
than one year from the date of issuance will be required to include OID in
income for United States 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, but such
holders will not be required to include separately in income cash payments
received on such Notes, even if denominated as interest, to the extent they do
not constitute qualified stated interest. The amount of OID includible in
income for a taxable year by the initial United States Holder of a Discount Note
will generally equal the sum of the "daily portions" of the total OID on the
Discount Note for each day during the taxable year on which such holder held the
Discount Note ("accrued OID"). Generally, the daily portion of the OID is
determined by allocation to each day in any "accrual period" a ratable portion
of the OID allocable to such accrual period. The term "accrual period" means an
interval of time of one year or less; provided that each scheduled payment of
principal or interest either occurs on the final day of an accrual period or the
first day of an accrual period. The amount of OID allocable to an accrual
period will be the excess of (a) the product of the "adjusted issue price" of
the Discount Note at the beginning of such accrual period and its "yield to
maturity" over (b) the amount of any qualified stated interest allocable to the
accrual period. The "adjusted issue price" of a Discount Note at the beginning
of an accrual period will equal the issue price plus the amount of OID
previously includible in the gross income of any United States Holder (without
reduction for any premium or amortized acquisition premium, as described below),
less any payments made on such Discount Note (other than qualified stated
interest) on or before the first day of the accrual period. The "yield to
maturity" of the Discount Note will be computed on the basis of a constant
annual interest rate and compounded at the end of each accrual period. Under
the foregoing rules, United States Holders of Discount Notes will generally be
required to include in income increasingly greater amounts of OID in successive
accrual periods. Special rules will apply for calculating OID for initial short
or final accrual periods.
Under the OID Regulations, Notes that pay interest annually that are
issued less than 15 calendar days before an Interest Payment Date may be treated
as Discount Notes. United States Holders intending to purchase such Notes
should refer to the applicable Pricing Supplement.
Certain of the Discount Notes may be redeemable prior to maturity at
the option of the Company (a "call option") and/or repayable prior to maturity
at the option of the holder (a "put option"). Discount Notes containing
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either or both of such features may be subject to rules that differ from the
general rules discussed above. Holders intending to purchase Discount Notes
with either or both of such features should carefully examine the applicable
Pricing Supplement and should consult with their own tax advisors with respect
to either or both of such features since the tax consequences with respect to
OID will depend, in part, on the particular terms and the particular features of
the purchased Note.
In general, a United States Holder who uses the cash method of tax
accounting and who holds a Discount Note that matures one year or less from the
date of its issuance (a "short-term Discount Note") is not required to accrue
OID for United States federal income tax purposes unless such holder elects to
do so. United States Holders who report income for United States federal income
tax purposes on the accrual method and certain other holders, including banks
and dealers in securities, are required to include OID (or alternatively
acquisition discount) on such short-term Discount Notes on a straight-line
basis, unless an election is made to accrue the OID according to a constant
yield method based on daily compounding. In the case of a United States Holder
who is not required, and does not elect, to include OID in income currently, any
gain realized on the sale, exchange or retirement of a short-term Discount Note
will be ordinary interest income to the extent of the OID accrued on a straight-
line basis (or alternatively under the constant yield method) through the date
of sale, exchange or retirement. In addition, such non-electing United States
Holders who are not subject to the current inclusion requirement described in
the second sentence of this paragraph will be required to defer the deduction of
all or a portion of any interest paid on indebtedness incurred to purchase
short-term Discount Notes until such OID is included in such holder's income.
If the amount of OID with respect to a Note is less than the specified
de minimis amount (generally, 0.0025 multiplied by the product of the stated
redemption price at maturity and the number of complete years to maturity), the
amount of OID is treated as zero and all stated interest is treated as qualified
stated interest. Under the OID regulations, a United States Holder will be
required to treat any stated principal payment on a Note as capital gain to the
extent of the product of the total amount of de minimis OID and a fraction, the
numerator of which is the amount of the principal payment made and the
denominator of which is the stated principal amount of the Note.
Under the OID Regulations, United States Holders are permitted to
elect to include all interest on a Note using the constant yield method. For
this purpose, interest includes stated interest, acquisition discount, OID, de
minimis OID, market discount, de minimis market discount, and unstated interest,
as adjusted by any amortizable bond premium or acquisition premium. Special
rules apply to elections made with respect to Notes with amortizable bond
premium or market discount and United States Holders considering such an
election should consult their own tax advisor. The election cannot be revoked
without the approval of the Internal Revenue Service.
Market Discount and Premium
If a United States Holder purchases a Note (other than a Discount
Note) for an amount that is less than its stated redemption price at maturity
or, in the case of a Discount Note, its adjusted issue price, the amount of the
difference will be treated as "market discount" for United States federal income
tax purposes, unless such difference is less than a specified de minimis amount.
Under the market discount rules of the Code, a United States Holder
will be required to treat any partial principal payment (or, in the case of a
Discount Note, any payment that does not constitute qualified stated interest)
on, or any gain realized on the sale, exchange, retirement or other disposition
of, a Note as ordinary income to the extent of the lesser of (i) the amount of
such payment or realized gain or (ii) the market discount that has not
previously been included in income and is treated as having accrued on such Note
at the time of such payment or disposition. If such Note is disposed of in a
nontaxable transaction (other than a nonrecognition transaction described in
Code Section 1276(c)), the amount of gain realized on such disposition for
purposes of the market discount rules shall be determined as if such holder had
sold the Note at its then fair market value. Market discount will be considered
to accrue ratably during the period from the date of acquisition to the maturity
date of the Note, unless the United States Holder elects to accrue on the basis
of a constant interest rate. A different rule may apply to Discount Notes or
Amortizing Notes under forthcoming regulations.
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A United States Holder may be required to defer the deduction of all
or a portion 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 (including a nonrecognition transaction other than a
transaction described in Code Section 1276(c)). A United States Holder may
elect to include market discount in income currently as it accrues (on either a
ratable or a constant interest rate basis), in which case the rules described
above regarding the treatment as ordinary income of gain upon the disposition of
the Note and upon the receipt of certain cash payments and regarding the
deferral of interest deductions will not apply.
A United States Holder who purchases a Discount Note for an amount
that is greater than its adjusted issue price, but less than or equal to the sum
of all amounts payable on the Note, after the purchase date (other than
qualified stated interest), will be considered to have purchased such Note at an
"acquisition premium" within the meaning of the Code. Under the acquisition
premium rules of the Code, the amount of OID which such holder must include in
its gross income with respect to such Note for any taxable year will be reduced
by the fraction, the numerator of which is the excess of the cost of the Note
over its adjusted issue price and the denominator of which is the excess of the
sum of all amounts payable on the Note after the purchase date (other than
qualified stated interest) over the adjusted issue price.
A United States Holder who purchases a Discount Note for an amount
that is greater than the sum of all amounts payable on the Note after the
purchase date (other than qualified stated interest) will be considered to have
purchased such Note at a "premium" within the meaning of the OID Regulations.
In such case, the holder is not required to include any OID in gross income.
If a United States Holder purchases a Note for an amount that is
greater than the amount payable at maturity (or on the earlier call date, in the
case of a Note that is redeemable at the option of the Company), 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 and to offset interest otherwise required to be
included in income in respect of such Note during any taxable year by the
amortized amount of such excess for such taxable year. However, if such Note
may be optionally redeemed after the United States Holder acquires it at a price
in excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of such Note.
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. A cash basis taxpayer's amount realized on the sale,
exchange or retirement of a Note will be reduced by any amount attributable to
accrued interest (or, in the case of a Discount Note, accrued qualified stated
interest), which will be taxable as such. A United States Holder's adjusted tax
basis in a Note generally will equal the cost of the Note to such holder,
increased by the amounts of any market discount, OID and de minimis OID
previously included in income by the holder with respect to such Note and
reduced by any amortized bond premium and any principal payments received by the
United States Holder and, in the case of a Discount Note, by the amounts of any
other payments that do not constitute qualified stated interest.
Subject to the discussion under "Foreign Currency Notes" below, gain
or loss recognized on the sale, exchange or retirement of a Note will be capital
gain or loss (except to the extent of any accrued market discount or, in the
case of a short-term Discount Note, any accrued OID which the United States
Holder has not previously included in income), and will generally 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.
Unless a United States Holder holds a Bearer Note through a financial
institution that satisfies the requirements of United States Treasury
Regulations Section 1.165-12(c)(3), such United States Holder generally will
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not be entitled to deduct any loss on such Bearer Note or coupon and must treat
as ordinary income any gain realized on the sale or other disposition (including
the receipt of principal) of such Bearer Note or coupon.
Foreign Currency Notes
The following discussion summarizes the principal United States
federal income tax consequences to a United States Holder of the ownership and
disposition of Notes (other than the Currency Linked Notes described above) that
are denominated in a Specified Currency other than the U.S. dollar or the
payments of interest or principal on which are payable in one or more currencies
or currency units other than the U.S. dollar (a "Foreign Currency Note").
The following summary is based upon certain Treasury regulations
issued pursuant to section 988 of the Code on March 16, 1992 (the "Section 988
Regulations").
The rules discussed below will generally not apply to a United States
Holder that enters into a "qualified hedging transaction" on or after September
21, 1989. A qualified hedging transaction is an integrated economic transaction
consisting of a qualifying debt instrument, such as a Foreign Currency Note, and
a "section 1.988-5(a) hedge," as defined in section 1.988-5(a)(4) of the Section
988 Regulations. Generally, such an integrated economic transaction, if
identified as such by either the United States Holder or the Service, is treated
as a single transaction for United States federal income tax purposes, the
effect of which is to treat such a holder as owning a synthetic debt instrument
that is subject to rules applicable to Discount Notes. The rules with respect
to a qualified hedging transaction are extremely complex and special rules may
apply in certain circumstances, and persons that are considering hedging the
currency risk are urged to consult with their own tax advisors with respect to
the application of these rules.
A United States Holder who uses the cash method of accounting and who
receives a payment of interest with respect to a Foreign Currency Note (other
than a Discount Note (except to the extent any qualified stated interest is
received) in which OID is accrued on a current basis) 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 United States Holder (to the extent the above paragraph is not
applicable) will be required to include in income the U.S. dollar value of the
amount of interest income (including OID or market discount and reduced by
premium, acquisition premium and amortizable bond premium to the extent
applicable) that has accrued and is otherwise required to be taken into account
with respect to a Foreign Currency Note during an accrual period. 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. The average rate of exchange for the
accrual period (or partial period) is the simple average of the exchange rates
for each business day of such period (or other method if such method is
reasonably derived and consistently applied). A United States Holder may elect
to determine the U.S. dollar value of such accrued income by translating such
income 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.
Such United States Holder will recognize ordinary gain or loss with respect to
accrued interest income on the date such income is received. The amount of
ordinary gain or loss recognized will equal the difference between the U.S.
dollar value of the foreign currency payments received (determined on the date
such payment is received) in respect of such accrual period and the U.S. dollar
value of interest income that has accrued during such accrual period (as
determined above).
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. Any gain or loss realized by a United States
Holder on a sale or other
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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.
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 converts U.S. dollars
to a foreign currency and immediately uses that currency to purchase a Foreign
Currency Note denominated in the same currency ordinarily will not recognize
gain or loss in connection with such conversion and purchase. However, a United
States Holder who purchases a Foreign Currency Note with previously owned
foreign currency will recognize ordinary income or loss in an amount equal to
the difference, if any, between such holder's tax basis in the foreign currency
and the U.S. dollar fair market value of the Foreign Currency Note on the date
of purchase. For purposes of determining the amount of any gain or loss
recognized by a United States Holder on the sale, exchange or retirement of a
Foreign Currency Note, the amount realized upon such sale, exchange or
retirement will be the U.S. dollar value of the foreign currency received,
determined on the date of sale, exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of a
Foreign Currency Note will be ordinary income or loss to the extent it is
attributable to fluctuations in currency exchange rates. Gain or loss
attributable to fluctuations in exchange rates will equal the difference between
the U.S. dollar value of the foreign currency principal amount of such Note,
determined on the date such payment is received or such Note is disposed of,
including any payment with respect to accrued interest, and 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
accrued interest received (determined by translating such interest at the
average exchange rate for the accrual period). The foreign currency principal
amount of a Foreign Currency Note generally equals the United States Holder's
purchase price in units of foreign currency. Such foreign currency gain or
loss will be recognized only to the extent of the total gain or loss recognized
by a United States Holder on the sale, exchange or retirement of the Foreign
Currency Note.
The source of exchange 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 recognized by such
a United States Holder in excess of such foreign currency gain or loss will be
capital gain or loss (except to the extent of any accrued market discount or, in
the case of a short-term Discount Note, any accrued OID), and generally will be
long-term capital gain or loss if the holding period of the Foreign Currency
Note exceeds one year.
Any gain or loss that is treated as ordinary income or loss, as
described above, generally will not be treated as interest income or expense
except to the extent provided by administrative pronouncements of the Service.
OID, market discount, premium, acquisition premium and amortizable
bond premium of a Foreign Currency Note are to be determined in the relevant
foreign currency. The amount of such discount or premium that is taken into
account currently under general rules applicable to Notes other than Foreign
Currency Notes is to be determined for any accrual period in the relevant
foreign currency and then translated into the United States Holder's functional
currency on the basis of the average exchange rate in effect during such accrual
period. The amount of accrued market discount (other than market discount that
is included in income on a current basis) taken into account upon the receipt of
any partial principal payment or upon the sale, exchange, retirement or other
disposition of a Foreign Currency Note will be the U.S. dollar value of such
accrued market discount (determined on the date of receipt of such partial
principal payment or upon the sale, exchange, retirement or other disposition).
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 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.
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The Section 988 Regulations do not discuss the tax consequences of an
issuance of a Foreign Currency Note that is denominated in, or has payments of
interest or principal determined by reference to, a so-called hyperinflationary
currency or more than one currency. On March 17, 1992, Treasury regulations
were proposed with regard to debt instruments denominated in a hyperinflationary
currency and certain debt instruments denominated in more than one currency.
These proposed regulations are proposed to be effective for transactions entered
into on or after the date such regulations are finalized.
A Foreign Currency Note will be considered to be a debt instrument
denominated in a hyperinflationary currency if it is denominated in a Specified
Currency of a country in which there is cumulative inflation of at least 100
percent during the thirty-six calendar month period ending on the last day of
the preceding calendar year. Under the proposed regulations, a United States
Holder that acquires a Foreign Currency Note that is denominated in a
hyperinflationary currency will recognize gain or loss for its taxable year
determined by reference to the change in exchange rates between the first day of
the taxable year (or the date the Note was acquired, if later) and the last day
of the taxable year (or the date the Note was disposed of, if earlier). Such
gain or loss will reduce or increase the amount of interest income otherwise
required to be taken into account. Special rules apply to the extent such loss
exceeds the amount of interest income otherwise taken into account.
Under the proposed regulations, a Foreign Currency Note will be
considered to be a "dual currency debt instrument" if (i) the qualified stated
interest is denominated in or determined by reference to a single currency, (ii)
the stated redemption price at maturity is denominated in or determined by
reference to a different currency, and (iii) the amount of all payments in each
currency is fixed on the issue date. A Foreign Currency Note (other than a dual
currency debt instrument) will be considered to be a "multi-currency debt
instrument" if payments are to be made in more than one currency and the amount
of all payments in each currency is fixed on the issue date. A dual currency
debt instrument will be treated as two hypothetical debt instruments, a zero
coupon bond denominated in the currency of the stated redemption price at
maturity and an installment obligation denominated in the currency of the
qualified stated interest. A multi-currency debt instrument will be treated
similarly and separated into component hypothetical debt instruments in each
currency. The OID and Section 988 rules discussed above will apply to each
hypothetical debt instrument. The proposed regulations do not apply to any
Foreign Currency Note that is denominated in, or has payments of interest or
principal determined by reference to, more than one currency except to the
extent the Note meets the definition of a dual currency debt instrument or
multi-currency debt instrument.
PERLS, Reverse PERLS and Multicurrency PERLS
The following discussion relates to PERLS, Reverse PERLS and
Multicurrency PERLS that bear current coupons consistent with or greater than
comparable dollar denominated debt obligations. In other cases, holders should
refer to the discussion relating to taxation in the applicable Pricing
Supplement.
Although no authority exists that addresses instruments having
characteristics similar to such instruments and the conclusions herein are
therefore not entirely free from doubt, Shearman & Sterling advises that such
PERLS, Reverse PERLS and Multicurrency PERLS should constitute debt obligations
for U.S. federal income tax purposes and that no portion of the issue price
should be allocated to the foreign exchange feature. The OID Regulations state
that a debt instrument will not be treated as a contingent debt instrument
merely because some or all of the payments are denominated in or determined by
reference to the value of one or more foreign currencies. It should be noted,
however, that the Section 988 Regulations do not yet address the treatment of
instruments like PERLS, Reverse PERLS or Multicurrency PERLS and the proposed
regulations do not address the treatment of such instruments except insofar as
they meet the definitions of dual currency debt instruments and multi-currency
debt instruments. It is possible that such regulations (or other authority),
when issued, could result in tax consequences that differ from those described
herein, and that such authority could apply with retroactive effect. See
discussion under "Foreign Currency Notes" for a summary of other federal income
tax principles that may apply to United States Holders of PERLS, Reverse PERLS
and Multicurrency PERLS.
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Notes Linked to Commodity Prices, Equity Indices or Other Factors
The United States federal income tax consequences to a United States
Holder of the ownership and disposition of Notes that have principal or interest
determined by reference to commodity prices, equity indices or other factors
will vary depending upon the exact terms of the Notes and related factors.
Notes containing any of such features may be subject to rules that differ from
the general rules discussed above. Holders intending to purchase such Notes
should refer to the discussion relating to taxation in the applicable Pricing
Supplement.
BACKUP WITHHOLDING
The 31% "backup" withholding and information reporting requirements
apply to certain payments of principal, premium, if any, and interest on an
obligation, and to proceeds of the sale or redemption of an obligation before
maturity, to certain noncorporate United States Holders. The Company, its
agent, a broker, the relevant Trustee or any paying agent, as the case may be,
will be required to withhold from any payment that is subject to backup
withholding a tax equal to 31% of such payment if the United States Holder fails
to furnish his taxpayer identification number (social security number or
employer identification number), to certify that such holder is not subject to
backup withholding, or to otherwise comply with the applicable requirements of
the backup withholding rules. Certain holders (including, among others,
corporations and persons who are not United States persons) are not subject to
the backup withholding and reporting requirements.
Any amounts withheld under the backup withholding rules from a payment
to a United States Holder would be allowed as a refund or a credit against such
holder's United States federal income tax provided that the required information
is furnished to the Service.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE
NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company
exclusively through the Agents, who have 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 Agents will have the right to reject any offer to
purchase Notes solicited by them in whole or in part. Payment of the purchase
price of the Notes will be required to be made in immediately available funds.
Unless otherwise specified in the applicable Pricing Supplement, 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,
depending upon the maturity of the Notes; provided, however, that commissions
with respect to Notes having a maturity of 30 years or greater will be
negotiated.
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. Such Notes may be
resold to investors and other purchasers at a fixed offering price or at
prevailing market prices, or prices related thereto at the time of such resale
or otherwise, as determined by such Agent and specified in the applicable
Pricing Supplement. An Agent may offer the Notes it has purchased as principal
to other dealers. Such Agent may sell the 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 that are to be resold by an Agent to investors and other purchasers on a
fixed public offering price basis, the public offering price, concession and
discount may be changed.
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In compliance with United States federal income tax laws and
regulations, the Company and each Agent has agreed that it will not, in
connection with the original issuance of any Bearer Notes or during the
Restricted Period (as defined above in "Description of Notes -- Forms,
Denominations, Exchange and Transfer"), offer, sell, resell or deliver, directly
or indirectly, any Bearer Notes in the United States or its possessions or to
United States persons (other than as permitted by the applicable Treasury
Regulations). In addition, each Agent has represented and agreed that it will
have in effect procedures reasonably designed to ensure that its employees or
agents who are directly engaged in selling Bearer Notes are aware of the above
restrictions on the offering, sale, resale or delivery of Bearer Notes.
Notes that are not listed on the London Stock Exchange may not be
offered or sold, directly or indirectly, in the United Kingdom, by means of this
Prospectus Supplement, the accompanying Prospectus or any other document, other
than to persons whose ordinary business it is to buy or sell shares or
debentures, whether as principal or agent (other than in circumstances that do
not constitute an offer to the public within the meaning of the Companies Act
1985 of the United Kingdom). All applicable provisions of the Financial
Services Act 1986 of the United Kingdom must be complied with with respect to
anything done by the Agents in relation to Notes not listed on the London Stock
Exchange in, from or otherwise involving the United Kingdom. Furthermore, each
underwriter, dealer, agent and remarketing firm participating in the
distribution of Notes not listed on the London Stock Exchange has agreed or will
agree that it will not issue or pass on to any person in the United Kingdom any
publication or document received by it in connection with the issue of such
Notes other than to persons who are of a kind described in Article 9(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988.
The Notes have not been, and will not be, registered under the
Securities and Exchange Law of Japan. Accordingly, the Notes may not be offered
or sold, directly or indirectly, in Japan or to, or for the benefit of, any
resident of Japan (which term as used herein means any person resident in Japan
including any corporation or other entity organized under the laws of Japan) or
to others for the re-offering or re-sale, directly or indirectly, in Japan or to
a resident of Japan except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the Securities and Exchange
Law of Japan and other relevant laws and regulations of Japan.
In addition, Notes denominated in Japanese yen shall have a maturity
of not less than one year and may not be offered or sold, directly or
indirectly, in Japan or to, or for the benefit of, any resident in Japan prior
to the date which is 90 days after the settlement date of each issue of such
Notes. In the case of Notes with respect to which interest payments are
denominated in Japanese yen and principal payments are denominated in a currency
or currency unit other than Japanese yen or Notes with respect to which
principal payments are denominated in Japanese yen and interest payments are
denominated in a currency or currency unit other than Japanese yen, such Notes
may not be offered or sold, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan prior to the date which is 180 days after the
settlement date of each issue of such Notes.
Notes denominated or payable in Deutsche Marks may only be offered and
sold from time to time by the Company through Morgan Stanley Bank AG, acting as
agent for the Company or as lead manager in a syndicated transaction. The
issuance of Notes denominated or payable in Deutsche Marks will take place in
compliance with the guidelines of the German Central Bank, as amended from time
to time, regarding the issue of debt securities denominated in Deutsche Marks.
The Notes may not be offered or sold in the Federal Republic of Germany other
than in compliance with the provisions of the German Sales Prospectus Act
(Wertpapier-Verkaufsprospektgesetz) of December 13, 1990, as amended, and of any
other laws applicable in the Federal Republic of Germany governing the issue,
offering and sale of securities.
Notes denominated or payable in or indexed to Swiss francs may only be
offered and sold from time to time by the Company through Bank Morgan Stanley
AG, acting as agent for the Company or as lead manager in a syndicated
transaction. The issuance of Notes denominated or payable in or indexed to
Swiss francs will take place in compliance with Swiss law and the relevant
regulations of the Swiss National Bank in effect from time to time.
S-36
<PAGE>
Morgan Stanley S.A. has represented and agreed, and any dealers for
French Franc Notes will represent and agree, that French Franc Notes will be
issued outside the Republic of France and that, in connection with their initial
distribution, Morgan Stanley S.A. and such dealers will not offer or sell,
directly or indirectly, any French Franc Notes to the public in the Republic of
France, and will not distribute or cause to be distributed to the public in the
Republic of France this Prospectus Supplement, the accompanying Prospectus or
any other offering material relating to French Franc Notes. As of the date of
this Prospectus Supplement, only French credit institutions (which includes
French subsidiaries of foreign banks) may act as underwriters, dealers or agents
with respect to issuances of French Franc Notes (except for syndicated issuances
of French Franc Notes, where the lead manager must be a credit institution
authorized to act as lead manager of French Franc debt instrument issuances).
Each of the Agents 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.
Morgan Stanley & Co. International Limited, Bank Morgan Stanley AG,
Morgan Stanley S.A. and Morgan Stanley Bank AG are each an affiliate of the
Company. The Company has been advised by the Agents that they 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.
Concurrently with the offering of Notes through the Agents as
described herein, the Company may issue other Debt Securities pursuant to the
Indentures referred to herein. Such Debt Securities may include medium-term
notes ("Global Medium-Term Notes, Series C") that may have terms substantially
similar to the terms of the Notes offered hereby and that may be offered,
concurrently with the offering of the Notes, on a continuing basis in the United
States by the Company pursuant to a distribution agreement (the "U.S.
Distribution Agreement") with Morgan Stanley & Co. Incorporated, an affiliate of
the Company ("MS&Co."), as agent for the Company, the terms of which are
substantially similar to the terms of the distribution agreement (the "Euro
Distribution Agreement") with the Agents, except for certain selling
restrictions specified in the Euro Distribution Agreement. Any Global Medium-
Term Notes, Series C sold pursuant to such U.S. Distribution Agreement, and any
Debt Securities issued by the Company pursuant to the Indentures, will reduce
the aggregate offering price of Notes that may be offered by this Prospectus
Supplement, any Pricing Supplement hereto and the Prospectus.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by
Jonathan M. Clark, Esq., General Counsel and Secretary of the Company and a
Managing Director of MS&Co., or other counsel who is satisfactory to the Agents
and an officer of the Company. Mr. Clark and such other counsel beneficially
own, or have rights to acquire under an employee benefit plan of the Company, an
aggregate of less than 1% of the common stock of the Company. Certain legal
matters relating to the Notes will be passed upon for the Agents by Davis Polk &
Wardwell. Davis Polk & Wardwell has in the past represented and continues to
represent the Company on a regular basis and in a variety of matters, including
in connection with its merchant banking and leveraged capital activities. In
this regard, certain partners of Davis Polk & Wardwell, acting through a
separate partnership, acquired less than 1% of the common stock of a company of
which the Company and a fund managed by the Company own a controlling interest.
Shearman & Sterling, which is opining on the accuracy of the summary of certain
tax matters described under the captions "United States Federal Taxation --
Foreign Holders" and "United States Federal Taxation -- United States Holders,"
represents the Company on a regular basis and in a variety of matters, including
in connection with its merchant banking and leveraged capital activities.
S-37
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated
capitalization of the Company at October 31, 1994. As of the date hereof and
except as described in the footnotes to the following table, there has been no
material change in the capitalization of the Company and its consolidated
subsidiaries, taken as a whole, since October 31, 1994. The following should be
read in conjunction with the Company's consolidated financial statements, the
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1994 and Quarterly Report on Form 10-Q for the
quarter ended October 31, 1994, each incorporated herein by reference.
<TABLE>
<CAPTION>
AT OCTOBER 31, 1994
----------------------------
(In thousands, except share
and unit data)
<S> <C>
Short-term borrowings................................................ $ 6,993,985
----------
Long-term borrowings (1)(2).......................................... $ 7,382,082
----------
Stockholders' equity:
Preferred stock, no par value; authorized 300,000 shares:
ESOP Convertible Preferred Stock, liquidation preference $35.88; 136,383
outstanding 3,801,621 shares......................................
9.36% Cumulative Preferred Stock, stated value $25; outstanding 137,500
5,500,000 shares..................................................
8.88% Cumulative Preferred Stock, stated value $200; outstanding 195,000
975,000 shares....................................................
8 3/4% Cumulative Preferred Stock, stated value $200; outstanding 150,000
750,000 shares....................................................
7 3/8% Cumulative Preferred Stock, stated value $200; outstanding 200,000
1,000,000 shares..................................................
Common stock, $1.00 par value; authorized 300,000,000 shares; 79,690
issued 79,689,995 shares...........................................
Paid-in capital..................................................... 582,379
Retained earnings................................................... 3,336,694
Cumulative translation adjustments (3,078)
----------
Subtotal...................................................... 4,814,568
Less:
Note receivable related to sale of preferred stock to ESOP......... 109,124
Common stock held in treasury, at cost 3,748,611 shares............ 234,831
----------
Total stockholders' equity.................................... 4,470,613
----------
Total capitalization................................................. $ 11,852,695
==========
---------------
</TABLE>
(1) Excludes current portion amounting to $1,729,338 at October 31, 1994.
(2) A shelf registration statement became effective in February 1994 for up to
$3,312,577 of debt securities, warrants to purchase debt securities,
preferred stock and depositary shares. Additional senior notes aggregating
$637,412 were issued after October 31, 1994 pursuant to such shelf
registration statement.
S-38
<PAGE>
BOARD OF DIRECTORS
The current Directors of the Company and their principal occupations
are listed below. The business address of each director is 1251 Avenue of the
Americas, New York, New York 10020.
Richard B. Fisher ...... Chairman, Managing Director and Director
John J. Mack ........... President, Managing Director and Director
Barton M. Biggs ........ Managing Director and Director
Peter F. Karches ....... Managing Director and Director
Robert W. Matschullat .. Managing Director and Director
Sir David A. Walker .... Director
Daniel B. Burke ........ Director
Dick Cheney ............ Director
S. Parker Gilbert ...... Director
Allen E. Murray ........ Chairman of the Board of Directors
and Chief Executive Officer of Mobil Corporation
Paul F. Oreffice ....... Director
Paul J. Rizzo .......... Director
GENERAL INFORMATION
The listing of the Series D Notes on the London Stock Exchange will be
expressed as a percentage of their principal amount excluding accrued interest.
Listing of the Series D Notes offered hereby is expected to be granted by the
London Stock Exchange on March 31, 1995 subject only to issuance of Series D
Notes (including temporary global notes). The listing agent with respect to the
application for the listing of the Series D Notes on the London Stock Exchange
is Morgan Stanley Securities Limited. The French Franc arranger, any dealers for
French Franc Notes and the Company will comply with the French EuroFranc
Regulations.
Ernst & Young LLP, independent auditors, have audited the consolidated
statement of financial condition of the Company as of January 31, 1994, January
31, 1993 and December 31, 1991 and the related consolidated statements of
income, cash flows and changes in stockholders' equity for the years ended
January 31, 1994, January 31, 1993 and December 31, 1991 and for the one month
period ended January 31, 1992.
Shearman & Sterling has given and not withdrawn its written consent to
the inclusion in this Prospectus Supplement of its opinion under "United States
Federal Taxation -- Foreign Holders" and "United States Federal Taxation --
United States Holders" and has authorized the contents of that part of the
listing particulars for the purposes of Section 152(1)(e) of the Financial
Services Act 1986.
Listing on the London Stock Exchange of the Series D Notes is
conditional upon issuance of such Notes. The obligation of a prospective
purchaser (including the Agents) to pay for any Notes it has agreed to purchase
is subject to the satisfaction of certain conditions which, if not satisfied or
waived, would result in such purchaser having no obligation to pay for any such
Notes.
The issuance of the Notes was authorized pursuant to resolutions
adopted by unanimous written consent of the Board of Directors of the Company
dated February 24, 1995 and unanimous written consent of the Executive Committee
of the Board of Directors of the Company dated March 22, 1995.
The Company is incorporated in Delaware, U.S.A., and its registered
office is located at 32 Loockerman Square, Suite L-100, Dover, Delaware 19901.
Since October 31, 1994, the date of the latest published interim
financial statements, there has been no material adverse change in the financial
or business position of the Company and its consolidated subsidiaries, taken as
a whole.
S-39
<PAGE>
As of the date hereof, there are no legal, arbitration or
administrative proceedings pending or, to the Company's knowledge, threatened
involving the Company or any of its consolidated subsidiaries which may have or
have had during the previous 12 months a material effect on the Company's
consolidated financial condition.
The Notes have been accepted for clearance through the Euroclear
Operator, Cedel and (in the case of French Franc Notes) SICOVAM. The
appropriate code for each issue allocated by the Euroclear Operator and Cedel
will be contained in the applicable Pricing Supplement. Transactions will
normally be effected for settlement not earlier than two business days after the
date of the transaction.
Copies of the Euro Distribution Agreement among the Company and the
Agents, the U.S. Distribution Agreement between the Company and MS&Co., each of
the Indentures, the Company's Annual Reports on Form 10-K for the fiscal years
ended January 31, 1994 and January 31, 1993 and Quarterly Reports on Form 10-Q
for 1992, 1993 and 1994 (each excluding exhibits), the Company's listing
particulars, all of the Company's future Annual, Quarterly and Current Reports,
supplementary listing particulars and Pricing Supplements and the Company's
Restated Certificate of Incorporation, as amended, and By-laws, as amended,
will, from the date hereof and so long as any Note is outstanding and throughout
the term of the medium-term note program (the "Program"), be available for
inspection during business hours at the corporate trust office of each of the
Trustees in The City of New York, the office of each Paying Agent and the
principal executive offices of the Company specified in this Prospectus
Supplement. The Company's Quarterly Reports on Form 10-Q contain unaudited
quarterly financial statements.
Documents incorporated by reference herein and any part of the
Registration Statement not included herein do not form part of the listing
particulars.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus Supplement (but not the listing
particulars) to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus Supplement.
PARIS LISTING INFORMATION
Under regulations made by the French Tresor, French Franc Notes are
required to be listed on the Paris Bourse if (a) such French Franc Notes are, or
are intended to be, listed on any other stock exchange or (b) such French Franc
Notes are, or are intended to be, distributed as a public offer (within the
meaning of the French EuroFranc Regulations). The following procedures will
apply to French Franc Notes which are to be so listed.
Only French credit institutions (which includes French subsidiaries of
foreign banks) may act as underwriters, dealers or agents for French Franc Notes
(except for syndicated issuances of French Franc Notes, where the lead manager
must be a credit institution authorized to act as lead manager of French Franc
debt instrument issuances). The French Franc arranger, any dealers in respect
of French Franc Notes and the Company must comply with the French EuroFranc
Regulations, including with respect to French Franc Notes issued in a private
placement under French law. The minimum aggregate principal amount of French
Franc Notes listed on the Paris Bourse and distributed in a public offer shall
be 300,000,000 French Francs. In addition, French Franc Notes which are listed
on the Paris Bourse will be issued subject to the requirements of the Paris
Bourse. Under the current regulations, "private placements" shall be construed
as issuances of Notes placed on a firm basis with a small number of pre-
determined non-resident investors. Index-linked French Franc Notes which are to
be listed on the Paris Bourse will be issued in compliance with the regulations
of the COB and the Conseil des Bourses de Valeurs.
S-40
<PAGE>
COMMISSION DES OPERATIONS DE BOURSE ("COB")
Prior to listing of any French Franc Notes on the Paris Bourse, the
COB is required to approve this Prospectus Supplement and the accompanying
Prospectus. In addition, the Pricing Supplement applicable to each issue of
French Franc Notes to be listed on the Paris Bourse is currently required to be
approved at the time of the relevant issue. The relevant approval in relation
to the Program and each such issue will each be evidenced by the issue of a visa
by the COB. The visa numbers will be disclosed in the Pricing Supplement
applicable to the relevant French Franc Notes.
CONSEIL DES BOURSES DE VALEURS ("CBV")
The listing of French Franc Notes on the Paris Bourse is subject to
approval by the CBV. Such approval will be evidenced by publication in the
Bulletin Officiel de la Cote. At the option of the Company, publication may be
made in one notice published in connection with a particular issue of French
Franc Notes or in two notices, the first published in relation to the Program
generally and the second published in connection with a particular issue of
French Franc Notes incorporated by reference to the contents of the first notice
(to the extent not modified in the second notice).
BULLETIN DES ANNONCES LEGALES OBLIGATOIRES ("BALO")
French Franc Notes to be listed on the Paris Bourse may not be offered
in France and the publication of the Pricing Supplement applicable thereto must
not be made before such listing becomes effective and details of the relevant
French Franc Notes (in the form of a notice legale) have been published in the
BALO.
DOCUMENTS AVAILABLE FOR INSPECTION
In the case of French Franc Notes listed on the Paris Bourse, the
applicable Pricing Supplement will specify the additional places in Paris at
which documents incorporated by reference herein (or otherwise required to be
made available for inspection) may be inspected during normal business hours.
The Company has undertaken to make such documents available as so required.
S-41
<PAGE>
PARIS BOURSE RESPONSIBILITY STATEMENT
PERSONNES QUI ASSUMENT
LA RESPONSABILITE DU "PROSPECTUS" ET DU "PROSPECTUS SUPPLEMENT"
EN CE QUI CONCERNE LES INSTRUMENTS QUI SONT ADMIS A LA COTATION
SUR LE COMPARTIMENT INTERNATIONAL DE LA BOURSE DE PARIS
AU NOM DE L'EMETTEUR ET DE LA BANQUE PRESENTATRICE
A la connaissance de l'emetteur et de la banque presentatrice, les donnees des
presents documents denommes "Prospectus" et "Prospectus Supplement" sont
conformes a la realite et ne comportent pas d'omission de nature a en alterer la
portee.
Valerie Blin Charles B. Hintz
Financing Manager Treasurer
Attorney-in-fact Morgan Stanley Group Inc.
Morgan Stanley S.A.
VISA DE LA COMMISSION DES OPERATIONS DE BOURSE
En vue de la cotation a Paris des titres eventuellement emis dans le
cadre de ce present Programme, et par application des articles 6 et 7 de
l'ordonnance No.67-833 du 28 septembre 1967, la Commission des Operations de
Bourse a enregistre les presents documents denommes "Prospectus" et "Prospectus
Supplement" sous le visa No. 95-112 du 27 mars 1995.
S-42
<PAGE>
PRINCIPAL EXECUTIVE OFFICES REGISTERED OFFICE OF THE
OF THE COMPANY COMPANY IN DELAWARE
1251 Avenue of the Americas 32 Loockerman Square, Suite L-100
New York, New York 10020 Dover, Delaware 19901
U.S.A. U.S.A.
TRUSTEES
(Senior Notes) (Subordinated Notes)
Chemical Bank The First National Bank of Chicago
450 West 33rd Street One First National Plaza
New York, New York 10001 Chicago, Illinois 60670
U.S.A. U.S.A.
PRINCIPAL PAYING AGENT, EXCHANGE AGENT AND
TRANSFER AGENT FOR BEARER NOTES AND REGISTERED NOTES
Chemical Bank
Chemical Bank House
180 Strand
London WC2R 1EX
England
OTHER PAYING AGENT AND TRANSFER
AGENT FOR REGISTERED NOTES
Chemical Bank
450 West 33rd Street
New York, New York 10001
U.S.A.
LEGAL ADVISORS TO THE COMPANY LEGAL ADVISORS TO THE AGENTS
Shearman & Sterling Davis Polk & Wardwell
599 Lexington Avenue 450 Lexington Avenue
New York, New York 10022 New York, New York 10017
U.S.A. U.S.A.
LISTING AGENT
Morgan Stanley Securities Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
PARIS LISTING AGENT
Morgan Stanley S.A.
25, rue de Balzac
75008 Paris
France
AUDITORS OF THE COMPANY
Ernst & Young LLP
277 Park Avenue
New York, New York 10172
U.S.A.
