Rule 424(b)(2)
Registration Statement
No. 333-18005
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 24, 1997)
U.S.$5,860,000,000
Morgan Stanley Group Inc.
GLOBAL MEDIUM-TERM NOTES, SERIES D AND SERIES E
GLOBAL UNITS, SERIES D AND SERIES E
---------------------------
Due More Than Nine Months from Date of Issue
---------------------------
Morgan Stanley Group Inc. (the "Company") may offer from time to time,
either alone or as part of a Unit, 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. Global Medium-Term Notes issued as part of a Unit will be issued
in conjunction with one or more Universal Warrants, Purchase Contracts or any
combination thereof. See "Description of Units." The Global Medium-Term Notes,
Series D (the "Series D Notes"), the Global Medium-Term Notes, Series E (the
"Series E Notes" and, together with the Series D Notes, the "Notes"), the Global
Units, Series D, each consisting of one or more Series D Notes and one or more
Universal Warrants, Purchase Contracts or any combination thereof ("Series D
Units"), and the Global Units, Series E, each consisting of one or more Series E
Notes and one or more Universal Warrants, Purchase Contracts or any combination
thereof ("Series E Units" and, together with the Series D Units, the "Units,"
and the Units together with the Notes, the "Program Securities"), offered hereby
are offered outside the United States at an aggregate initial offering price of
up to U.S.$5,860,000,000, 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, including the sale of the Company's Global Medium-Term Notes,
Series C, and Global Units, Series C, primarily in the United States, and
certain Warrants, Preferred Stock, Purchase Contracts and Units. 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. Such
interest rates may be determined by reference to the prices of certain
securities or commodities. 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
prior to the 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 in denominations of U.S.$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 U.S.$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. Unless
otherwise specified 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."
Universal Warrants included in Units will entitle the holders thereof
to purchase or sell (a) securities of an entity unaffiliated with the Company, a
basket of such securities, an index or indices of such securities or any
combination of the above, (b) currencies or composite currencies or (c)
commodities. The Company may satisfy its obligations, if any, with respect to
any Universal Warrants by delivering the underlying securities, currencies or
commodities or, in the case of underlying securities or commodities, the cash
value thereof, as set forth in the applicable Pricing Supplement. A Universal
Warrant issued as part of a Unit may not be separated from the other securities
comprising such Unit prior to such Warrant's expiration date unless otherwise
specified in the applicable Pricing Supplement.
Purchase Contracts included in Units will require the holders thereof
to purchase or sell (a) securities of an entity unaffiliated with the Company, a
basket of such securities, an index or indices of such securities or any
combination of the above, (b) currencies or composite currencies or (c)
commodities. A Purchase Contract issued as part of a Unit may not be separated
from the other securities comprising such Unit prior to such Purchase Contract's
settlement date, unless otherwise specified in the applicable Pricing
Supplement. The applicable Pricing Supplement will also specify the methods by
which the holders may purchase or sell such securities, currencies or
commodities and any acceleration, cancellation or termination provisions or
other provisions relating to the settlement of a Purchase Contract.
Application has been made to the London Stock Exchange Limited (the
"London Stock Exchange") for Series D Notes only, up to an aggregate principal
amount outstanding at any time of up to U.S.$5,860,000,000 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. The Company may make application
from time to time for issues of Series D Units to be admitted to the Official
List of the London Stock Exchange, in connection with which further listing
particulars will be produced. Application will, in certain circumstances as
described herein, be made to list Series D Notes and Series D Units on the
Bourse de Paris (the "Paris Bourse"). For the sole purpose of listing Series D
Notes and Series D Units 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 no. ________ on February ____, 1997. The Series E Notes and Series E
Units 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 SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
<TABLE>
<CAPTION>
Price to Agent's Proceeds to
Public (1) Commission (2) Company (2)(3)
---------- -------------- --------------
<S> <C> <C> <C>
Per Note or Unit.............. 100.000% .125% - .750% 99.875% - 99.250%
Total(4)...................... U.S.$5,860,000,000 U.S.$7,325,000 - U.S.$43,950,000 U.S.$5,852,675,000 - U.S.$5,816,050,000
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes
will be sold at 100% of their principal amount, and Units will be sold
at 100% of the principal amount of the Notes included therein.
(2) Unless otherwise specified in the applicable Pricing Supplement, the
commission payable to an Agent for each Program Security sold through
such Agent will range from .125% to .750% of the Price to Public of
such Program Security; provided, however, that commissions with respect
to Program Securities having a maturity of 30 years or greater will be
negotiated. The Company may also sell Program Securities to an Agent,
as principal, at negotiated discounts, for resale to investors and
other purchasers.
(3) Before deducting expenses payable by the Company estimated at
U.S.$3,174,167.
(4) Or the equivalent thereof in other currencies, including composite
currencies.
---------------------------
Offers to purchase the Program Securities 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 Program Securities. The Company may also
sell Program Securities to an Agent acting as principal for its own account or
otherwise, as determined by such Agent. No termination date for the offering of
the Program Securities has been established. The Company or the Agents may
reject any order in whole or in part. There can be no assurance that the Program
Securities offered hereby will be sold or that there will be a secondary market
for the Program Securities. 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 Program Securities 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
February 20, 1997
<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 January 24, 1997, 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 Notes or Units denominated in French Francs, or Notes or Units
denominated in another currency but which provide for payments that are linked
directly or indirectly to French Francs ("French Franc Notes" and "French Franc
Units," respectively) will comply with the rules and regulations relating to the
Marche de l'eurofranc from time to time of the Comite des Emissions ("French
EuroFranc Regulations") and the Principes Generaux etablis par la Commission des
Operations de Bourse ("COB") et de Conseil des Bourse de Valeurs ("CBV" that has
since changed its name to "CMF") relatifs a l'emission en France sur le marche
International et a l'admission a la cote officielle de warrants et d'obligations
complexes (the "General Principles"). The French EuroFranc Regulations recommend
the listing of French Franc Notes and French Franc Units on the Paris Bourse
where (i) such French Franc Notes or French Franc Units are, or are intended to
be, listed on any other stock exchange or (ii) such French Franc Notes or French
Franc Units 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 Series D French Franc Notes or Series D French Franc Units
listed on the Paris Bourse ("Series D French Franc Notes" and "Series D French
Franc Units," respectively) 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 or Units placed on a firm
basis with a small number of predetermined nonresident investors. So long as any
Notes or Units 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 and Units 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
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PROGRAM SECURITIES, OR ANY
SECURITIES THE PRICES OF WHICH MAY BE USED TO DETERMINE PAYMENTS ON SUCH PROGRAM
SECURITIES, AT LEVELS WHICH MIGHT NOT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SUCH TRANSACTIONS
WILL BE CARRIED OUT IN ACCORDANCE WITH ALL RELEVANT LAWS AND REGULATIONS.
- -------------------
S-2
<PAGE>
RECENT DEVELOPMENTS
On February 5, 1997, the Company and Dean Witter, Discover & Co. ("Dean
Witter") announced a definitive agreement to merge. The combined company would
be a preeminent global financial services firm with a market capitalization of
approximately $21 billion (as of the merger announcement) and with leading
market positions in the securities, asset management and credit services
businesses. The new company will be named Morgan Stanley, Dean Witter, Discover
& Co. The merger would combine Morgan Stanley's strengths in investment banking
and institutional sales and trading with Dean Witter's strengths in retail
distribution, asset gathering and credit services. Dean Witter has the third
largest retail brokerage operation with over 9,000 account executives and 361
branches throughout the U.S. and manages more than $100 billion in customer
assets. Led by the Discover(R) Card, Dean Witter is the nation's largest credit
card issuer with 39 million accounts, and the third largest in credit card
receivables. Under the terms of the merger agreement, unanimously approved by
the Boards of both companies, each of the Company's common shares will be
exchanged for 1.65 Dean Witter common shares. The transaction, which is expected
to be completed by mid-1997, is intended to be a tax-free exchange and accounted
for as a pooling of interests and is subject to customary closing conditions,
including certain regulatory approvals and the approval of shareholders of both
companies.
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.
Unless otherwise defined, the terms used herein shall have the same meaning as
those set forth in the Prospectus. 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. The Notes described herein may be offered either
alone or as part of a Unit. See "Description of Units."
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 European Currency Unit (the "ECU"), in which the
principal, premium, if any, and interest, if any, with respect to such Note are
to be paid, along with any other terms relating to the non-U.S. dollar
denomination. See "Foreign Currency Risks."
General
The Notes may be issued either alone or as part of a Unit, 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 that the Company may incur. At August 31, 1996, the Company had
approximately U.S.$11.6 billion aggregate principal amount of medium-term notes
outstanding under the Senior Debt Indenture and approximately U.S.$91.2 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
S-3
<PAGE>
in full of the Senior Indebtedness of the Company. See "Description of Debt
Securities -- Subordinated Debt" in the Prospectus. At August 31, 1996, there
was outstanding approximately U.S.$22.4 billion of Senior Indebtedness,
approximately U.S.$1.3 billion of subordinated indebtedness and approximately
U.S.$865.3 million of Capital Units. Each Capital Unit consists of a
subordinated debenture of Morgan Stanley Finance plc, a subsidiary of the
Company, guaranteed by the Company on a subordinated basis and a related
purchase contract issued by the Company requiring the holder to purchase one
depositary share representing ownership of a fraction or multiple of a share of
the Company's preferred stock.
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 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 (as defined below). Bearer Notes (as defined below) 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
Bank") and/or any other relevant clearing system (including Sicovam S.A. 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, the interest rate or interest
rate formula, ranking, maturity, currency or composite currency, 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:
"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.
S-4
<PAGE>
Payment Currency
If the applicable Pricing Supplement provides for all or a portion of
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; provided,
however, that if such Specified Currency is replaced by the Euro (as described
under "Special Provisions Relating to Notes Denominated in ECU" below), the
payment of principal of, premium, if any, or interest on any Note denominated in
such currency shall be effected in Euro in conformity with legally applicable
measures taken pursuant to, or by virtue of, the treaty establishing the
European Community (the "EC"), as amended by the treaty on European Union (as so
amended, the "Treaty"). Any payment made under such circumstances in U.S.
dollars (or, if applicable, Euro) 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.
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 from time to time used as the
unit of account of the 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.
Under Article 109G of the Treaty, the currency composition of the ECU may not be
changed. Other changes to the ECU may be made by the EC in conformity with EC
law, in which event the ECU will change accordingly. From the start of the third
stage of European monetary union, the value of the ECU as against the currencies
of member states participating in the third stage will be irrevocably fixed and
the ECU will become a currency in its own right, replacing all or some of the
currencies of the 15 member states of the EC (as of the date of this Prospectus
Supplement, such currencies include the Austrian shilling, Belgian franc, Danish
krone, Dutch guilder, Finnish markka, French franc, German mark, Greek drachma,
Irish pound, Italian lira, Luxembourg franc, Portuguese escudo, Spanish peseta,
Swedish krona and pound sterling). In contemplation of the third stage, the
European Council meeting in Madrid on December 16, 1995 decided that the name of
the new currency will be the Euro and that, in accordance with the Treaty,
substitution of the Euro for the ECU will be at the rate of one Euro for one
ECU. From the start of the third stage of European monetary union, all payments
in respect of the Notes denominated or payable in ECU will be payable in Euro at
the rate then established in accordance with the Treaty.
S-5
<PAGE>
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 Brussels on which
the ECU ceases to be used as the unit of account of the EC and has not become a
currency in its own right replacing all or some of the currencies of the member
states of the EC, 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 Brussels prior to the date on which such
payment is due.
On the first business day in Brussels on which the ECU ceases to be
used as the unit of account of the EC and has not become a currency in its own
right replacing all or some of the currencies of the member states of the EC,
the Company shall select 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. 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., Brussels 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 in the
country of issue more than two Business Days 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.,
Brussels 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 nonresident issuer of
securities denominated in such currency would purchase such currency in order to
make payments in respect of such securities.
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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 such
entity's 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 Euro, the payment of principal of,
premium, if any, or interest on, the Notes denominated in such currencies shall
be effected in Euro in conformity with legally applicable measures taken
pursuant to, or by virtue of, the Treaty.
Forms, Denominations, Exchange and Transfer
Unless otherwise specified in the applicable Pricing Supplement, the
Notes may be issued, either alone or as part of a Unit, (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 U.S.$1,000 or any amount in excess thereof that is an integral
multiple of U.S.$1,000, Notes denominated in Japanese yen ("(Y)") will be issued
with a minimum denomination of (Y)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 U.S.$1,000 (rounded to an integral multiple of 1,000 units
of such Specified Currency), or any amount in excess thereof which is an
integral multiple of 1,000 units of such Specified Currency, as determined by
reference to the 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 the following
legend: "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."
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 Bank, 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 Bank,
as the case may be, will credit each subscriber with a principal amount of Notes
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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 Bank, 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.
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 Bank, 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 Bank 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 Bank. 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
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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 Bank, 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
Bank, 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 Bank, as the case may be, by its member
organizations. Each of the Euroclear Operator and Cedel Bank 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 to the extent that they have furnished such Ownership
Certificates.
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 Bank, 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 Bank 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 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 Bank, and the Euroclear
Operator and Cedel Bank 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 Bank 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.
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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.
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 U.S.$10,000,000 (or the equivalent)
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.
See "United States Federal Taxation."
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. 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 The Chase Manhattan Bank (formerly
known as 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 The Chase Manhattan 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
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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 or
Series D Units 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. 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 and including the date of issue or from and including the last date in
respect of which interest has been paid, as the case may be, to, but excluding,
the Interest Payment Date or the date of maturity or earlier redemption or
repayment, as the case may be. The interest rates the Company will agree to pay
on newly issued Fixed Rate Notes are subject to change without notice by the
Company from time to time, but no such change will affect any Fixed Rate Notes
theretofore issued or that the Company has agreed to issue.
Floating Rate Notes
Each Floating Rate Note will bear interest from the date of issuance
until the principal thereof is paid or made available for payment at a rate
determined by reference to an interest rate basis or formula (the "Base Rate"),
which may be adjusted by a Spread and/or Spread Multiplier (each as defined
below). The applicable Pricing Supplement will designate one or more of the
following Base Rates as applicable to each Floating Rate Note: (a) the CD Rate
(a "CD Rate Note"), (b) the Commercial Paper Rate (a "Commercial Paper Rate
Note"), (c) the Federal Funds Rate (a "Federal Funds Rate Note"), (d) LIBOR (a
"LIBOR Note"), (e) the Prime Rate (a "Prime Rate Note"), (f) the Treasury Rate
(a "Treasury Rate Note"), (g) the Constant-Maturity Treasury Rate (a "CMT Rate
Note") or (h) such other Base Rate or interest rate formula as is set forth in
such Pricing Supplement and in such Floating Rate Note. The "Index Maturity" for
any Floating Rate Note is the period of maturity of the instrument or obligation
from which the Base Rate is calculated and will be specified in the applicable
Pricing Supplement.
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
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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 that may accrue during any interest period ("Minimum Interest
Rate"). In addition to any Maximum Interest Rate that may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on a
Floating Rate Note will in no event be higher than the maximum rate permitted by
New York law, as the same may be modified by United States law of general
application. Under current New York law, the maximum rate of interest, subject
to certain exceptions, for any loan in an amount less than U.S.$250,000 is 16%
and for any loan in the amount of U.S.$250,000 or more but less than
U.S.$2,500,000 is 25% per annum on a simple interest basis. These limits do not
apply to loans of U.S.$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. The determination of the rate of interest at which a Floating Rate
Note will be reset on any Interest Reset Date will be made on the Interest
Determination Date (as defined below) pertaining to such Interest Reset Date.
Unless otherwise specified in the Pricing Supplement, the Interest Reset Date
will be, in the case of Floating Rate Notes which reset daily, each Business
Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) which
reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes
which reset weekly, the Tuesday of each week, except as provided below; in the
case of Floating Rate Notes which reset monthly, the third Wednesday of each
month; in the case of Floating Rate Notes which reset quarterly, the third
Wednesday of March, June, September and December; in the case of Floating Rate
Notes which reset semiannually, the third Wednesday of two months of each year,
as specified in the applicable Pricing Supplement; and in the case of Floating
Rate Notes which reset annually, the third Wednesday of one month of each year,
as specified in the applicable Pricing Supplement; provided, however, that (a)
the interest rate in effect from the date of issue to the first Interest Reset
Date with respect to a Floating Rate Note will be the initial interest rate set
forth in the applicable Pricing Supplement (the "Initial Interest Rate") and (b)
unless otherwise specified in the applicable Pricing Supplement, the interest
rate in effect for the ten calendar days immediately prior to maturity,
redemption or repayment will be that in effect on the tenth calendar 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
immediately preceding Business Day.
Except as provided below, unless otherwise specified in the applicable
Pricing Supplement, interest on Floating Rate Notes will be payable: (i) in the
case of Floating Rate Notes 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.
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Unless otherwise specified in the applicable Pricing Supplement,
interest payments for Floating Rate Notes shall be the amount of interest
accrued from and including the date of issue or from and including the last date
to which interest has been paid to, but excluding, the Interest Payment Date or
maturity date or date of redemption or repayment.
With respect to a Floating Rate Note, accrued interest shall be
calculated by multiplying the principal amount of such Floating Rate Note by an
accrued interest factor. Such accrued interest factor will be computed by adding
the interest factors calculated for each day in the period for which interest is
being paid. Unless otherwise specified in the applicable Pricing Supplement, the
interest factor for each such day is computed by dividing the interest rate
applicable to such day by 360, in the case of CD Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes or by the
actual number of days in the year, in the case of Treasury Rate Notes and CMT
Rate Notes. All percentages used in or resulting from any calculation of the
rate of interest on a Floating Rate Note will be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point (.0000001), with five
one-millionths of a percentage point rounded upward, and all dollar amounts used
in or resulting from such calculation on Floating Rate Notes will be rounded to
the nearest cent, with one-half cent rounded upward. The interest rate in effect
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, except that the Interest Determination Date
pertaining to an Interest Reset Date for a LIBOR Note for which the Index
Currency is pounds sterling will be 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
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designated in the applicable Pricing Supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication of the Board of Governors
of the Federal Reserve System ("H.15(519)") under the heading "CDs (Secondary
Market)," or, if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the CD Rate
will be the rate on such Interest Determination Date for negotiable certificates
of deposit of the Index Maturity designated in the applicable Pricing Supplement
as published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" (the
"Composite Quotations") under the heading "Certificates of Deposit." If such
rate is not yet published in either H.15(519) or the Composite Quotations by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the CD Rate on such Interest Determination Date
will be calculated by the Calculation Agent and will be the arithmetic mean of
the secondary market offered rates as of 10:00 A.M., New York City time, on such
Interest Determination Date for certificates of deposit in an amount that is
representative for a single transaction at that time with a remaining maturity
closest to the Index Maturity designated in the Pricing Supplement of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for negotiable certificates
of deposit of major United States money center banks; provided, however, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
set forth above, the "CD Rate" in effect for the applicable period will be the
same as the CD Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the rate of interest payable on the CD
Rate Notes for which such CD Rate is being determined shall be the Initial
Interest Rate).
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Commercial Paper Rate Notes and
in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield (as defined below) of the rate on such date for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement, as such rate shall be published in H.15(519), under the heading
"Commercial Paper." In the event that such rate is not published by 9:00 A.M.,
New York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the Commercial Paper Rate shall be the Money Market
Yield of the rate on such Interest Determination Date for commercial paper of
the specified Index Maturity as published in Composite Quotations under the
heading "Commercial Paper." If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet available in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate shall be the Money Market Yield of
the arithmetic mean of the offered rates as of 11:00 A.M., New York City time,
on such Interest Determination Date of three leading dealers of commercial paper
in The City of New York selected by the Calculation Agent for commercial paper
of the specified Index Maturity, placed for an industrial issuer whose bond
rating is "AA," or the equivalent, from a nationally recognized 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.
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Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Federal Funds Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" means, with respect to any Interest Determination Date, the
rate on such date for Federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)," or, if not so published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Federal Funds Rate will be the rate on such Interest Determination Date as
published in the Composite Quotations under the heading "Federal Funds/Effective
Rate." If such rate is not yet published in either H.15(519) or the Composite
Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Federal Funds Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight Federal
funds, as of 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 Determination 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 Index Currency for the period of the
Index Maturity, each as designated in the applicable Pricing
Supplement, commencing on the second London Banking 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, each as designated in
the applicable Pricing Supplement, commencing on the second London
Banking Day following such Interest Determination Date (or, if pounds
sterling is the Index Currency, 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
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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 (or if pounds
sterling is the Index Currency, commencing on 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, if the Index
Currency is not the U.S. dollar) 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 determined on such
Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR determined
on such Interest Determination Date will be the arithmetic mean of
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 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 (or, if pounds sterling is
the Index Currency, commencing on such Interest Determination Date) and
in a principal amount of not less than U.S.$1 million (or the
equivalent in the Index Currency, if the Index Currency is not the U.S.
dollar) 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 USPRIME1 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 USPRIME1 Page on
such Interest Determination Date, or, if fewer than four such rates appear on
the Reuters Screen USPRIME1 Page for such Interest Determination Date, the rate
shall be the arithmetic
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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 U.S.$500 million and being subject to supervision or
examination by federal or state authority, selected by the Calculation Agent to
quote such rate or rates; provided, however, that if the banks or trust
companies selected as aforesaid by the Calculation Agent are not quoting rates
as set forth above, the "Prime Rate" in effect 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 such Prime Rate is being determined
shall be the Initial Interest Rate). "Reuters Screen USPRIME1 Page" means the
display designated as Page "USPRIME1" on the Reuters Monitor Money Rates Service
(or such other page as may replace the USPRIME1 Page on that service for the
purpose of displaying prime rates or base lending rates of major United States
banks).
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest 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 the Designated CMT
Telerate Page (as defined below) under the caption "... Treasury Constant
Maturities ... Federal Reserve Board Release H.15" under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such Interest Determination Date and (ii) if
the Designated
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CMT Telerate Page is 7052, the week or the month, as applicable, ended
immediately preceding the week in which the related Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for such Interest Determination Date will be such Treasury
Constant Maturity rate for the Designated CMT Maturity Index as published in the
relevant H.15(519). If such rate is no longer published, or if not published by
3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for such Interest Determination Date will be such Treasury Constant
Maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for the Interest
Determination Date with respect to the related Interest Reset Date as may then
be published by either the Board of Governors of the Federal Reserve System or
the United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in the relevant H.15(519). If such information is
not provided by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for the Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market closing offer side prices as of approximately 3:30 P.M.,
New York City time, on the Interest Determination Date reported, according to
their written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of New York (which
may include the Agents or their affiliates) selected by the Calculation Agent
(from five such Reference Dealers selected by the Calculation Agent, after
consultation with the Company, and eliminating the highest quotation (or, in the
event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury notes") with
an original maturity of approximately the Designated CMT Maturity Index and
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent cannot obtain three such Treasury notes
quotations, the CMT Rate for such Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity based on the arithmetic
mean of the secondary market offer side prices as of approximately 3:30 P.M.,
New York City time, on the Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent, after consultation with the Company, and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury notes with an original maturity of the number of years that is the next
highest to the Designated CMT Maturity Index and a remaining term to maturity
closest to the Designated CMT Maturity Index and in an amount of at least
U.S.$100,000,000. If three or four (and not five) of such Reference Dealers are
quoting as described above, then the CMT Rate will be based on the arithmetic
mean of the offer prices obtained and neither the highest nor the lowest of such
quotes will be eliminated; provided, however, that if fewer than three Reference
Dealers selected by the Calculation Agent are quoting as described herein, the
CMT Rate for such Interest Reset Date will be the same as the CMT Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the CMT Rate Notes for which the
CMT Rate is being determined shall be the Initial Interest Rate). If two
Treasury notes with an original maturity as described in the second preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury note with the shorter remaining term
to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page designated in an applicable Pricing Supplement (or
any other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified in an applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.
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Exchangeable Notes
Notes may be issued, from time to time, that are optionally or
mandatorily exchangeable into the securities of an entity unaffiliated with the
Company, into a basket of such securities, into an index or indices of such
securities or into any combination of the above, as may be set forth in the
applicable Pricing Supplement (the "Exchangeable Notes"). The Exchangeable Notes
may or may not bear interest or be issued with original issue discount or at a
premium.
Unless otherwise specified in the applicable Pricing Supplement,
optionally Exchangeable Notes (the "Optionally Exchangeable Notes") will entitle
the holder of such a Note, during a period, or at specific times, to exchange
such Note for the underlying security, basket of securities or index or indices
of securities (or combination thereof) at a specified rate of exchange. If so
specified in the applicable Pricing Supplement, Optionally Exchangeable Notes
will be redeemable at the option of the Company prior to maturity. If the holder
of an Optionally Exchangeable Note does not elect to exchange such Note prior to
maturity or any applicable redemption date, such holder will receive the
principal amount of such Note.
Unless otherwise specified in the applicable Pricing Supplement,
mandatorily Exchangeable Notes (the "Mandatorily Exchangeable Notes") do not
entitle the holder of such a Note to exchange such Note prior to maturity; at
maturity, the holder is required to exchange such Note for the underlying
security, basket of securities or index or indices of securities (or combination
thereof) at a specified rate of exchange, and, therefore, the holder of a
Mandatorily Exchangeable Note may receive less than the principal amount of such
Note at maturity. If so indicated in the applicable Pricing Supplement, the
specified rate at which a Mandatorily Exchangeable Note may be exchanged may
vary depending on the value of the underlying security, basket of securities or
index or indices (or combination thereof) so that, upon exchange, the holder
participates in a percentage, which may be less than, equal to, or greater than
100% of the change in value of the underlying security, basket of securities or
index or indices (or combination thereof).
Upon exchange, at maturity or otherwise, the holder of an Exchangeable
Note may receive, at the specified exchange rate, either the underlying security
or the securities constituting the relevant basket or index or indices at the
specified exchange rate or the cash value of such underlying security or
securities, as may be specified in the applicable Pricing Supplement. The
underlying security or securities constituting any basket, index or indices may
be the securities of either U.S. or foreign entities or both, and the
Exchangeable Notes may or may not provide for protection against fluctuations in
the rate of currency exchange between the currency in which such Note is
denominated and the currency or currencies in which the market prices of such
underlying security or securities are quoted, as may be specified in the
applicable Pricing Supplement. Exchangeable Notes may have other terms, which
will be specified in the applicable Pricing Supplement. Exchangeable Notes for
which a holder may receive the underlying security or securities constituting a
basket of securities or an index or indices will not be listed on the London
Stock Exchange unless listing particulars with respect thereto are approved by
the London Stock Exchange.
If an Optionally Exchangeable Note is represented by a global Bearer
Note or by definitive Notes that remain on deposit with a Common Depositary for
the Euroclear Operator or Cedel Bank, the exercise of the right to exchange must
be made through the Euroclear Operator or Cedel Bank. In order to ensure that
the Euroclear Operator or Cedel Bank will timely exercise a right to exchange
with respect to a particular Note on behalf of a beneficial owner of such Note
or an interest in such Note, the beneficial owner of such Note must instruct the
broker or other direct or indirect participant through which it holds an
interest in such Note to notify the Euroclear Operator or Cedel Bank of its
desire to exercise a right to exchange in accordance with the then applicable
operating procedures of the Euroclear Operator or Cedel Bank. Different firms
have different deadlines for accepting instructions from their customers and,
accordingly, each beneficial owner should consult the broker or other direct or
indirect participant through which it holds an interest in a Note in order to
ascertain the deadline for such an instruction in order for timely notice to be
delivered to the Euroclear Operator or Cedel Bank.
Payments upon Acceleration of Maturity or upon Tax Redemption
If the principal amount payable at maturity of any Exchangeable Note is
declared due and payable prior to maturity or is redeemed as set forth below
under "Tax Redemption," and unless otherwise specified in the applicable Pricing
Supplement, the amount payable with respect to (i) an Optionally Exchangeable
Note will equal
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the face amount of such Note plus accrued interest, if any, to but excluding the
date of payment, provided that if a holder shall have exchanged an Optionally
Exchangeable Note prior to such time without having received the amount due upon
such exchange, the amount payable shall be the amount due upon exchange and
shall not include any accrued but unpaid interest, and (ii) a Mandatorily
Exchangeable Note will equal an amount determined as if the date of such
declaration or tax redemption were the maturity date plus accrued interest, if
any, to but excluding the date of payment.
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; 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; provided further that if the Second
Indexed Currency and the Payment Currency are identical, then the Payment
Currency equivalent of any Second Indexed Currency amount will be such amount.
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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; 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 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; provided further that
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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, Single Securities, Baskets of Securities or
Indices
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, securities of entities unaffiliated with the Company, baskets of such
securities or indices 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 of the
COB and the Conseil des Bourses de Valeurs ("CBV") published on July 26, 1996
(Decisions et Avis No. 96-2580 published by the Societe de Bourses Francaises
("SBF")) or any other general principles that could replace those mentioned
above.
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 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. 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,
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facsimile transmission or 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 or unless
such Note is a Mandatorily Exchangeable Note), 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 the Pricing Supplement in connection with the issuance of such Notes
(or other date specified in the applicable Pricing Supplement), 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 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.
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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 certification,
identification or other information reporting 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 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.
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Payment of Additional Amounts
Except as otherwise provided in the applicable Pricing Supplement, 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 and its possessions, 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;
(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
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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 nonresident alien
individual, a nonresident 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 nonresident alien individual or a nonresident 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 in The City of 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. In respect of Notes that are listed
on the Paris Bourse, and so long as required by the Paris Bourse, notices to
holders of the Notes will be given by publication in a French language daily
newspaper published in Paris (which is expected to be either Les Echos or la
Tribune Desfosses or, if such publication is not practicable, in a French
language newspaper with general circulation in Europe. 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.
DESCRIPTION OF UNITS
The following description of the Units offered hereby, including the
designation and the terms of the Notes, Universal Warrants and Purchase
Contracts that may be included in a Unit, supplements the description of the
Units, Universal Warrants and Purchase Contracts set forth in the Prospectus, to
which reference is hereby made. In particular, the terms of the Universal
Warrants and Purchase Contracts offered hereby relate solely to Universal
Warrants and Purchase Contracts issued in conjunction with Notes as part of a
Unit. The terms and conditions of Notes issued as part of a Unit are set forth
above under "Description of Notes."
The particular terms of the Units, including the terms of the Notes,
Universal Warrants and Purchase Contracts that may be included in a Unit,
offered pursuant to any Pricing Supplement will be described therein. The terms
and conditions set forth in the Prospectus under "Description of Units,"
"Description of Warrants," "Description of Purchase Contracts" and "Description
of Debt Securities" and those set forth below under "-- General," "-- Certain
Provisions of the Unit Agreement," "-- Purchase Contracts," "-- Universal
Warrants" and "-- Certain Provisions of the Universal Warrant Agreement" and
above under "Description of Notes" will apply to each Unit and to any Universal
Warrant, Purchase Contract or Note included in such Unit, respectively, unless
otherwise specified in the applicable Pricing Supplement.
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General
The Company may issue from time to time Units that may include, in
addition to Notes, one or more Universal Warrants or Purchase Contracts.
Reference is made to the applicable Pricing Supplement for (i) the designation
and the terms of the Units and of the Notes, Universal Warrants, Purchase
Contracts, or any combination thereof, comprising such Units, including whether
and under what circumstances such Notes, Universal Warrants or Purchase
Contracts may be traded separately, (ii) a description of any additional terms
of the Unit Agreement (as defined below) and (iii) a description of any
additional provisions for the issuance, payment, settlement, transfer or
exchange of the Units or of the securities comprised by the Units.
The Units will be issued pursuant to the Unit Agreement dated as of
January 24, 1997 (the "Unit Agreement") among the Company, The Chase Manhattan
Bank, as Unit Agent for the Units (the "Unit Agent"), as Collateral Agent (the
"Collateral Agent"), and as Trustee and Paying Agent under the Senior Debt
Indenture and as Warrant Agent under the Universal Warrant Agreement (as defined
below), and the holders from time to time of the Units. Unless otherwise
specified in the applicable Pricing Supplement, the Units will be issued in the
form corresponding to the form of the Notes comprised by such Units and,
therefore, will be issued (i) in fully registered definitive form ("Registered
Units") or (ii) in definitive bearer form or in temporary or permanent global
bearer form (in each case, "Bearer Units") or in any combination of the above
such registered or bearer forms. Each other security comprised by a Unit will be
in the corresponding form.
Unless otherwise specified in the applicable Pricing Supplement, Units
will be issued in denominations of a single Unit and any integral multiple
thereof, with face amounts as indicated in the applicable Pricing Supplement,
generally corresponding to the principal amount of the Notes comprised by such
Units. See "Description of Notes -- Forms, Denominations, Exchange and Transfer"
above.
Registered Units will be exchangeable for Registered Units in other
authorized denominations, in an equal aggregate principal amount in accordance
with the provisions set forth in the Unit Agreement. Bearer Units will not be
issuable in exchange for Registered Units. Registered Units may be presented for
registration of transfer or exchange at the offices of the Unit Agent or at the
offices of any other agent designated by the Company for such purpose. Bearer
Units 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 Units but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Bearer Units (together with
the securities comprised by such Unit) will be transferable by delivery.
Each Bearer Unit will be represented initially by a temporary global
Bearer Unit which, unless otherwise specified in the applicable Pricing
Supplement, will be deposited with a Common Depositary for credit to the account
designated by or on behalf of the subscriber thereof. Upon deposit of each such
temporary global Bearer Unit, the Euroclear Operator or Cedel Bank, as the case
may be, will credit each subscriber with a number (and specified face amount) of
Units equal to the number (and specified face amount) thereof for which it has
subscribed and paid. The interests of the beneficial owner or owners in a
temporary global Bearer Unit 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 the Note comprised by such Unit (the "Closing Date"), for an
interest in a permanent global Bearer Unit to be held by a Common Depositary for
the Euroclear Operator and Cedel Bank, for credit to the account designated by
or on behalf of the beneficial owner thereof. The exchange of such interests of
the beneficial owner or owners in a temporary global Bearer Unit (and in the
temporary global form of any Universal Warrant or Purchase Contract comprised by
such Unit) will be made at the time, and to the extent, of the exchange of such
interests in the temporary global Bearer Note comprised by such Unit in
accordance with the procedures described above under "Description of Notes --
Forms, Denominations, Exchange and Transfer."
The beneficial owner of a Unit represented by a permanent global Bearer
Unit may, upon 30 days' written notice to the Unit Agent given by the beneficial
owner through either the Euroclear Operator or Cedel Bank, exchange such owner's
interest in such permanent global Bearer Unit for a definitive Bearer Unit or
Units, which will be serially numbered, or a definitive Registered Unit or Units
(consisting of the definitive registered forms of each security comprised by
such Unit or Units), in any authorized denominations. Upon receipt by the Unit
Agent of an initial request to exchange an interest in a permanent global Bearer
Unit for a definitive Bearer Unit or Units,
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all other interests in such permanent global Bearer Unit shall be exchanged for
a definitive Bearer Unit or Units (consisting of the definitive forms of each
security comprised by such Unit). The Common Depositary for the Euroclear
Operator and Cedel Bank will instruct the Unit Agent regarding the aggregate
face amount and denominations of definitive Bearer Units that must be
authenticated and delivered to each of the Euroclear Operator and Cedel Bank.
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
Units. No Bearer Unit will be delivered in the United States. References herein
to "Bearer Units" shall, except where otherwise indicated, include interests in
a permanent or temporary global Bearer Unit as well as definitive Bearer Units.
At the option of the holder, and subject to the terms of the Unit Agreement or
procedures established pursuant thereto, definitive Bearer Units will be
exchangeable into Registered Units (consisting of the registered forms of each
security comprised by such Unit) of any authorized denominations of like tenor
and in an equal number and aggregate face amount at the office of the Unit Agent
or at the office of any other agent designated by the Company for such purpose.
If a Unit represented by a global Bearer Unit or by definitive Units
that remain on deposit with a Common Depositary for the Euroclear Operator or
Cedel Bank (i) includes a Universal Warrant entitling the holder to exercise the
Universal Warrant to purchase or sell Warrant Property (as defined below), (ii)
includes any Note or Purchase Contract that entitles the holder thereof to
redeem, accelerate or take any other action with respect to such Note or
Purchase Contract or (iii) otherwise entitles the holder of the Unit to take any
action with respect to the Unit or any security comprised by such Unit, the
exercise of such right must be made through the Euroclear Operator or Cedel
Bank. In order to ensure that the Euroclear Operator or Cedel Bank will timely
exercise a right conferred by a Unit (or by the securities comprised by such
Unit) with respect to a particular Unit (or any security comprised by such Unit)
or any portion thereof, the beneficial owner of such Unit must instruct the
broker or other direct or indirect participant through which it holds an
interest in such Unit to notify the Euroclear Operator or Cedel Bank of its
desire to exercise any such right. Different firms have different deadlines for
accepting instructions from their customers and, accordingly, each beneficial
owner should consult the broker or other direct or indirect participant through
which it holds an interest in a Unit in order to ascertain the deadline for such
an instruction in order for timely notice to be delivered to the Euroclear
Operator or Cedel Bank.
Payments with respect to Units and Securities Comprised by Units. At
the office of the Unit Agent in the Borough of Manhattan, The City of New York,
maintained by the Company for such purpose, or at the office of The Chase
Manhattan Bank, London Branch, as Unit Agent and Collateral Agent for the Units
outside the United States, (i) the Units, accompanied by each of the securities
comprised by such Unit (unless the applicable Pricing Supplement indicates that
any such securities are separable from such Unit), may be presented for payment
or delivery of Warrant Property or Purchase Contract Property (as defined below)
or any other amounts due with respect thereto, (ii) transfer of the Units will
be registrable and (iii) the Units will be exchangeable, provided that global
Bearer Units will be exchangeable only in the manner and to the extent set forth
above. The Company may at any time appoint additional unit agents or other
agents with respect to the Units outside the United States (each a "Unit Agent,"
which term includes the initial Unit Agent named above and any additional or
successor unit agent appointed by the Company). No service charge will be made
for any registration of transfer or exchange of the Units (or of any security
comprised by such Unit) or interest therein, except for any tax or other
governmental charge that may be imposed in connection therewith.
Certain Provisions of the Unit Agreement
Under the terms of the Unit Agreement, each holder of a definitive Unit
and each beneficial owner of a global Unit, by its acceptance thereof, (i)
consents to and agrees to be bound by the terms of the Unit Agreement and (ii)
appoints the Unit Agent as its authorized agent to execute, deliver and perform
any Purchase Contract included in such Unit in which such holder or beneficial
owner has an interest on behalf of such holder or beneficial owner, as the case
may be. Under the terms of the Unit Agreement, each holder of a definitive Unit
and each beneficial owner of a global Unit, by acceptance thereof, irrevocably
agrees to be a party to and be bound by the terms of any Purchase Contract
included in such Unit in which such holder or beneficial owner has an interest.
Upon the registration of transfer of a registered Unit or the transfer by
delivery of a Bearer Unit, the transferee will assume the obligations of the
transferor under any Purchase Contract included in such Unit and under any other
security comprised by such Unit in which such holder or beneficial owner has an
interest, and the transferor will
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be released from such obligations. Pursuant to the terms of the Unit Agreement,
the Company has consented to the transfer of any such obligations to the
transferee, to the assumption of such obligations by the transferee and the
release of the transferor, if such transfer is made in accordance with the
provisions of the Unit Agreement.
Remedies. The Unit Agreement provides that upon the acceleration of the
Notes comprised by any Units, the obligations of the Company and the holders
under any Purchase Contracts comprised by such Units may also be accelerated, on
behalf of all such holders, upon the request of the holders of not less than 25%
of the Purchase Contracts that constitute a part of Units that comprise such
accelerated Notes. No holder of any Unit or interest therein shall have any
right by virtue of or by availing itself of any provision of the Unit Agreement
to institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to the Unit Agreement, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official, unless such holder shall have given written notice to the Unit Agent
and the Company of the occurrence and continuance of a default thereunder and,
(i) in the case of an Event of Default under the Notes or the Senior Debt
Indenture, unless the procedures (including notice to the Trustee and the
Company) described in Article Five of the Senior Debt Indenture have been
complied with and (ii) in the case of certain defaults under any Purchase
Contracts included in such Unit, unless the holders of not less than 25% of the
affected Purchase Contracts comprised by all Units then outstanding shall have
made written request upon the Unit Agent to institute such action or proceeding
in its own name as Unit Agent under the Unit Agreement and shall have offered to
the Unit Agent such reasonable indemnity as it may require, and the Unit Agent
for 60 days after its receipt of such notice, request and offer of indemnity
shall have failed to institute any such action or proceedings and no direction
inconsistent with such request shall have been given to the Unit Agent pursuant
to the Unit Agreement in writing by the holders of a majority of the outstanding
affected Units. If such conditions have been satisfied, any holder of an
affected Unit may then (but only then) institute such action or proceeding.
Notwithstanding the above, the holder of any Unit or Purchase Contract will have
the unconditional right to purchase or sell, as the case may be, Purchase
Contract Property pursuant to such Purchase Contract and to institute suit for
the enforcement of such right.
Except as may be described in a Pricing Supplement applicable to a
particular series of Units, there are no covenants or other provisions in the
Unit Agreement providing for a put or increased interest or otherwise that would
afford holders of Units additional protection in the event of a recapitalization
transaction, a change of control of the Company or a highly leveraged
transaction.
Modification. The Unit Agreement and the terms of the Purchase
Contracts and the Purchase Contract Certificates may be amended by the Company
and the Unit Agent, without the consent of the holders, for the purpose of
curing any ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision therein or in any other manner which the Company may deem
necessary or desirable and which will not adversely affect the interests of the
affected holders in any material respect.
The Unit Agreement will contain provisions permitting the Company and
the Unit Agent, with the consent of the holders of not less than a majority of
all series of Units at the time outstanding under such Unit Agreement and
affected thereby (voting as one class), to modify the rights of the holders of
the Units of each series so affected or the terms of any Purchase Contracts
included in any such series of Units and the terms of the Unit Agreement
relating to the Purchase Contracts of each series so affected, except that no
such modification may, without the consent of the holder of each outstanding
Unit affected thereby, (i) impair the right to institute suit for the
enforcement of any Purchase Contract, (ii) materially adversely affect the
holders' rights under any Purchase Contract or Unit or (iii) reduce the
aforesaid percentage of outstanding Units issued under the Unit Agreement, the
consent of the holders of which is required for the modification or amendment of
the provisions of the Unit Agreement relating to any such Purchase Contracts or
for any waiver of compliance with certain provisions of the Unit Agreement or
waiver of certain defaults relating to any such Purchase Contracts.
Modifications of any Notes comprised by Units may only be made in accordance
with the Senior Debt Indenture, as described in the Prospectus under
"Description of Debt Securities -- Modification of the Indentures."
Modifications of any Universal Warrants comprised by Units may only be made in
accordance with the terms of the Universal Warrant Agreement as described below
under "Certain Provisions of the Universal Warrant Agreement."
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Title. The Company, the Unit Agent and any agent of the Company or the
Unit Agent will treat the registered owner of any Registered Unit or registered
Purchase Contract and the bearer of any Bearer Unit or Purchase Contract in
bearer form as the owner thereof (whether or not the Note constituting a part of
such Unit shall be overdue and notwithstanding any notice to the contrary) for
the purpose of making payment, the performance of any Purchase Contracts
included in any series of Units and for all other purposes; provided that, with
respect to Units consisting of Purchase Contracts together with securities, the
Company agrees, and each beneficial holder of such Unit shall be deemed by its
acceptance thereof to agree, that none of Euroclear, Cedel Bank or any other
relevant clearing system (or any securities intermediary through which any such
clearing system directly or indirectly holds any interest in any such Unit and
that is not itself the beneficial owner thereof) shall have any obligation by
virtue of being the holder of such Unit to perform the Purchase Contract
included in such Unit.
Replacement of Unit Certificates or Purchase Contract Certificates. Any
mutilated certificate evidencing a definitive Unit or Purchase Contract will be
replaced at the expense of the holder upon surrender of such certificate to the
Unit Agent. Certificates that have been destroyed, lost or stolen will be
replaced at the expense of the holder upon delivery to the Company and the Unit
Agent of evidence of the destruction, loss or theft thereof satisfactory to the
Company and the Unit Agent. In the case of a destroyed, lost or stolen
certificate, an indemnity satisfactory to the Unit Agent and the Company may be
required at the expense of the holder of the Units or Purchase Contracts
evidenced by such certificate before a replacement will be issued.
The Unit Agreement provides that, notwithstanding the foregoing, no
such replacement certificate need be delivered (i) during the period beginning
15 days before the day of mailing of or publishing a notice of redemption or of
any other exercise of any right held by the Company with respect to the Unit (or
any security comprised by such Unit) evidenced by the mutilated, destroyed, lost
or stolen certificate and ending on the day of the giving of such notice, (ii)
if such mutilated, destroyed, lost or stolen certificate evidences any security
selected or called for redemption or other exercise of a right held by the
Company or (iii) at any time on or after the date of settlement or redemption,
as applicable, with respect to any Purchase Contract included in the Unit (or at
any time on or after the last exercise date with respect to any Universal
Warrant included in the Unit) evidenced by such mutilated, destroyed, lost or
stolen certificate, except with respect to any Units that remain or will remain
outstanding following such date of settlement or redemption or such last
exercise date.
Governing Law. The Unit Agreement, the Units and the Purchase Contracts
will be governed by, and construed in accordance with, the laws of the State of
New York.
Purchase Contracts
The Company may, issue from time to time, as part of a Unit with one or
more Notes or Universal Warrants, Purchase Contracts for the purchase or sale of
(a) securities of an entity unaffiliated with the Company, a basket of such
securities, and index or indices of such securities or any combination of the
above, (b) currencies or composite currencies or (c) commodities (collectively,
"Purchase Contract Property"). Such Purchase Contracts will be governed by the
terms and provisions of the Unit Agreement. See "Description of Units--Certain
Provisions of the Unit Agreements." The applicable Pricing Supplement will
specify whether or not a Purchase Contract issued as part of a Unit may be
separated from the other securities comprised by such Unit prior to such
Purchase Contract's settlement date. Purchase Contracts may not be so separated
prior to the 91st day after the issuance of a Unit, unless otherwise specified
in the applicable Pricing Supplement. The applicable Pricing Supplement will
also specify the methods by which the holders may purchase or sell such Purchase
Contract Property and any acceleration, cancellation or termination provisions
or other provisions relating to the settlement of a Purchase Contract. The Unit
Agreement will not be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), the Unit Agent will not be
required to qualify as a trustee thereunder and the holders of Units and
Purchase Contracts will not have the benefits of the protections of the Trust
Indenture Act. However, any Notes issued as part of a Unit will be issued under
an indenture qualified under the Trust Indenture Act and the trustee thereunder
will have qualified as a trustee under the Trust Indenture Act.
The Purchase Contracts may be issued in fully registered definitive
form or in global or definitive bearer form or in any combination of the above
such registered or bearer forms, as specified in the applicable Pricing
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Supplement. In each case, the form of the Purchase Contract included in a Unit
will correspond to the form of the Unit and of the Note and any Universal
Warrant included in such Unit.
Under circumstances specified in the applicable Pricing Supplement,
payments in respect of principal of Notes that are part of Units that include
Purchase Contracts requiring the holders to purchase Purchase Contract Property
may be applied by the Unit Agent in satisfaction of the obligations of the
holders of the Units under the related Purchase Contracts (unless a holder has
delivered cash in respect of its obligations under such Purchase Contract). Upon
settlement of any such Purchase Contract, the Purchase Contract Property will be
delivered only upon presentation and surrender of the certificates evidencing
Units at the office of the Unit Agent. If a holder delivers cash in settlement
of its obligations under a Purchase Contract that is part of a Unit, the related
Note that is a part of such Unit will remain outstanding if the maturity extends
beyond the relevant settlement date and, as more fully described in the
applicable Pricing Supplement, the holder will receive a definitive Bearer Note
or an interest in a global Bearer Note.
In order to secure the observance and performance of the covenants and
agreements of the holders of Purchase Contracts contained in the Unit Agreement
and in such Purchase Contracts, holders of Purchase Contracts acting through the
Unit Agent, as their attorney-in-fact, shall be deemed to grant, sell, convey,
assign, transfer and pledge unto The Chase Manhattan Bank, in its capacity as
Collateral Agent, for the benefit of the Company, as collateral security for the
performance when due by such holders of their respective obligations under the
Unit Agreement and under such Purchase Contracts, a security interest in and to,
and a lien upon and right of set-off (the "Pledge") against, all of their right,
title and interest in and to (i) the Notes that are part of Units that include
such Purchase Contracts, or such other property as may be specified in the
applicable Pricing Supplement (the "Pledged Items"); (ii) all additions to and
substitutions for such Pledged Items as may be permissible, if so specified in
the applicable Pricing Supplement; (iii) all income, proceeds and collections
received or to be received, or derived or to be derived, at any time from or in
connection with (i) and (ii) above; and (iv) all powers and rights owned or
thereafter acquired under or with respect to the Pledged Items. All payments
with respect to any Pledged Items received by the Collateral Agent shall be paid
by the Collateral Agent, unless such payments have been released from the Pledge
pursuant to the Unit Agreement, to the Company in satisfaction of the respective
obligations of the holders of the Units of which such Pledged Items are a part
under the Purchase Contracts forming a part of such Units.
Unless otherwise specified in the applicable Pricing Supplement, in the
event that a holder does not elect to deliver cash in settlement of its
obligations under a Purchase Contract that is part of a Unit and fails to
present and surrender the certificate evidencing the Units held by such holder
to the Unit Agent when required, the Purchase Contract Property to be purchased
by such holder under the Purchase Contracts evidenced thereby shall be
registered in the name of, and together with any distributions thereon shall be
held by, the Unit Agent in trust for the benefit of such holder until such
certificate is presented and surrendered or the holder provides satisfactory
evidence that such certificate has been destroyed, lost or stolen, together with
any indemnity that may be required by the Unit Agent or the Company in respect
thereof. In the event that a certificate is not presented (or such evidence and
indemnity are not provided) on or prior to the date two years after the relevant
settlement date with respect to the related Purchase Contract, any payments
received by the Unit Agent in respect of the Purchase Contract Property
delivered in respect of the Units evidenced by such certificate will be paid by
the Unit Agent to the Company and such holder will thereafter be required to
look solely to the Company for payment thereof. The Unit Agent will have no
obligation to invest or to pay interest on any amounts held by the Unit Agent
pending distribution, as described above.
Unsecured Obligations of the Company. The Purchase Contracts are
unsecured contractual obligations of the Company and will rank pari passu with
the Company's other unsecured contractual obligations and with the Company's
unsecured and unsubordinated debt. Most of the assets of the Company are owned
by its subsidiaries. Therefore, the Company's rights and the rights of its
creditors, including holders of Purchase Contracts, to participate in the
distribution of assets of any subsidiary upon such subsidiary's liquidation or
recapitalization will be subject to the prior claims of such subsidiary's
creditors, except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary. In addition, dividends, loans and
advances from certain
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of the Company's principal subsidiaries to the Company are restricted by net
capital requirements under the Exchange Act and under rules of certain exchanges
and various domestic and foreign regulatory bodies.
Universal Warrants
The Company may issue from time to time, as part of a Unit with one or
more Notes or Purchase Contracts, Universal Warrants to purchase or sell (a)
securities of an entity unaffiliated with the Company, a basket of such
securities, an index or indices of such securities or any combination of the
above, (b) currencies or composite currencies or (c) commodities (collectively,
"Warrant Property"). The Company may satisfy its obligations, if any, with
respect to any Universal Warrants by delivering the Warrant Property or, in the
case of underlying securities or commodities, the cash value thereof, as set
forth in the applicable Pricing Supplement. The applicable Pricing Supplement
will specify whether or not a Universal Warrant issued as part of a Unit may be
separated from the other securities comprised by such Unit prior to such
Universal Warrant's expiration. Universal Warrants may not be so separated prior
to the 91st day after the issuance of a Unit, unless otherwise specified in the
applicable Pricing Supplement.
The Universal Warrants comprising part of a Unit will be issued under
the Universal Warrant Agreement dated as of January 24, 1997 (the "Universal
Warrant Agreement") between the Company and The Chase Manhattan Bank, as Warrant
Agent (the "Warrant Agent"), and may be issued in one or more series as set
forth in the applicable Pricing Supplement. The following summaries of certain
provisions of the Universal Warrant Agreement and Universal Warrants do not
purport to be complete and such summaries are subject to the detailed provisions
of the Universal Warrant Agreement to which reference is hereby made for a full
description of such provisions, including the definition of certain terms used
herein, and for other information regarding the Universal Warrants.
Reference is made to the applicable Pricing Supplement for the
following terms of and information relating to any Universal Warrants: (i) the
specific designation and aggregate number of and the price at which the
Universal Warrants will be issued; (ii) the currency or composite currency for
which the Universal Warrants may be purchased; (iii) the date on which the right
to exercise the Universal Warrants shall commence and the date on which such
right shall expire or, if the Universal Warrants are not continuously
exercisable throughout such period, the specific date or dates on which they
will be exercisable; (iv) the identity of any depositaries, execution or paying
agents, transfer agents, registrars or calculation or other agents in respect of
the Universal Warrants; (v) whether such Universal Warrants are put Warrants or
call Warrants; (vi) (a) the specific Warrant Property (and the amount thereof)
purchasable or saleable upon exercise of each Universal Warrant; (b) the price
at which and the currency or composite currency with which such Warrant Property
may be purchased or sold upon such exercise (or the method of determining the
same); (c) whether such exercise price may be paid in cash, by the exchange of
any other security offered with such Universal Warrants or both and the method
of such exercise; and (d) whether the exercise of such Universal Warrants is to
be settled in cash or by delivery of the underlying securities or commodities or
both; and (vii) any other terms of the Universal Warrants.
Unless otherwise specified in the applicable Pricing Supplement, the
Universal Warrants may be issued (i) in fully registered definitive form
("Registered Warrants"), (ii) in global bearer or definitive bearer form
("Bearer Warrants") or (iii) any combination thereof, as specified in the
applicable Pricing Supplement. In each case, the form of the Universal Warrant
included in a Unit will correspond to the form of the Unit and of any other
security included in such Unit.
At the option of the holder, upon request confirmed in writing and
subject to the terms of the Universal Warrant Agreement, Registered Universal
Warrants in definitive form may be presented for exchange and for registration
of transfer (with the form of transfer endorsed thereon duly executed), but only
in connection with the transfer of the applicable Unit and each of the
securities comprised by such Unit, unless otherwise specified in the applicable
Pricing Supplement, at the corporate trust office of the Warrant Agent (or any
other office indicated in the Pricing Supplement relating to the Units
comprising such Universal Warrants) without service charge and upon payment of
any taxes and other governmental charges as described in such Universal Warrant
Agreement. Such transfer or exchange will be effected only if the Warrant Agent
is satisfied with the documents of title and identity of the person making the
request.
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Certain Provisions of the Universal Warrant Agreement
Modifications. The Universal Warrant Agreement and the terms of the
Universal Warrants and the Universal Warrant Certificates may be amended by the
Company and the Warrant Agent, without the consent of the holders, for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective or inconsistent provision therein or in any other manner which the
Company may deem necessary or desirable and which will not adversely affect the
interests of the affected holders in any material respect.
The Company and the Warrant Agent may also modify or amend the
Universal Warrant Agreement and the terms of the Universal Warrants, with the
consent of the owners of not less than a majority in number of the then
outstanding unexercised Universal Warrants affected, provided that no such
modification or amendment that changes the exercise price of the Universal
Warrants, reduces the amount receivable upon exercise, cancellation or
expiration, shortens the period of time during which the Universal Warrants may
be exercised or otherwise materially and adversely affects the rights of the
owners of the Universal Warrants or reduces the percentage of outstanding
Universal Warrants, the consent of whose owners is required for modification or
amendment of the Universal Warrant Agreement or the terms of the Universal
Warrants, may be made without the consent of the owners affected thereby.
Merger, Consolidation, Sale or Other Disposition. If at any time there
shall be a merger or consolidation of the Company or a transfer of substantially
all of its assets, as permitted under the applicable Indentures, the successor
corporation thereunder shall succeed to and assume all obligations of the
Company under the Universal Warrant Agreement and the Universal Warrant
Certificates. The Company shall thereupon be relieved of any further obligation
under the Universal Warrant Agreement and the Universal Warrants. The Company
shall notify the Warrantholders of the occurrence of any such event. See
"Description of Debt Securities -- Certain Covenants" in the Prospectus.
Enforceability of Rights of Warrantholders; Governing Law. The Warrant
Agent will act solely as an agent of the Company in connection with the
Universal Warrant Certificates and will not assume any obligation or
relationship of agency or trust for or with any holders of Universal Warrant
Certificates or beneficial owners of Universal Warrants. Any holder of Universal
Warrant Certificates and any beneficial owner of Universal Warrants may, without
the consent of the Warrant Agent, any other holder or beneficial owner, enforce
by appropriate legal action, on its own behalf, its right to exercise the
Universal Warrants evidenced by such Universal Warrant Certificates, in the
manner provided therein and in the Universal Warrant Agreement. No holder of any
Universal Warrant Certificate or beneficial owner of any Universal Warrants
shall be entitled to any of the rights of a holder of the Warrant Property
purchasable upon exercise of such Universal Warrants. The Universal Warrants and
the Universal Warrant Agreement will be governed by, and construed in accordance
with, the laws of the State of New York.
Unsecured Obligations of the Company. The Universal Warrants are
unsecured contractual obligations of the Company and will rank pari passu with
the Company's other unsecured contractual obligations and with the Company's
unsecured and unsubordinated debt. Most of the assets of the Company are owned
by its subsidiaries. Therefore, the Company's rights and the rights of its
creditors, including Warrantholders, to participate in the distribution of
assets of any subsidiary upon such subsidiary's liquidation or recapitalization
will be subject to the prior claims of such subsidiary's creditors, except to
the extent that the Company may itself be a creditor with recognized claims
against the subsidiary. In addition, dividends, loans and advances from certain
of the Company's principal subsidiaries to the Company are restricted by net
capital requirements under the Exchange Act and under rules of certain exchanges
and various domestic and foreign regulatory bodies.
S-34
<PAGE>
FOREIGN CURRENCY RISKS
Exchange Rates and Exchange Controls
An investment in Notes, Units or any of the securities constituting
such Units 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, Euro 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, Unit or security included
in such Unit. Depreciation of the Specified Currency for a Note, Unit or
security included in such Unit against the relevant home currency would result
in a decrease in the effective yield of such Note below its coupon rate or in
the payout of such Unit (or security included therein) 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.
Fluctuations in the rates of exchange between the home currency and any
other currency (i) in which payment of the exercise price of a Universal Warrant
is to be made, (ii) in which the Warrant Property is denominated or (iii) that
is to be purchased or sold by exercise of such Universal Warrant (or between any
of the currencies noted in clauses (i) through (iii) above) may change the value
of such Universal Warrant or of the Unit comprising such Universal Warrant and
could result in a loss to the investor even if the spot price of the Warrant
Property were such that the Universal Warrant appeared to be "in the money."
Similarly, currency fluctuations between any of the home currency, the currency
in which the purchase price is denominated, the currency in which the Purchase
Contract Property is denominated or, if applicable, the currency to be purchased
or sold pursuant to such Purchase Contract could adversely affect the value of
any Purchase Contract or of the Unit comprising such Purchase Contract and could
result in a loss 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, UNITS OR ANY OF THE SECURITIES CONSTITUTING SUCH UNITS THAT ARE
DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, FOREIGN
CURRENCY. SUCH NOTES, UNITS OR OTHER SECURITIES INCLUDED IN SUCH UNITS 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-home currency-denominated
Notes or Currency Linked Notes (or Universal Warrants or Purchase Contracts
where the exercise or purchase price and the underlying property is denominated
in currencies differing from one another or from the home currency) is that
their home currency-equivalent yields or payouts 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
S-35
<PAGE>
Notes, Units or any of the securities constituting such Units 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 (or of securities denominated in
such currency) at the time of payment of principal of, premium, if any, or
interest on a Note (or of any payment due with respect to a Unit or any security
constituting such Unit). 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 (or the applicable currency for any payment with respect to a Unit
(or any of the securities constituting such Unit)) would not be available when
payments on such Note are due, including as a result of the replacement of such
Specified Currency by the Euro. 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; provided,
however, that if the Specified Currency for any Note (or the applicable currency
for any payment with respect to a Unit (or any of the securities constituting
such Unit)) is not available because it has been replaced by the Euro, the
Company would make such payments in Euro in conformity with legally applicable
measures taken pursuant to, or by virtue of, the Treaty. See "Description of
Notes -- Payment Currency."
Governing Law and Judgments
The Notes, Units, Universal Warrants and Purchase Contracts 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. If a court in the United States were to
grant a judgment in an action based on Notes denominated in a Specified Currency
other than U.S. dollars or on any Units, Universal Warrants and Purchase
Contracts denominated in any such currency, it is likely that such court would
grant judgment only in U.S. dollars. If the court were a New York court,
however, such court would grant a judgment in the Specified Currency or currency
in respect of which any payment on a Unit, Universal Warrant, or Purchase
Contract was due. Such judgment would then be converted into U.S. dollars at the
rate of exchange prevailing on the date of entry of the judgment.
UNITED STATES FEDERAL TAXATION
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 Program
Securities by a Foreign Holder (as defined below). This summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and existing and
proposed Treasury regulations, revenue rulings, administrative interpretations
and judicial decisions (all as currently in effect and all of which are subject
to change, possibly with retroactive effect). 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 who have lost United
States citizenship or who 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
federal income tax. Persons considering the purchase of the Program Securities
should consult 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 to any tax consequences arising under the laws of any state, local or
foreign jurisdiction.
As used herein, the term "Foreign Holder" means a beneficial owner of a
Program Security who or 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, (iii) an estate the income of which
is not subject to United States federal income tax on a net basis, or (iv) a
trust if either (A) primary supervision over the administration of the trust is
unable to be exercised
S-36
<PAGE>
by a United States court, or (B) the authority to control all substantial
decisions of the trust does not rest with one or more United States trustees or
fiduciaries.
Income Taxes
Notes
Except as otherwise discussed below, a Foreign Holder will generally
not be subject to United States federal income tax, including withholding tax,
on payments of principal of, premium, if any, or interest (including original
issue discount, if any) on, a Note or coupon, or proceeds from the sale or
disposition of a Note or coupon, provided that (i) such payments or proceeds are
not effectively connected with the conduct of a trade or business by such holder
within the United States, (ii) such holder does not own (directly or by
attribution) ten percent or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (iii) such 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 (iv) in the case of a
Note issued in registered form, required certification of such holder's
non-United States status is provided to the Company or the Agent.
Exchangeable Notes
A Foreign Holder will generally not be subject to United States federal
income tax, including withholding tax, with regard to an Exchangeable Note if
(i) the Exchangeable Note is treated as indebtedness of the Company for United
States federal income tax purposes, (ii) the Exchangeable Note is exchangeable
only into securities that are actively traded, into a basket of securities that
are actively traded or an index or indices of securities that are actively
traded, and (iii) the requirements for exemption from tax listed above under
"--Notes" are met. With regard to the above requirements, Optionally
Exchangeable Notes for which the principal amount payable in cash equals or
exceeds the issue price (i.e., the initial offering price to the public at which
price a substantial amount of the respective Optionally Exchangeable Notes is
sold) will be treated as indebtedness of the Company for United States federal
income tax purposes. Under current United States federal income tax law, it is
unclear how a Mandatorily Exchangeable Note will be treated. Prospective
purchasers of Mandatorily Exchangeable Notes are urged to review the applicable
Pricing Supplement and consult with their tax advisors. No opinion is expressed
herein as to the impact of the "United States real property holding company"
rules, which could affect the taxation of Foreign Holders in certain
circumstances. Persons considering the purchase of Exchangeable Notes should
refer to the discussion relating to United States federal taxation in the
applicable Pricing Supplement for disclosure, if any is deemed necessary,
concerning the applicability of such rules. For information regarding the United
States federal income tax consequence of ownership and disposition of the
property received in exchange for an Exchangeable Note, please refer to the
publicly available documents described in the applicable Pricing Supplement.
Notes Linked to Commodity Prices, Single Securities, Baskets of
Securities or Indices
The United States federal income tax consequences to a Foreign Holder
of the ownership and disposition of Notes that have principal or interest
determined by reference to commodity prices, securities of entities unaffiliated
with the Company, baskets of such securities or indices may vary depending upon
the exact terms of the Notes and related factors. Certain Notes containing such
features may be subject to rules that differ from the general rules discussed
above under "-- Notes." In such circumstances, persons intending to purchase
such Notes should refer to the discussion relating to United States federal
taxation in the applicable Pricing Supplement for additional disclosure, if any
is deemed necessary.
Units
Under current United States federal income tax law, the treatment of a
Foreign Holder of a Unit (including a Foreign Holder of the Note and/or the
Universal Warrants or Purchase Contracts comprising a Unit) is unclear.
Prospective purchasers of Units are urged to review the discussion relating to
United States federal taxation in the applicable Pricing Supplement and consult
with their tax advisors.
S-37
<PAGE>
Backup Withholding
A Foreign Holder of a Bearer Note or coupon will generally not be
subject to backup withholding or information reporting with respect to payments
on, and to proceeds of the sale before maturity of, the 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 Program Securities 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 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 held by an individual who at the time of his death is not a
citizen or domiciliary of the United States will generally not be subject to
United States federal estate tax as a result of such individual's death,
provided that (i) income derived by such individual on the Note would not be
subject to United States federal income tax or (ii) an applicable estate tax
treaty provides an exemption therefrom. Unless an applicable estate tax treaty
provides otherwise, the fair market value of Program Securities (other than
Notes that were not issued as part of a Unit) may be includible in the gross
estate of a non-resident alien individual for United States federal estate tax
purposes.
THE UNITED STATES FEDERAL INCOME AND ESTATE TAX DISCUSSION SET FORTH
ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE
DEPENDING ON A FOREIGN HOLDER'S PARTICULAR SITUATION. PERSONS CONSIDERING THE
PURCHASE OF PROGRAM SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH REGARD
TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF PROGRAM
SECURITIES.
PLAN OF DISTRIBUTION
The Program Securities 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 such Program Securities. The Company will
have the sole right to accept offers to purchase Program Securities and may
reject any offer in whole or in part. The Agents will have the right to reject
any offer to purchase Program Securities solicited by them in whole or in part.
Payment of the purchase price of the Program Securities 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 Program Securities resulting from a solicitation made or an offer to
purchase received by such Agent, a commission ranging from .125% to .750% of the
initial offering price of the Program Securities to be sold, depending upon the
maturity of the Program Securities; provided, however, that commissions with
respect to Program Securities having a maturity of 30 years or greater will be
negotiated.
The Company may also sell Program Securities to an Agent as principal
for its own account at discounts to be agreed upon at the time of sale. Such
Program Securities 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 Program Securities it
has purchased as principal to other dealers. Such Agent may sell the Program
Securities 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 Program Securities 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.
S-38
<PAGE>
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 either alone or as
part of a Unit 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 either alone or as part of
a Unit 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.
With respect to Program Securities to be offered or sold in the United
Kingdom, each Agent, underwriter, dealer, other agent and remarketing firm
participating in the distribution of such Program Securities has represented and
agreed, or will represent and agree, that: (i) in relation to Program Securities
which have a maturity of one year or more and in respect of which admission to
such listing in accordance with Part IV of the Financial Services Act 1986 (the
"Act") is to be sought, it has not offered or sold and will not offer or sell
any such Program Securities to persons in the United Kingdom prior to admission
of such Program Securities to such listing except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 or the Act; (ii) in relation to Program
Securities which have a maturity of one year or more and in respect of which
admission to such listing is not to be sought, it has not offered or sold and,
prior to the expiry of the period of six months from the date of issue of such
Program Securities, will not offer or sell any such Program Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (iii) it has complied and will comply with all
applicable provisions of the Act with respect to anything done by it in relation
to such Program Securities in, from or otherwise involving the United Kingdom;
and (iv) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of such
Program Securities, other than any document which consists of or any part of
listing particulars, supplementary listing particulars or any other document
required or permitted to be published by the listing rules under Part IV of the
Act, to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom such document may otherwise lawfully be issued or passed on.
The Program Securities have not been, and will not be, registered under
the Securities and Exchange Law of Japan. Accordingly, the Program Securities
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 reoffering or resale, 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.
Program Securities 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 Program Securities 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 Program Securities 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.
Program Securities 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 Program Securities denominated or
payable in or indexed to
S-39
<PAGE>
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.
Morgan Stanley S.A. has represented and agreed, and any dealers for
French Franc Notes or French Franc Units will represent and agree, that French
Franc Notes and French Franc Units 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 or French Franc Units 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 or French Franc Units. The
Company has also undertaken that it will not offer, directly or indirectly, any
Notes or Units to the public in the Republic of France. At the date of this
Prospectus Supplement only a credit establishment or investment institution
incorporated in a member state of the European Union which is authorized to
lead-manage euro-bond issues by the competent authority of its home state may
(i) act as a dealer in respect of private placements of French Franc Notes or
French Franc Units or (ii) act as lead manager of public offers (within the
meaning of the French EuroFranc Regulations) of French Franc Notes or French
Franc Units issued on a syndicated basis.
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 Program Securities, 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 Program Securities.
Concurrently with the offering of Program Securities 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, alone
or as units containing warrants, purchase contracts or any combination thereof
("Global Units, Series C"), concurrently with the offering of the Program
Securities, 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 or any Global Units, Series C
sold pursuant to such U.S. Distribution Agreement, and any Debt Securities, Debt
Warrants or pre-paid purchase contracts issued by the Company pursuant to the
Indentures or any preferred stock, warrants or purchase contacts issued by the
Company, will reduce the aggregate offering price of Program Securities that may
be offered by this Prospectus Supplement, any Pricing Supplement hereto and the
Prospectus.
LEGAL MATTERS
The validity of the Notes, Units, Universal Warrants and Purchase
Contracts 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.,
Ralph L. Pellecchio, Assistant Secretary and Counsel 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, Mr. Pellecchio 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, Units, Universal Warrants and
Purchase Contracts 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. Shearman & Sterling,
which is opining on the accuracy of the summary of certain tax matters described
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<PAGE>
under the captions "United States Federal Taxation," 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-41
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated
capitalization of the Company at August 31, 1996. 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 August 31, 1996. 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 period ended November 30, 1995 and Quarterly Reports on Form 10-Q for the
quarters ended February 29, 1996, May 30, 1996 and August 31, 1996, each
incorporated herein by reference.
<TABLE>
<CAPTION>
At August 31, 1996
------------------
(In thousands, except share
and unit data)
<S> <C>
Short-term borrowings..................................................... U.S.$ 11,580,506
Current portion of long-term borrowings................................... 3,107,999
----------
Total.............................................................. U.S.$ 14,688,505
==========
Long-term borrowings (1).................................................. U.S.$ 10,756,508
Capital Units (2)......................................................... 865,283
----------
Stockholders' equity:
Preferred stock, no par value; authorized 30,000,000 shares (3):
ESOP Convertible Preferred Stock, liquidation preference
U.S.$35.88; outstanding 3,711,165 shares........................... 133,138
8.88% Cumulative Preferred Stock, stated value U.S.$200;
outstanding 975,000 shares (4)..................................... 195,000
8 3/4% Cumulative Preferred Stock, stated value U.S.$200;
outstanding 750,000 shares......................................... 150,000
7 3/8% Cumulative Preferred Stock, stated value U.S.$200;
outstanding 1,000,000 shares....................................... 200,000
7 3/4% Cumulative Preferred Stock, stated value U.S.$200;
outstanding 1,000,000 shares....................................... 200,000
Common stock, U.S.$1.00 par value; authorized 600,000,000 shares;
issued 166,366,653 shares.......................................... 166,367
Paid-in capital........................................................ 689,806
Retained earnings...................................................... 4,472,989
Cumulative translation adjustments..................................... (14,504)
----------
Subtotal.......................................... 6,192,796
Less:
Note receivable related to sale of preferred stock to ESOP........... 86,773
Common stock held in treasury, at cost 13,946,864 shares............. 575,105
----------
Total stockholders' equity........................ 5,530,918
----------
Total capitalization...................................................... U.S.$ 17,152,709
==========
</TABLE>
(footnotes are located on the following page)
S-42
<PAGE>
(1) In May 1996, a shelf registration statement became effective for up to
U.S.$4,286,271 of debt securities, warrants to purchase debt securities,
preferred stock and depositary shares. In January 1997, a shelf
registration statement became effective for up to U.S.$6,000,000 of debt
securities, warrants, preferred stock, depositary shares, purchase
contracts and units. Additional senior notes aggregating U.S.$2,171,506
were issued after August 31, 1996 and through February 21, 1997, pursuant
to such shelf registration statements.*
(2) On December 18, 1996, the Company caused to be issued 134,000 8.03% Capital
Units, each Capital Unit consisting of an 8.03% Subordinated Debenture of
Morgan Stanley Finance plc in the principal amount of U.S.$1,000, (ii) a
full and unconditional subordinated Guarantee by the Company and (iii) a
related contract issued by the Company requiring the purchase by the holder
thereof of one Depositary Share representing ownership of 5 shares of 8.03%
Cumulative Preferred Stock with a stated value of U.S.$200.00 per share at
a sale price of U.S.$1,000.00 per Depositary Share.
(3) On November 14, 1996, the Company caused to be issued 6,900,000 Depositary
Shares, each Depositary Share representing ownership of 1/4 of a share of
Series A Fixed/Adjustable Rate Preferred Stock with a stated value of
U.S.$200.00 per share at a sale price of U.S.$50.00 per Depositary Share.
(4) All 975,000 shares of the 8.88% Cumulative Preferred Stock were called for
redemption on December 3, 1996 and were redeemed on January 3, 1997.
* Amounts in this footnote are in thousands of U.S. dollars.
S-43
<PAGE>
BOARD OF DIRECTORS
The current Directors of the Company and their principal occupations
are listed below. The business address of each director is 1585 Broadway, New
York, New York 10036.
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
Sir David A. Walker.............. Managing Director and Director
Robert P. Bauman................. Director
Daniel B. Burke.................. Director
S. Parker Gilbert................ Director
Allen E. Murray.................. 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 or about February 24, 1997 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
French Franc Units 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 November 30, 1995, January
31, 1995, 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 fiscal period ended November 30, 1995, for the
fiscal years ended January 31, 1995, 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" 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.
The obligation of a prospective purchaser (including the Agents) to pay
for any Notes or Units 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 or Units.
The issuance of the Notes, the Units, the Universal Warrants and the
Purchase Contracts was authorized pursuant to resolutions adopted by unanimous
written consent of the Board of Directors of the Company dated December 20, 1996
and unanimous written consent of the Executive Committee of the Board of
Directors of the Company dated January 23, 1997.
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 August 31, 1996, the date of the latest published unaudited
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.
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As of the date hereof, there are no legal, arbitration or
administrative proceedings including any 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 and Units have been accepted for clearance through the
Euroclear Operator, Cedel Bank and (in the case of (i) French Franc Notes, (ii)
French Franc Units and (iii) Purchase Contracts and Universal Warrants included
in any French Franc Unit (collectively, "French Franc Securities")) SICOVAM. The
appropriate code for each issue allocated by the Euroclear Operator, Cedel Bank
and (in the case of French Franc Securities) SICOVAM 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 dated February 21,
1997 among the Company and the Agents, the U.S. Distribution Agreement dated
January 24, 1997 between the Company and MS&Co., each of the Indentures, the
opinion of Shearman & Sterling referred to in the last paragraph of page 36, the
Company's Annual Reports on Form 10-K for the fiscal period ended November 30,
1995 and for the fiscal years ended January 31, 1995 and January 31, 1994 and
Quarterly Reports on Form 10-Q for 1993, 1994, 1995 and 1996 (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, Unit, Universal Warrant or Purchase Contract 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 the accompanying
Prospectus. 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
The French EuroFranc Regulations recommend the listing of French Franc
Notes and French Franc Units on the Paris Bourse where (i) such French Franc
Notes and French Franc Units are, or are intended to be, listed on any other
stock exchange or (ii) such French Franc Notes and French Franc Units are, or
are intended to be, distributed as a public offer (within the meaning of the
French EuroFranc Regulations).
At the date of this Prospectus Supplement, only a credit establishment
or investment institution incorporated in a member state of the European Union
which is authorized to lead-manage euro-bond issues by the competent authority
of its home state may (i) act as a dealer in respect of private placements of
French Franc Notes and French Franc Units and (ii) act as lead manager of public
offers (within the meaning of the French Eurofranc Regulations) of French Franc
Notes and French Franc Units issued on a syndicated basis. The minimum aggregate
principal amount of Series D French Franc Notes and Series D French Franc Units
listed on the Paris Bourse and distributed in a public offer shall be
300,000,000 French Francs. In addition, Series D French Franc Notes and Series D
French Franc Units 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 Series D French Franc Notes and
Series D French Franc Units placed on a firm basis with a small number of
predetermined nonresident investors. Index-linked Series D French Franc Notes
and Series D French Franc Units which are to be listed on the Paris Bourse will
be issued in compliance with the regulations of the COB and the CBV published
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on July 26, 1996 in Decisions et Avis No. 96-2580 published by the SBF, as
amended as of the date of such issuance.
Commission des Operations de Bourse ("COB")
Prior to listing of any Series D Notes and Series D Units 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 Series D Notes and Series D Units 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 Series D Notes and Series D
Units.
Societe des Bourses Francaises ("SBF")
The listing of Series D Notes and Series D Units on the Paris Bourse is
subject to approval by the SBF. 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
Series D Notes and Series D Units or in two notices, the first published in
relation to the Program generally and the second published in connection with a
particular issue of Series D Notes and Series D Units 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")
Series D Notes and Series D Units 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 Series D Notes and Series D Units (in the form of a
notice legale) have been published in the BALO.
Documents available for inspection
In the case of Series D Notes and Series D Units 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.
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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.
- ------------------ ------------------------
Associate Eileen K. Murray
Attorney-in-fact Treasurer
Morgan Stanley S.A. Morgan Stanley Group Inc.
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 telle que modifiee, la Commission
des Operations de Bourse a enregistre les documents denommes "Prospectus" et
"Prospectus Supplement" sous le No. P 97-022 du 19 fevrier 1997.
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PRINCIPAL EXECUTIVE OFFICES REGISTERED OFFICE OF THE
OF THE COMPANY COMPANY IN DELAWARE
1585 Broadway 32 Loockerman Square, Suite L-100
New York, New York 10036 Dover, Delaware 19901
U.S.A. U.S.A.
TRUSTEES
(Senior Notes) (Subordinated Notes)
The Chase Manhattan 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
UNIT AGENT AND COLLATERAL AGENT FOR UNITS
WARRANT AGENT FOR UNIVERSAL WARRANTS
The Chase Manhattan Bank
Woolgate House
Coleman Street
London EC2P2HD
England
Attention: Global Trust Services
OTHER PAYING AGENT AND TRANSFER
AGENT FOR REGISTERED NOTES
The Chase Manhattan 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 Balzac
75008 Paris
France
AUDITORS OF THE COMPANY
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
U.S.A.
