<PAGE>
PROSPECTUS SUPPLEMENT Filed pursuant to Rule 424(b)(5)
(TO PROSPECTUS DATED SEPTEMBER 23, 1997) Registration No. 33-51804
$223,350,000
[LOGO OF GREEN TREE FINANCIAL]
MEDIUM-TERM NOTES, SERIES A
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
-----------------
Green Tree Financial Corporation (the "Company") may offer from time to time
its Medium-Term Notes, Series A (the "Notes"), in an aggregate principal
amount not to exceed $223,350,000, or the equivalent thereof in foreign
currencies or foreign currency units, subject to reduction as a result of the
sale of other Debt Securities. Each Note will mature on a Business Day nine
months or more from its date of issue, as agreed to by the Company and the
purchaser. If so specified in the applicable pricing supplement to this
Prospectus Supplement (a "Pricing Supplement"), a Note may be redeemed by the
Company on the specified date or dates prior to maturity at the specified
price or prices. The Notes may be denominated, and payments of principal,
premium, if any, and interest on the Notes may be made, in United States
dollars or in such foreign currencies or foreign currency units as may be
designated by the Company in the applicable Pricing Supplement ("Foreign
Currency Notes").
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued in fully registered form in denominations of $1,000 and any
integral multiple of $1,000 in excess thereof, or in the case of Foreign
Currency Notes, in the denominations indicated in the applicable Pricing
Supplement. Each Note will be represented either by a global security
registered in the name of a nominee of The Depository Trust Company, which
will act as Depositary, or a certificate issued in definitive form. See
"Description of Notes."
The Notes may bear interest at fixed or floating rates. The Notes may also
be issued with the principal amount thereof payable at maturity or upon
redemption or the interest payable on any interest payment date, or both, to
be determined by reference to an index (currencies, composite currencies,
commodities or financial or non-financial indices), as specified in the
applicable Pricing Supplement. The specific currency or composite currency,
index, if any, interest rate or rates and/or interest rate formula or
formulas, if any, issue price and date of maturity for each Note will be
established by the Company prior to the date of issuance of such Note and will
be specified in a Pricing Supplement. Notes may be issued at a discount from
the principal amount payable at maturity thereof and will constitute Original
Issue Discount Notes. Zero Coupon Notes will not provide for periodic payments
of interest. See "Description of Notes."
Unless otherwise specified in the applicable Pricing Supplement, interest on
Fixed Rate Notes is payable each March 1 and September 1 and at maturity or,
if applicable, upon redemption. Interest on Floating Rate Notes is payable on
the dates specified therein and in the applicable Pricing Supplement. See
"Description of Notes--Interest and Interest Rates."
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THE PROSPECTUS ATTACHED HERETO FOR
CERTAIN FACTORS RELATED TO THIS OFFERING.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY
PRICING SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Agents' Commissions Proceeds to Company
Price to Public (1) (2) (2)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note..... 100% .125%-.925% 99.875%-99.075%
- --------------------------------------------------------------------------------
$223,070,812-
Total (4).... $223,350,000 $279,188-$2,065,988 $221,284,012
================================================================================
</TABLE>
(1) Unless otherwise specified in a Pricing Supplement, Notes will be issued
at 100% of their principal amount.
(2) The Company will pay a commission to the Agents (as defined herein)
ranging from .125% to .925% of the principal amount of any Note, depending
upon its maturity and the rating of the Company's debt securities, sold
through any such Agent. The Company may also sell Notes to any Agent at a
discount for resale to one or more investors or other purchasers at
varying prices related to prevailing market prices at the time of resale
as determined by such Agent. Unless otherwise specified in the applicable
Pricing Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency
sale of a Note of identical maturity and debt rating, and may be resold by
such Agent. The Company has agreed to indemnify the Agents against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Plan of Distribution of Notes."
(3) Before deducting estimated expenses of $370,000, payable by the Company,
including reimbursement of the Agents' expenses.
(4) Or the equivalent thereof in foreign currencies or foreign currency units.
-----------------
The Notes are being offered on a continuing basis by the Company through the
Agents, each of which will have agreed to use its reasonable efforts to
solicit offers to purchase the Notes. The Company also may sell Notes to any
Agent acting as principal for resale to investors or other purchasers at
varying prices related to prevailing market prices at the time of resale, as
determined by such Agent, and may sell Notes directly to investors on its own
behalf in jurisdictions where it is authorized to do so. The Notes will not be
listed on any securities exchange, and there can be no assurance that the
Notes offered by this Prospectus Supplement will be sold or that there will be
a secondary market for the Notes. The Company reserves the right to withdraw,
cancel or modify the offer made hereby without notice. The Company or any
Agent may reject any offer to purchase Notes, in whole or in part. No
termination date for the offering of the Notes has been established. See "Plan
of Distribution of Notes."
-----------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
-----------------
The date of this Prospectus Supplement is September 23, 1997.
<PAGE>
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS AS
PRINCIPAL ON A FIXED OFFERING PRICE BASIS, SUCH AGENT(S) MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF NOTES.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF NOTES TO COVER
SHORT POSITIONS OF SUCH AGENT(S). FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"PLAN OF DISTRIBUTION OF NOTES" IN THIS PROSPECTUS SUPPLEMENT.
DESCRIPTION OF NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set
forth in the accompanying Prospectus, to which description reference is hereby
made. Unless different terms or additional terms are specified in the
applicable Pricing Supplement, the Notes will have the terms described below.
References to interest payments and interest-related information do not apply
to Zero Coupon Notes (as defined below).
The Notes will be issued pursuant to the Indenture dated as of September 1,
1992 (the "Indenture") between the Company and First Trust National
Association, as Trustee (the "Trustee"). The Notes will represent senior,
unsubordinated debt of the Company and will rank equally with all other
unsecured and unsubordinated debt of the Company. The Notes constitute a
separate series for purposes of the Indenture. The Notes are limited to an
aggregate principal amount of $250,000,000, or the equivalent thereof in
foreign currencies or foreign currency units, subject to reduction as a result
of the sale of other Debt Securities (as defined in the accompanying
Prospectus). As of the date of this Prospectus Supplement, the Company has
previously issued an aggregate of $26,650,000 of Notes. The following summary
of certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the Indenture, including the definitions therein of certain
terms.
Each Note will mature on a Business Day (as defined below) nine months or
more from its date of issue, as agreed to by the Company and the purchaser and
specified in the Note and the applicable Pricing Supplement; provided,
however, that no Commercial Paper Rate Note will mature less than 9 months and
1 day from its date of issue. If the maturity date specified in the applicable
Pricing Supplement for any Note is a day that is not a Business Day (as
defined below), principal will be paid on the next succeeding Business Day
with the same force and effect as if made on such specified maturity date,
except that, in the case of a LIBOR Note (as defined below), if such Business
Day is in the next succeeding calendar month, principal will be paid on the
immediately preceding Business Day. "Business Day" means (a) with respect to
any Note, any day that is not a Saturday or Sunday and that in the City of
Minneapolis or The City of New York (and, with respect to LIBOR Notes, London,
England) is not a day on which banking institutions generally are authorized
or obligated by law or executive order to close and (b) with respect to
Foreign Currency Notes only, any day that, in the capital city of the country
of the currency in which such Notes are denominated or, with respect to
Foreign Currency Notes denominated in European Currency Units ("ECUs"),
Brussels, is not a day on which banking institutions generally are authorized
or obligated by law to close.
Each Note will be denominated in a currency or currency unit ("Specified
Currency") as specified on the face thereof and in the applicable Pricing
Supplement, which may include United States dollars, Australian dollars, New
Zealand dollars, Canadian dollars, Danish kroner, Italian lire, ECUs or any
other currency set forth in the applicable Pricing Supplement. Purchasers of
the Notes are required to pay for such Notes by delivery of the requisite
amount of the Specified Currency to an Agent, unless other arrangements have
been made.
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The applicable Pricing Supplement will specify any redemption terms
applicable to the Notes. See "--Redemption" below.
Unless otherwise specified in the applicable Pricing Supplement, the Notes,
other than Foreign Currency Notes, will be issuable only in definitive
registered form in denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The authorized denominations of Foreign Currency Notes will be
indicated in the applicable Pricing Supplement.
Each Note will be represented either by a global security (a "Global
Security") registered in the name of a nominee of The Depository Trust
Company, as depositary (the "Depositary") (each such Note represented by a
Global Security being herein referred to as a "Book-Entry Note"), or by a
certificate issued in definitive registered form, without coupons (a
"Certificated Note"), as set forth in the applicable Pricing Supplement.
Except as set forth under "--Book-Entry Notes" below, Book-Entry Notes will
not be issuable in certificated form. So long as the Depositary or its nominee
is the registered holder of any Global Security, the Depositary or its
nominee, as the case may be, will be considered the sole registered holder of
the Book-Entry Notes represented by such Global Security for all purposes
under the Indenture and such Notes. For a further description of the
respective forms, denominations and transfer and exchange procedures with
respect to any such Global Security and Book-Entry Note, reference is made to
"--Book-Entry Notes" below and to the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement and except
as provided below under "--Book-Entry Notes," principal, premium (if any) and
interest (if any) will be payable, the transfer of any Notes will be
registrable and any Notes will be exchangeable for Notes bearing identical
terms and provisions at the corporate trust office of First Trust National
Association (the "Paying Agent"), in the City of St. Paul, Minnesota or its
agency located in The City of New York, provided that payments of interest on
any Interest Payment Date (as defined below) with respect to any Certificated
Note may be made at the option of the Company by check mailed to the address
of the person entitled thereto as it appears on the registry books of the
Company at the close of business on the Regular Record Date (as defined below)
corresponding to the relevant Interest Payment Date. Unless otherwise
specified in the applicable Pricing Supplement, holders of $10,000,000 or more
in aggregate principal amount of Certificated Notes shall be entitled to
receive payments of interest on any Interest Payment Date by wire transfer of
immediately available funds, if appropriate wire transfer instructions have
been given to the Paying Agent in writing not later than the Regular Record
Date preceding such Interest Payment Date.
Unless otherwise specified in the applicable Pricing Supplement, the
principal, premium (if any) and interest (if any) payable at maturity or upon
redemption on each Certificated Note will be paid in immediately available
funds against presentation of the Note at the above mentioned corporate trust
office of the Paying Agent.
The applicable Pricing Supplement will specify any additional terms
applicable to any Foreign Currency Note with respect to the payment of
principal and any premium or interest thereon.
Notes may be issued as Original Issue Discount Notes. An "Original Issue
Discount Note" is a Note, including any Zero Coupon Note, which is issued at a
price lower than the principal amount thereof and which provides that upon
acceleration of the maturity thereof an amount less than the principal thereof
shall become due and payable. Unless otherwise specified in the applicable
Pricing Supplement, the amount payable to the holder of Zero Coupon Notes and
certain of such interest-bearing Notes issued as Original Issue Discount Notes
(as specified in the applicable Pricing Supplement) upon any acceleration of
the maturity thereof will be the Amortized Face Amount (as defined below)
thereof, and the amount payable to the holder of such Original Issue Discount
Note upon any redemption thereof will be the applicable percentage of the
Amortized Face Amount thereof specified in the applicable Pricing Supplement,
in each case as determined by the Company plus, in the case of any interest-
bearing Note issued as an Original Issue Discount Note, any accrued but unpaid
"qualified stated interest payments" (as defined under "United States
Taxation--Original Issue Discount"). The "Amortized Face Amount" of an
Original Issue Discount Note is equal to the sum of (i) the Issue Price (as
defined below) of such Original Issue Discount Note and (ii) that portion of
the difference between the Issue Price and the principal amount of such
Original Issue Discount Note that has been amortized at the Stated Yield
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<PAGE>
(as defined below) of such Original Issue Discount Note (computed in
accordance with Section 1272(a)(4) of the Internal Revenue Code of 1986, as
amended, and Section 1.1272-1(e) of the OID Regulations (as defined under
"United States Taxation"), in each case as in effect on the issue date of such
Original Issue Discount Note), at the date as of which the Amortized Face
Amount is calculated, but in no event can the Amortized Face Amount exceed the
principal amount of such Note due at maturity thereof. As used in the
preceding sentence, the term "Issue Price" means the principal amount of such
Original Issue Discount Note due at maturity thereof less the "Original Issue
Discount" of such Original Issue Discount Note specified on the face thereof
and in the applicable Pricing Supplement. The term "Stated Yield" of such
Original Issue Discount Note means the "Yield to Maturity" specified on the
face of such Original Issue Discount Note and in the applicable Pricing
Supplement for the period from the Original Issue Date of such Original Issue
Discount Note, as specified on the face of such Original Issue Discount Note
and in the applicable Pricing Supplement, to the maturity thereof based on its
Issue Price and the principal amount payable at the maturity thereof. See
"United States Taxation--Original Issue Discount."
INTEREST AND INTEREST RATES
Each Note that bears interest will bear interest at either (a) a fixed rate
(the "Fixed Rate Notes"), (b) an indexed rate (the "Indexed Notes"), or (c) a
floating rate determined by reference to one or more interest rate formulas,
which may be adjusted by a Spread and/or Spread Multiplier (each as defined
below), and, if so specified in the applicable Pricing Supplement with respect
to one or more Interest Periods (as defined below), one or more fixed rates
(the "Floating Rate Notes"). Any Floating Rate Note may also have either or
both of the following: (i) a maximum interest rate limitation, or ceiling, on
the rate of interest which may accrue during any Interest Period; and (ii) a
minimum interest rate limitation, or floor, on the rate of interest which may
accrue during any Interest Period. The applicable Pricing Supplement may
designate any of the following interest rate formulas as applicable to one or
more Interest Periods on each Floating Rate Note: (a) the Commercial Paper
Rate, in which case such Note will be a "Commercial Paper Rate Note" with
respect to such Interest Period or Interest Periods; (b) the Federal Funds
Rate, in which case such Note will be a "Federal Funds Rate Note" with respect
to such Interest Period or Interest Periods; (c) LIBOR, in which case such
Note will be a "LIBOR Note" with respect to such Interest Period or Interest
Periods; (d) the Prime Rate, in which case such Note will be a "Prime Rate
Note" with respect to such Interest Period or Interest Periods; (e) the CD
Rate, in which case such Note will be a "CD Rate Note" with respect to such
Interest Period or Interest Periods; (f) the Treasury Rate, in which case such
Note will be a "Treasury Rate Note" with respect to such Interest Period or
Interest Periods; or (g) such other interest rate formula as is set forth in
the applicable Pricing Supplement.
The interest rate on each Floating Rate Note for each Interest Period will
be determined by reference to (i) the applicable interest rate formula
specified in the applicable Pricing Supplement for such Interest Period, plus
or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if
any, or (ii) the applicable fixed rate per annum specified in the applicable
Pricing Supplement for such Interest Period. The "Spread" is the number of
basis points specified in the applicable Pricing Supplement as being
applicable to such Floating Rate Note for such Interest Period, and the
"Spread Multiplier" is the percentage specified in the applicable Pricing
Supplement as being applicable to such Floating Rate Note for such Interest
Period.
Each Note that bears interest will bear interest from and including its date
of issue or from and including the most recent Interest Payment Date to which
interest on such Note (or any predecessor Note) has been paid or duly provided
for (i) at the fixed rate per annum applicable to the related Interest Period
or Interest Periods, (ii) at the rate determined pursuant to the applicable
index or (iii) at the rate per annum determined pursuant to the interest rate
formula applicable to the related Interest Period or Interest Periods, in each
case as specified therein and in the applicable Pricing Supplement, until the
principal thereof is paid or made available for payment. Interest will be
payable on each Interest Payment Date and at maturity or upon redemption.
Except as provided below under "--Book Entry Notes," interest will be payable
to the person in whose name a Note (or any predecessor Note) is registered at
the close of business on the Regular Record Date (as defined below) next
preceding each Interest Payment Date; provided, however, that interest payable
on a maturity date or redemption
S-4
<PAGE>
date will be payable to the person to whom principal shall be payable. Except
as provided below under "--Book Entry Notes," the first payment of interest on
any Note originally issued after a Regular Record Date and on or before an
Interest Payment Date will be made on the Interest Payment Date following the
next succeeding Regular Record Date to the registered holder on such next
succeeding Regular Record Date. Interest rates and interest rate formulas are
subject to change by the Company from time to time but no such change will
affect any Note theretofore issued or which the Company has agreed to issue.
Unless otherwise specified in the applicable Pricing Supplement, the "Interest
Payment Dates" and the "Regular Record Dates" for Fixed Rate Notes shall be as
described below under "--Fixed Rate Notes" and the "Interest Payment Dates"
and the "Regular Record Dates" for Floating Rate Notes shall be as described
below under "--Floating Rate Notes."
The applicable Pricing Supplement will specify with respect to each Note
that bears interest: (i) the issue price, Interest Payment Dates and Regular
Record Dates; (ii) with respect to any Fixed Rate Note, the interest rate;
(iii) with respect to any Indexed Note, the index; (iv) with respect to any
Floating Rate Note, the Initial Interest Rate (as defined below), the method
(which may vary from Interest Period to Interest Period) of calculating the
interest rate applicable to each Interest Period (including, if applicable,
the fixed rate per annum applicable to one or more Interest Periods, the
period to maturity of any instrument on which the interest rate formula for
any Interest Period is based (the "Index Maturity"), the Spread and/or Spread
Multiplier, the Interest Determination Dates (as defined below), the Interest
Reset Dates (as defined below) and any minimum or maximum interest rate
limitations); (v) whether such Note is an Original Issue Discount Note; and
(vi) any other terms not inconsistent with the Indenture.
Fixed Rate Notes
Each Fixed Rate Note, whether or not issued as an Original Issue Discount
Note, will bear interest at the annual rate specified therein and in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, the Interest Payment Dates for the Fixed Rate Notes will
be on March 1 and September 1 of each year and the Regular Record Dates for
the Fixed Rate Notes will be on the fifteenth day (whether or not a Business
Day) of the month next preceding each Interest Payment Date. Unless otherwise
specified in the applicable Pricing Supplement, interest payments for Fixed
Rate Notes shall be the amount of interest accrued from, and including, the
next preceding Interest Payment Date to which interest has been paid or duly
provided for (or from, and including, the date of issue if no interest has
been paid or duly provided for with respect to such Fixed Rate Note) to, but
excluding, the relevant Interest Payment Date or maturity date (or earlier
redemption date), as the case may be. Interest on Fixed Rate Notes will be
computed and paid on the basis of a 360-day year of twelve 30-day months. In
the event that any Interest Payment Date or maturity date (or earlier
redemption date), as the case may be, on a Fixed Rate Note is not a Business
Day, interest will be paid on the next succeeding Business Day with the same
force and effect as if made on such Interest Payment Date or maturity date (or
earlier redemption date), as the case may be.
Floating Rate Notes
The Interest Payment Dates for the Floating Rate Notes shall be as specified
in such Notes and in the applicable Pricing Supplement, and, unless otherwise
specified in the applicable Pricing Supplement, the Regular Record Dates for
the Floating Rate Notes will be the day (whether or not a Business Day)
fifteen calendar days preceding each Interest Payment Date. Unless otherwise
specified in the applicable Pricing Supplement and except as provided below,
interest on Floating Rate Notes will be payable on the following Interest
Payment Dates: 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 of each year; in the
case of Floating Rate Notes with a quarterly Interest Reset Date, on the third
Wednesday of March, June, September and December of each year; in the case of
Floating Rate Notes with a semiannual Interest Reset Date,
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<PAGE>
on the third Wednesday of the two months of each year specified in the
applicable Pricing Supplement; and in the case of Floating Rate Notes with an
annual Interest Reset Date, on the third Wednesday of the month of each year
specified in the applicable Pricing Supplement, and in each case at maturity
or upon redemption. If any Interest Payment Date or maturity date (or earlier
redemption date), as the case may be, for any Floating Rate Note would
otherwise be a day that is not a Business Day, the Interest Payment Date or
maturity date (or earlier redemption date), as the case may be, for such
Floating Rate Note shall be postponed to the next day that is a Business Day,
except that in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date or maturity date (or
earlier redemption date), as the case may be, shall be the immediately
preceding Business Day.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (the date on which each such
reset occurs, an "Interest Reset Date"), as specified in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Reset Date will be as follows: in the case of
Floating Rate Notes which are reset daily, each Business Day; in the case of
Floating Rate Notes (other than Treasury Rate Notes) which are reset weekly,
the Wednesday of each week; in the case of Treasury Rate Notes which are reset
weekly, the Tuesday of each week (except if the auction date falls on a
Tuesday, then the next Business Day, as provided below); in the case of
Floating Rate Notes which are reset monthly, the third Wednesday of each
month; in the case of Floating Rate Notes which are reset quarterly, the third
Wednesday of March, June, September and December of each year; in the case of
Floating Rate Notes which are reset semiannually, the third Wednesday of the
two months of each year specified in the applicable Pricing Supplement; and in
the case of Floating Rate Notes which are reset annually, the third Wednesday
of the month of each year specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate determined with respect to any Interest Determination Date will
become effective on and as of the next succeeding Interest Reset Date;
provided, however, that (i) the interest rate in effect from the date of issue
to the first Interest Reset Date with respect to a Floating Rate Note (the
"Initial Interest Rate") will be as specified in the applicable Pricing
Supplement and (ii) the interest rate in effect for the 10 days immediately
prior to maturity or redemption will be that in effect on the tenth day
preceding such maturity or redemption. 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 day that is a Business Day,
except that in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
As used herein, "Interest Determination Date" means the date as of which the
interest rate for a Floating Rate Note is to be calculated, to be effective as
of the following Interest Reset Date and calculated on the related Calculation
Date (as defined below). Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date pertaining to any Interest Reset
Date for a Commercial Paper Rate Note, a Federal Funds Rate Note, a LIBOR
Note, a Prime Rate Note or a CD Rate Note (the "Commercial Paper Interest
Determination Date," the "Federal Funds Interest Determination Date," the
"LIBOR Interest Determination Date," the "Prime Interest Determination Date"
and the "CD Interest Determination Date," respectively) will be the second
Business Day prior to such Interest Reset Date. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Determination Date pertaining
to an Interest Reset Date for a Treasury Rate Note (the "Treasury Interest
Determination Date") will be the day of the week on which Treasury bills would
normally be auctioned in the week in which such Interest Reset Date falls.
Treasury bills are usually sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is usually held on the
following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Treasury Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week.
If an auction date shall fall on any Interest Reset Date for a Treasury Rate
Note, then such Interest Reset Date shall instead be the first Business Day
immediately following such auction date.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments on an Interest Payment Date or maturity date (or earlier redemption
date), as the case may be, for a Floating Rate Note will include interest
accrued from, and including, the next preceding Interest Payment Date to which
interest has been paid
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or duly provided for (or from, and including, the date of issue if no interest
has been paid or duly provided for with respect to such Floating Rate Note)
to, but excluding, such Interest Payment Date or maturity date (or earlier
redemption date), as the case may be (each such interest accrual period, an
"Interest Period"). Accrued interest from the date of issue or from the last
date to which interest has been paid or duly provided for to the date for
which interest is being calculated is calculated by multiplying the face
amount of a Floating Rate Note by the applicable accrued interest factor (the
"Accrued Interest Factor"). The Accrued Interest Factor is computed by adding
together the interest factors calculated for each day from the date of issue,
or from the last date to which interest has been paid or duly provided for,
to, but excluding, the date for which accrued interest is being calculated.
The interest factor for each such day is computed by dividing the per annum
interest rate applicable to such day by 360 in the case of Commercial Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes, Prime Rate Notes and CD
Rate Notes, or by the actual number of days in the year in the case of
Treasury Rate Notes. The interest rate in effect on each day will be (i) if
such day is an Interest Reset Date, the interest rate with respect to the
Interest Determination Date pertaining to such Interest Reset Date or (ii) if
such day is not an Interest Reset Date, the interest rate with respect to the
Interest Determination Date pertaining to the next preceding Interest Reset
Date, subject in either case to any maximum or minimum interest rate
limitation referred to above or in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, First Trust
National Association will be the "Calculation Agent." On or before each
Calculation Date, the Calculation Agent will determine the interest rate as
described below and notify the Paying Agent. The Paying Agent will determine
the Accrued Interest Factor applicable to any such Floating Rate Note. The
Paying Agent will, upon the request of the holder of any Floating Rate Note,
provide the interest rate then in effect and the interest rate which will
become effective as a result of a determination made with respect to the most
recent Interest Determination Date with respect to such Floating Rate Note.
The determinations of interest rates made by the Calculation Agent shall be
conclusive and binding, and neither the Trustee nor the Paying Agent shall
have the duty to verify determinations of interest rates made by the
Calculation Agent. The determinations of Accrued Interest Factors made by the
Paying Agent shall be conclusive and binding. Unless otherwise specified in
the applicable Pricing Supplement, the "Calculation Date," if applicable,
pertaining to any Interest Determination Date on a Floating Rate Note will be
the earlier of (i) the tenth calendar day after such Interest Determination
Date, or, if any such day is not a Business Day, the next succeeding Business
Day and (ii) the Business Day preceding the applicable Interest Payment Date
or maturity or redemption, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation referred to in this Prospectus
Supplement will be rounded, if necessary, to the nearest one hundred-
thousandth of one percentage point, with five one-millionths of one percentage
point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655%
(or .0987655) and 9.876544% (or .09876544) being rounded to 9.87654% (or
.0987654); all calculations of the interest factor for any day on Floating
Rate Notes will be rounded, if necessary, to the nearest one hundred-
millionth, with five one-billionths rounded upward (e.g., .098765455 being
rounded to .09876546 and .098765454 being rounded to .09876545); and all
currency or currency unit amounts used in or resulting from such calculations
on the Notes will be rounded to the nearest one-hundredth of a unit (with .005
of a unit being rounded upward).
Commercial Paper Rate Notes. Commercial Paper Rate Notes will bear interest
at the interest rates (calculated with reference to the Commercial Paper Rate
and the Spread and/or Spread Multiplier, if any) specified in the Commercial
Paper Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on
that date for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement as such rate is published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication of the Board of
Governors of the Federal Reserve System ("H.15(519)"), under the heading
"Commercial Paper." If by 3:00 p.m., New York City time, on the Calculation
Date pertaining to such Commercial Paper Interest Determination Date such rate
is
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not so published, then the Commercial Paper Rate shall be the Money Market
Yield of the rate on that Commercial Paper Interest Determination Date for
commercial paper having the Index Maturity designated in the applicable
Pricing Supplement as published by the Federal Reserve Bank of New York in its
daily statistical release, "Composite 3:30 p.m. Quotations for United States
Government Securities" ("Composite Quotations") under the heading "Commercial
Paper." If by 3:00 p.m., New York City time, on such Calculation Date such
rate is not so published in Composite Quotations, the Commercial Paper Rate
for that Commercial Paper Interest Determination Date shall be calculated by
the Calculation Agent and shall be the Money Market Yield of the arithmetic
mean of the offered rates of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent as of 11:00 a.m., New York
City time, on that Commercial Paper Interest Determination Date, for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized securities rating agency; provided,
however, that if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as specified in this sentence, the Commercial
Paper Rate with respect to such Commercial Paper Interest Determination Date
will remain the Commercial Paper Rate in effect on such Commercial Paper
Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 X 100
360-(D X M)
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Federal Funds Rate Notes. Federal Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Federal Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in the Federal Funds Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Federal Funds Interest Determination
Date, the rate on that day for Federal Funds as published in H.15(519) under
the heading "Federal Funds (Effective)" or, if not so published by 3:00 p.m.,
New York City time, on the Calculation Date pertaining to such Federal Funds
Interest Determination Date, the Federal Funds Rate will be the rate on such
Federal Funds Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate." If such rate is not so
published by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Federal Funds Interest Determination Date, the Federal Funds Rate for
such Federal Funds Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds arranged by three leading dealers of
Federal Funds transactions in The City of New York selected by the Calculation
Agent as of 9:00 a.m., New York City time, on such Federal Funds Interest
Determination Date; provided, however, that if fewer than three dealers
selected as aforesaid by the Calculation Agent are quoting as specified in
this sentence, the Federal Funds Rate will remain the Federal Funds Rate in
effect on such Federal Funds Interest Determination Date.
LIBOR Notes. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread and/or Spread Multiplier,
if any) specified in the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, LIBOR will be
determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will be
determined on the basis of the offered rates for deposits of not less than
U.S. $1,000,000 having the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second Business Day immediately
following that LIBOR Interest Determination Date, which appear on the
Reuter's Screen LIBO Page (as defined below) at approximately 11:00 a.m.,
London time, on that LIBOR Interest Determination Date. If at least two
such
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offered rates appear on the Reuter's Screen LIBO Page, the rate in respect
of that LIBOR Interest Determination Date will be the arithmetic mean of
such offered rates as determined by the Calculation Agent. If fewer than
two offered rates appear, LIBOR in respect of that LIBOR Interest
Determination Date will be determined as described in (ii) below. "Reuter's
Screen LIBO Page" means the display designated as page "LIBO" on the
Reuter's Monitor Money Rates Service (or such other page as may replace the
LIBO Page on that service for the purpose of displaying London interbank
offered rates of major banks).
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Reuter's Screen LIBO Page as specified
in (i) above, LIBOR will be determined on the basis of the rates at which
deposits in United States dollars are offered by four major banks in the
London interbank market selected by the Calculation Agent (the "Reference
Banks") at approximately 11:00 a.m., London time, on that LIBOR Interest
Determination Date to prime banks in the London interbank market having the
Index Maturity designated in the applicable Pricing Supplement commencing
on the second Business Day immediately following such LIBOR Interest
Determination Date and in a principal amount, not less than United States
$1,000,000, that, in the judgment of the Calculation Agent, is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of such
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted by three
major banks in The City of New York selected by the Calculation Agent at
approximately 11:00 a.m., New York City time, on that LIBOR Interest
Determination Date for loans in United States dollars to leading European
banks, having the Index Maturity specified in the applicable Pricing
Supplement, commencing on the second Business Day immediately following
that LIBOR Interest Determination Date and in a principal amount, not less
than United States $1,000,000, that, in the judgment of the Calculation
Agent, is representative for a single transaction in such market at such
time; provided, however, that if fewer than three banks in The City of New
York selected as aforesaid by the Calculation Agent are quoting as
specified in this sentence, LIBOR with respect to such LIBOR Interest
Determination Date will remain LIBOR in effect on such LIBOR Interest
Determination Date.
Prime Rate Notes. Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any) specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Interest Determination Date, the
arithmetic mean of the prime rates or base rates for commercial loans quoted
on the basis of the actual number of days in the year divided by a 360-day
year as of the close of business on such Prime Interest Determination Date by
three major money center banks in The City of New York selected by the
Calculation Agent (after consultation with the Company). If fewer than three
quotations are provided, the Prime Rate shall be calculated by the Calculation
Agent and shall be determined as the arithmetic mean on the basis of the prime
rates or base rates for commercial loans quoted in The City of New York on
such date by three substitute banks or trust companies organized and doing
business under the laws of the United States, or any State thereof, having
total equity capital of at least $500,000,000 and being subject to supervision
or examination by a federal or state authority, selected by the Calculation
Agent (after consultation with the Company); provided, however, that if fewer
than three banks or trust companies selected as aforesaid by the Calculation
Agent are quoting as specified in this sentence, the Prime Rate will remain
the Prime Rate in effect on such Prime Interest Determination Date.
CD Rate Notes. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread and/or Spread
Multiplier, if any) specified in the CD Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such
date for negotiable certificates of deposit having the Index
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Maturity specified in the applicable Pricing Supplement as such rate is
published in H.15(519) under the heading "CDs (Secondary Market)." If by 3:00
p.m., New York City time, on the Calculation Date pertaining to such CD
Interest Determination Date such rate is not so published, then the CD Rate
shall be the rate on such CD Interest Determination Date for negotiable
certificates of deposit of the Index Maturity specified in the applicable
Pricing Supplement as published in Composite Quotations under the heading
"Certificates of Deposit." If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not so published in Composite Quotations, the CD
Rate for that CD Interest Determination Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such CD Interest
Determination Date, of three leading nonbank dealers in negotiable United
States 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 market banks with a remaining maturity closest to the Index
Maturity specified in the applicable Pricing Supplement in denominations of
$5,000,000; provided, however, that if fewer than three dealers selected as
aforesaid by the Calculation Agent are quoting as specified in this sentence,
the CD Rate will remain the CD Rate in effect on such CD Interest
Determination Date.
Treasury Rate Notes. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread and/or
Spread Multiplier, if any) specified in the Treasury Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the
rate for the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable
Pricing Supplement as such rate is published in H.15(519) under the heading
"United States Government Securities--Treasury Bills--auction average
(investment)" or, if not so published by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Treasury Interest Determination Date, the
auction average rate (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. In the event that
the results of the auction of Treasury bills having the Index Maturity
designated in the applicable Pricing Supplement are not otherwise reported as
provided above by 3:00 p.m., New York City time, on such Calculation Date or
no such auction is held in a particular week, then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of 3:30 p.m., New York City time, on such
Treasury Interest Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent for the issue
of Treasury bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that if
fewer than three dealers selected as aforesaid by the Calculation Agent are
quoting as specified in this sentence, the Treasury Rate with respect to such
Treasury Interest Determination Date will remain the Treasury Rate in effect
on such Treasury Interest Determination Date.
ZERO COUPON NOTES
Notes may be issued in the form of Original Issue Discount Notes that do not
provide any periodic payments of interest (the "Zero Coupon Notes"). The
specific terms of any Zero Coupon Notes will be set forth in the applicable
Pricing Supplement.
INDEXED NOTES
Notes may be issued from time to time as Indexed Notes. Indexed Notes are
Notes for which the principal amount payable at maturity or upon redemption,
or the amount of interest payable on an Interest Payment Date, or both, is
determined by reference to a currency exchange rate, composite currency or
currencies, commodity price or other financial or non-financial index as set
forth in the applicable Pricing Supplement. Specific terms of any Indexed
Notes will be set forth in such Notes and the applicable Pricing Supplement.
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REDEMPTION
If so specified in the applicable Pricing Supplement, a Note will be
redeemable at the option of the Company on the date or dates prior to maturity
specified in the applicable Pricing Supplement at the price or prices
specified in the applicable Pricing Supplement (unless otherwise specified in
such Pricing Supplement, expressed as a percentage of the principal amount of
such Note or, in the case of Zero Coupon Notes or certain interest-bearing
Notes issued as Original Issue Discount Notes (as specified in the applicable
Pricing Supplement), as a percentage of the Amortized Face Amount of such
Note), together with accrued interest, if any, to the date of redemption
determined as specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, the Company may redeem any of
the Notes which are redeemable and remain outstanding either in whole or from
time to time in part upon not less than 30 nor more than 60 days' notice
mailed by or on behalf of the Company to the registered holder thereof. Unless
otherwise specified in the applicable Pricing Supplement, the Company will not
be obligated to redeem or purchase the Notes pursuant to any sinking fund or
analogous provision or at the option of any holder. If less than all of the
Notes of like tenor are to be redeemed, the Notes to be redeemed shall be
selected by the Trustee by such method as the Trustee shall deem fair and
appropriate. Upon any redemption of less than all of the principal of a Note
prior to maturity, a new Note of like tenor and of an authorized denomination
representing the unredeemed portion thereof will be issued to the registered
holder thereof.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes of the same series and bearing interest
(if any) at the same rate or pursuant to the same formula and having the same
date of issuance, redemption provisions (if any), maturity date and other
terms will be represented by a single Global Security. Each Global Security
representing Book-Entry Notes will be deposited with, or on behalf of, the
Depositary and will be registered in the name of the Depositary or a nominee
of the Depositary. Unless otherwise specified in the applicable Pricing
Supplement, all Book-Entry Notes will be denominated in United States dollars.
Upon the issuance of a Global Security, the Depositary will credit accounts
held with it with the respective principal or face amounts of the Book-Entry
Notes represented by such Global Security. The accounts to be credited shall
be designated initially by the Agent through which the Note was sold or, to
the extent that such Notes are offered and sold directly, by the Company.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary ("participants") and to
persons that may hold interests through such participants. Ownership of
beneficial interests by participants in a Global Security will be shown on,
and the transfer of that ownership interest will be effected only through,
records maintained by the Depositary for such Global Security. Ownership of
beneficial interests in such Global Security by persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant.
Payment of principal of, premium (if any) and interest (if any) on Book-
Entry Notes represented by any such Global Security will be made in
immediately available funds to the Depositary or its nominee, as the case may
be, as the sole registered holder of the Book-Entry Notes represented thereby
for all purposes under the Indenture. None of the Company, the Trustee, the
Paying Agent or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's records
relating to or payments made on account of beneficial ownership interests in a
Global Security representing any Book-Entry Notes or any other aspect of the
relationship between the Depositary and its participants or the relationship
between such participants and the owner of beneficial interests in a Global
Security owning through such participants or for maintaining, supervising or
reviewing any of the Depositary's records relating to such beneficial
ownership interests.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of, premium (if any) or interest (if any) on any such
Global Security, the Depositary will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of
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the Depositary. Payments by participants to owners of beneficial interests in
a Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
by such participants for customer accounts registered in "street name," and
will be the sole responsibility of such participants.
No Global Security may be transferred except as a whole by a nominee of the
Depositary to the Depositary or to another nominee of the Depositary, or by
the Depositary or any such nominee to a successor of the Depositary or a
nominee of such successor.
Unless otherwise specified in the applicable Pricing Supplement, a Global
Security representing Book-Entry Notes is exchangeable for Certificated Notes
of the same series and bearing interest (if any) at the same rate or pursuant
to the same formula, having the same date of issuance, redemption provisions
(if any), maturity date and other terms and of differing authorized
denominations aggregating a like amount, only if (x) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for such
Global Security or if at any time the Depositary ceases to be a clearing
agency registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (y) the Company in its sole discretion determines that such
Global Security shall be exchangeable for Certificated Notes or (z) there
shall have occurred and be continuing an Event of Default with respect to the
Notes. Such Certificated Notes shall be registered in the names of the owners
of the beneficial interests in such Global Security as provided by the
Depositary's relevant participants (as identified by the Depositary).
Except as provided above, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Notes in
certificated form and will not be considered the registered holders thereof
for any purpose under the Indenture, and no Global Security representing Book-
Entry Notes shall be exchangeable or transferrable. Accordingly, each person
owning a beneficial interest in such a Global Security must rely on the
procedures of the Depositary and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a registered holder under the Indenture. The laws of
some jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and such laws
may impair the ability to transfer beneficial interests in a Global Security.
The Depositary, as the registered holder of each Global Security, may
appoint agents and otherwise authorize participants to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action which a registered holder is entitled to give or take under the
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of registered holders or that
an owner of a beneficial interest in such a Global Security desires to give or
take any action which a registered holder is entitled to give or take under
the Indenture, the Depositary would authorize the participants holding the
relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depositary has advised the Company that the Depositary is a limited-
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including
the Agents), banks (including the Trustee), trust companies, clearing
corporations, and certain other organizations some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
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FOREIGN CURRENCY RISKS
GENERAL
Unless otherwise specified in an applicable Pricing Supplement, Notes
denominated in other than United States dollars or ECUs will not be sold in,
or to residents of, the country issuing the Specified Currency in which
particular Notes are denominated. The information set forth in this Prospectus
Supplement is directed to prospective purchasers who are United States
residents, and the Company disclaims any responsibility to advise prospective
purchasers who are residents of countries other than the United States with
respect to any matters that may affect the purchase, holding or receipt of
payments of principal of and interest on the Notes. Such persons should
consult their own financial and legal advisors with regard to such matters.
THIS PROSPECTUS SUPPLEMENT DOES NOT DESCRIBE ALL RISKS OF AN INVESTMENT IN
FOREIGN CURRENCY NOTES THAT RESULT FROM SUCH NOTES BEING DENOMINATED OR
PAYABLE IN A FOREIGN CURRENCY OR CURRENCY UNIT, EITHER AS SUCH RISKS EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME
TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN FOREIGN CURRENCY NOTES.
FOREIGN CURRENCY NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information set forth below is by necessity incomplete and prospective
purchasers of Foreign Currency Notes should consult their own financial and
legal advisors with respect to any matters that may affect the purchase or
holding of a Foreign Currency Note or the receipt of payments of principal of
and any premium and interest on a Foreign Currency Note in a Specified
Currency.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a security denominated in United
States dollars. Such risks include, without limitation, the possibility of
significant changes in rate of exchange between the United States dollar and
the Specified Currency and the possibility of the imposition or modification
of foreign exchange controls by either the United States or foreign
governments. Such risks generally depend on events over which the Company has
no control, such as economic and political events and the supply and demand
for relevant currencies. In recent years, rates of exchange between the United
States dollar and certain foreign currencies have been highly volatile and
such volatility may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations in the rate that may occur during the term of any
Foreign Currency Note. Depreciation of the Specified Currency applicable to a
Foreign Currency Note against the United States dollar would result in a
decrease in the United States dollar-equivalent yield of such Note, in the
United States dollar-equivalent value of the principal payable at maturity or
redemption of such Note and, generally, in the United States dollar-equivalent
market value of such Note.
Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or prior to a Foreign Currency
Note's maturity or redemption which could affect exchange rates as well as the
availability of the Specified Currency at a Foreign Currency Note's maturity
or redemption. Even if there are no exchange controls, it is possible that the
Specified Currency for any particular Foreign Currency Note would not be
available at such Note's maturity or redemption due to other circumstances
beyond the control of the Company. In that event, the Company will repay in
United States dollars on the basis of the most recently available exchange
rate.
JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. If an action based on Foreign Currency Notes were
commenced in a court of the United States, it is likely that such
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court would grant judgment relating to such Notes only in United States
dollars. It is not clear, however, whether, in granting such judgment, the
rate of conversion into United States dollars would be determined with
reference to the date of default, the date judgment is rendered or some other
date. Under current New York law, a state court in the State of New York
rendering a judgment on a Foreign Currency Note would be required to render
such judgment in the Specified Currency in which such Foreign Currency Note is
denominated, and such judgment would be converted into United States dollars
at the exchange rate prevailing on the date of entry of the judgment. Holders
of Foreign Currency Notes would bear the risk of exchange rate fluctuations
between the time the amount of the judgment is calculated and the time such
Holders are paid in the Specified Currency in satisfaction of the judgment.
LIMITED FACILITIES FOR CONVERSION
Currently, there are limited facilities in the United States for conversion
of United States dollars into foreign currencies, and vice versa. In addition,
banks offer limited non-United States dollar denominated checking or savings
account facilities in the United States. Accordingly, payments on Foreign
Currency Notes will, unless otherwise specified in the applicable Pricing
Supplement, be made from an account with a bank located in the country issuing
the Specified Currency (or, with respect to Foreign Currency Notes denominated
in ECUs, Brussels).
UNITED STATES TAXATION
The following summary describes certain United States federal income tax
consequences of ownership of the Notes and is based on the Internal Revenue
Code of 1986, as amended to the date hereof (the "Code"), and existing and
proposed Treasury regulations, rulings and judicial decisions. This summary
generally applies to any Holder that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision thereof,
an estate the income of which is subject to United States federal income
taxation regardless of its source, a trust if a court within the United States
is able to exercise primary supervision of the administration of the trust and
one or more United States fiduciaries have the authority to control all
substantial decisions of the trust (a "United States person") or any other
person or entity that otherwise is subject to United States federal income
taxation on a net income basis in respect of a Note (a "United States
Holder"). The United States federal income tax consequences of the ownership
of Notes by non-United States Holders are summarized below under "--United
States Alien Holders."
This summary deals only with Notes held as capital assets within the meaning
of the Code. It does not discuss all of the tax consequences that may be
relevant to a Holder in light of such Holder's particular circumstances or to
Holders subject to special rules, such as life insurance companies, dealers in
securities or foreign currencies, persons holding Notes as a hedge against
currency risks, or Holders whose functional currency (as defined in the Code)
is not the United States dollar. Additional United States federal income tax
considerations applicable to particular Notes may be set forth in the
applicable Pricing Supplement. Persons considering the purchase of Notes
should consult their own tax advisors with regard to the application of the
United States federal income tax laws to their particular situations as well
as any tax consequences arising under the laws of any state, local or foreign
taxing jurisdiction. As used in this section, "Holder" includes the beneficial
owner of a Note.
GENERAL
As a general rule, interest paid or accrued on the Notes, as well as market
discount and original issue discount, if any, will be treated as ordinary
income to United States Holders. A United States Holder using the accrual
method of accounting for federal income tax purposes is required to include
interest paid or accrued on the Notes in ordinary income as such interest
accrues, while a United States Holder using the cash receipts and
disbursements method of accounting for federal income tax purposes must
include such interest in ordinary income when payments are received (or made
available for receipt by such Holder. Generally, principal payments on the
Notes will be treated as a return of capital to the extent of a United States
Holder's basis therein.
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In the event that any of the Notes are determined to be "applicable high
yield discount obligations," under the provisions of the Code, additional
information regarding the federal income tax consequences associated with such
Notes will be provided as part of the Pricing Supplement for such Notes.
ORIGINAL ISSUE DISCOUNT
This discussion of original issue discount is based in part on regulations
issued under the Code in January 1994 (the "OID Regulations"). The Notes,
including the Original Issue Discount Notes, may be issued with "original
issue discount." In general, in the hands of the original United States
Holder, original issue discount is the difference between the "stated
redemption price at maturity" of the Note and its "issue price." The original
issue discount with respect to a Note will be considered to be zero if it is
less than one quarter of one percentage point of the Note's stated redemption
price at maturity multiplied by the number of complete years from the date of
issue of such Note to its maturity date. In addition, special rules described
below apply to Notes having a fixed maturity date not more than one year from
the date of issue.
It is possible that Notes which are not denominated as Original Issue
Discount Notes may also be treated as issued with original issue discount. For
example, Floating Rate Notes providing for one or more qualified floating
rates of interest, a single fixed rate and one or more qualified floating
rates, a single objective rate, or a single fixed rate and a single objective
rate that is a qualified inverse floating rate will also be deemed to have
original issue discount unless such interest is unconditionally payable at
least annually during the term of the Note at a single qualified floating rate
or a single objective rate within the meaning of the OID Regulations. If a
Floating Rate Note provides for two or more qualified floating rates that can
reasonably be expected to have approximately the same values throughout the
term of the Note, the qualified floating rates together constitute a single
qualified floating rate. If interest on a debt instrument is stated at a fixed
rate for an initial period of less than one year followed by a variable rate
that is either a qualified floating rate or an objective rate for a subsequent
period, and the value of the variable rate on the issue date is intended to
approximate the fixed rate, the fixed rate and the variable rate together
constitute a single qualified floating rate or objective rate. Two or more
rates will be conclusively presumed to meet the requirements of the preceding
sentences if the values of the applicable rates on the issue date are within
1/4 of one percent of each other. Special tax considerations (including
possible original issue discount) may arise with respect to Floating Rate
Notes providing for (i) one base rate followed by one or more base rates, (ii)
a single fixed rate followed by a qualified floating rate or (iii) a Spread
Multiplier. Purchasers of Floating Rate Notes with any of such features should
carefully examine the applicable Pricing Supplement and should consult their
tax advisors with respect to such a feature since the tax consequences will
depend, in part, on the particular terms of the purchased Note. Special rules
may also apply if a Floating Rate Note is subject to a cap, floor, governor or
similar restriction that is not fixed throughout the term of the Note and is
reasonably expected as of the issue date to cause the yield on the Note to be
significantly less or more than the expected yield determined without the
restriction.
The stated redemption price at maturity of a Note generally will be equal to
the sum of all payments, whether denominated as principal or interest, to be
made with respect thereto other than "qualified stated interest payments."
Pursuant to the OID Regulations, qualified stated interest payments are
interest payments based on a single fixed rate of interest (or under certain
circumstances, a variable rate tied to an objective index) that is actually
and unconditionally payable at fixed periodic intervals of one year or less
during the entire term of the Note. In general, the issue price of a Note is
the initial offering price to the public at which a substantial amount of
Notes are sold, taking into account all Notes which are sold at substantially
the same time pursuant to a common plan of marketing.
In the case of Notes that are determined to be issued with original issue
discount ("Discount Notes"), a United States Holder must generally include the
original issue discount in ordinary gross income for federal income tax
purposes as it accrues in advance of the receipt of any cash attributable to
such income. The amount of original issue discount, if any, required to be
included in such Holder's ordinary gross income for federal
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income tax purposes in any taxable year will be computed in accordance with
Section 1272(a) of the Code and the OID Regulations. Under such Section and
the OID Regulations, original issue discount accrues on a daily basis under a
constant-yield method that takes into account the compounding of interest. The
daily portions of original issue discount are determined by allocating to each
day in any "accrual period" a pro rata portion of the original issue discount
for that period. Generally, the accrual period for the Notes is (i) in the
case of Discount Notes that pay or compound interest at regular intervals of
one year or less, each period between Interest Payment Dates (including the
period from the issue date to the first Interest Payment Date and the period
from the last Interest Payment Date to the maturity date), (ii) in the case of
interest-bearing Discount Notes that do not pay or compound interest at
regular intervals of one year or less, the longest period of not more than one
year such that all intervals consist of a whole number of accrual periods or
(iii) in the case of a Discount Note which does not bear interest, each six-
month period (or shorter period beginning on the issue date) ending in each
year on the date which corresponds to, or the date six months before, the
maturity of such Discount Note. Original issue discount for any accrual period
will be the excess of (i) the product of the Note's "adjusted issue price" at
the beginning of such accrual period and its yield to maturity over (ii) any
qualified stated interest payments for that accrual period. The adjusted issue
price of a Note at the start of any accrual period is the sum of the issue
price and the accrued original issue discount for each prior accrual period.
One effect of this method is that United States Holders generally will have to
include in income increasingly greater amounts of original issue discount in
successive accrual periods.
The original issue discount provisions described above do not apply to Notes
having a fixed maturity date not more than one year from the date of issue.
Under the OID Regulations, such a "short-term" Note will be treated as having
been issued at an original issue discount equal to the excess of the total
principal and interest payments on the Note over its issue price. An
individual or other United States Holder using the cash receipts and
disbursements method of tax accounting will not be required to include
original issue discount in ordinary gross income for federal income tax
purposes on a daily basis unless an election to do so is made. United States
Holders of such short-term Notes who report income under the accrual method of
tax accounting and certain other United States Holders, including banks,
regulated investment companies and dealers in such securities, are required to
include original issue discount in income on a daily basis pursuant to a
straight-line method, unless such United States Holders make an election to
accrue original issue discount under the constant-yield method described above
but taking into account daily compounding. In the case of United States
Holders of such short-term Notes not required and not electing to include
original issue discount in income currently, any gain realized on the sale or
maturity of such short-term Notes will be ordinary gross income to the extent
of the original issue discount accrued on a straight-line basis (or, if
elected on a constant yield method, based on daily compounding) to the date of
sale or maturity. United States Holders of such short-term Notes not required
and not electing to include the original issue discount in income currently
will be required to defer deductions for interest on indebtedness incurred or
continued to purchase or carry such short-term Notes in an amount not
exceeding the deferred income pursuant to rules similar to those described
below with respect to market discount.
A subsequent purchaser of a Note will also be required to include in such
purchaser's ordinary gross income for federal income tax purposes the original
issue discount, if any, accruing with respect to such Note, unless the price
paid equals or exceeds the Note's principal amount. If the price paid exceeds
the sum of the Note's issue price plus the aggregate amount of original issue
discount accrued with respect to the Note, but does not equal or exceed the
principal amount of the Note, the amount of original issue discount to be
accrued will be reduced in accordance with a formula set forth in Section
1272(a)(7) of the Code.
In addition to reporting interest paid on the Notes, the Company will report
annually to the Internal Revenue Service and Holders of record of the Notes
information with respect to the original issue discount accruing thereon.
OPTIONAL REDEMPTION
Under the OID Regulations, for purposes of determining original issue
discount, if the Company has an option to redeem a Note prior to its maturity,
such option will be presumed to be exercised if, by utilizing any
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date on which such Note may be redeemed as the maturity date and the amount
payable on such date in accordance with the terms of such Note (the
"redemption price") as the stated redemption price at maturity, the yield on
the Note would be lower than its yield to maturity. If such option is not in
fact exercised when presumed to be exercised, the Note would be treated solely
for original issue discount purposes as if it were redeemed, and a new Note
were issued, on the presumed exercise date for an amount equal to the
redemption price.
MARKET DISCOUNT
The Notes, whether or not issued with original issue discount, will be
subject to the "market discount rules" of Section 1276 of the Code. In
general, these rules provide that if a United States Holder of a Note
purchases the Note at a market discount (i.e., a discount from its original
issue price plus any accrued original issue discount, as described above),
unless such difference is less than a de minimis amount specified in the Code,
and thereafter recognizes gain upon a disposition, the lesser of (i) such gain
or (ii) the accrued market discount will be taxed as ordinary interest income.
Generally, the accrued market discount will be the total market discount on
the Note multiplied by a fraction, the numerator of which is the number of
days the Holder held the Note and the denominator of which is the number of
days from the date the Holder acquired the Note until its maturity date. The
Holder may elect, however, to determine accrued market discount under the
constant-yield method.
The Notes may provide that they may be redeemed in whole or in part prior to
maturity. If a Note is redeemed in part, each United States Holder of such a
Note acquired at a market discount would be required to treat the principal
payment as ordinary interest income to the extent of any accrued market
discount on that Note.
Limitations imposed by the Code which are intended to match deductions with
the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A United States Holder may elect to include
market discount in gross income as it accrues and, if such Holder makes such
an election, is exempt from this rule. The adjusted basis of a Note subject to
such election will be increased to reflect market discount included in gross
income, thereby reducing any gain or increasing any loss on a sale or taxable
disposition.
AMORTIZABLE BOND PREMIUM
In general, if a United States Holder purchases a Note at a premium (i.e.,
an amount in excess of the amount payable upon the maturity thereof), such
Holder will be considered to have purchased such Note with "amortizable bond
premium" equal to the amount of such excess. Such Holder may elect to deduct
the amortizable bond premium as it accrues under a constant-yield method that
is similar to the method used for the accrual of original issue discount over
the remaining term of the Note. Such Holder's tax basis in the Note will be
reduced by the amount of the amortizable bond premium deducted. Any such
election shall apply to all debt instruments (other than instruments the
interest on which is excludable from gross income) held by the United States
Holder at the beginning of the first taxable year to which the election
applies or thereafter acquired and is irrevocable without the consent of the
Internal Revenue Service. Bond premium on a Note held by a United States
Holder that does not elect to deduct the premium will decrease the gain or
increase the loss otherwise recognized on the disposition of the Note. United
States Holders should consult with their own tax advisers regarding special
rules that apply for determining the amount of and method for amortizing bond
premium with respect to Notes that may be redeemed in whole or in part prior
to maturity.
PURCHASE, SALE OR RETIREMENT OF NOTES
If a Note is sold or retired, the United States Holder will recognize gain
or loss equal to the difference between the amount realized from the sale or
retirement and such Holder's adjusted basis in such Note or applicable portion
thereof. Such adjusted basis generally will equal the cost of such Note to
such Holder, increased by any original issue discount included in such
Holder's ordinary gross income with respect to such Note and reduced by any
principal payments on the Note previously received by such Holder (including
any
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interest payments on the Note that are not qualified stated interest payments)
and by any amortizable bond premium deducted by such Holder. Except as
discussed above with respect to short-term obligations or market discount, or
to the extent cash is received attributable to accrued interest, any gain or
loss recognized upon a sale, exchange, retirement or other disposition of a
Note will be capital gain, if the Note is held as a capital asset.
If, however, it is determined that the Company intended on the date of issue
of the Notes to call all or any portion of the Notes prior to their maturity,
within the meaning of Section 1271(a)(2)(A) of the Code, any gain realized
upon a sale, exchange, retirement or other disposition of a Note would be
considered ordinary income, to the extent it does not exceed the unrecognized
portion of the original issue discount, if any, with respect to the Note. It
is uncertain how this rule will be applied to the Notes since the provisions
regarding sinking funds or optional redemption of the Notes, if applicable,
may be considered evidence of an intention at the time the Notes were issued
to call the Notes before maturity.
FOREIGN CURRENCY NOTES
The following discussion summarizes the principal United States federal
income tax consequences United States Holder of a Foreign Currency Note.
In general, if a payment of interest (including accrued original issue
discount) or premium with respect to a Note is made in a foreign currency, the
amount includable in the income of a Holder will be the United States dollar
value of the foreign currency payment (based on the exchange rate in effect on
the date of receipt or, in the case of original issue discount or a United
States Holder using the accrual method of tax accounting, based on the average
exchange rate in effect during the interest accrual period), regardless of
whether the payment is in fact converted to United States dollars at that
time, and such United States dollar value will be the Holder's tax basis in
the foreign currency. On the receipt of an amount attributable to original
issue discount (whether in connection with the payment of interest or the sale
or retirement of a Note), a United States Holder will recognize ordinary
income or loss equal to the difference between the United States dollar value
of the amount accrued at such average exchange rate and the United States
dollar value of such amount based on the exchange rate in effect on the date
of payment, sale or retirement. The amount of market discount currently
includable in income which accrues during any accrual period shall be
determined in the foreign currency and translated into United States dollars
on the basis of the average exchange rate in effect during such accrual
period. Upon the disposition of a Foreign Currency Note, the amount of market
discount other than the market discount currently included in income shall be
determined on the basis of the exchange rate on the date of disposition.
Amortizable bond premium on a Foreign Currency Note will be calculated in
units of applicable Specified Currency, and if the United States Holder elects
to deduct such premium, will reduce the amount of interest deemed to be
received in units of that Specified Currency. Exchange gain or loss will be
recognized with respect to amortized bond premium by treating the amount of
premium amortized with respect to any period as a return of principal, will be
based on the difference between the exchange rate on the date on which the
United States Holder acquired the Foreign Currency Note and the exchange rate
on the date such premium is treated as received, and will be ordinary income
or loss.
For taxable years beginning after March 17, 1992, a United States Holder may
elect to translate original issue discount (and, in the case of an accrual
basis United States Holder, accrued interest) into United States dollars at
the exchange rate in effect on the last day of an accrual period for the
original issue discount or interest, or in the case of an accrual period that
spans two taxable years, at the exchange rate in effect on the last day of the
taxable year. Additionally, if a payment of original issue discount or
interest is actually received within five business days of the last day of the
accrual period or taxable year, an electing United States Holder may instead
translate such original issue discount or accrued interest into United States
dollars at the exchange rate in effect on the day of actual receipt. Any such
election will apply to all debt instruments held by the United States Holder
at the beginning of the first taxable year to which the election applies or
thereafter acquired by the United States Holder and will be irrevocable
without the consent of the Internal Revenue Service.
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A United States Holder will have a tax basis in any foreign currency
received in connection with the payment of interest or the sale or retirement
of a Note equal to the United States dollar value thereof, determined at the
time of such payment, sale or retirement. Any gain or loss realized by a
United States Holder on a sale or other disposition of foreign currency
(including its exchange for United States dollars or its use to purchase
Foreign Currency Notes) will be ordinary income or loss.
A United States Holder's tax basis in a Foreign Currency Note will be the
United States dollar value of the foreign currency amount paid for such
Foreign Currency Note. A United States Holder who converts United States
dollars to a foreign currency and immediately uses that currency to purchase a
Foreign Currency Note denominated in the same currency normally will not
recognize gain or loss in connection with such conversion and purchase.
However, a United States Holder that purchases a Foreign Currency Note with
previously-owned foreign currency will recognize ordinary income or loss in an
amount equal to the difference, if any, between such Holder's tax basis in the
foreign currency and the United States dollar fair market value of the Foreign
Currency Note on the date of purchase. For purposes of determining the amount
of any gain or loss recognized by a United States Holder on the sale, exchange
or retirement of a Foreign Currency Note, the amount realized upon such sale,
exchange or retirement will be the United States dollar value of the foreign
currency received, determined on the date of sale, exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of a Foreign
Currency Note which is attributable to fluctuations in currency exchange rates
will be ordinary income or loss. Gain or loss attributable to fluctuations in
exchange rates will be calculated by multiplying the original purchase price
paid by a United States Holder (expressed in the relevant foreign currency) by
the change in the relevant exchange rate (expressed in dollars per unit of the
relevant foreign currency) between the date on which the Holder acquired the
Foreign Currency Note and the date on which the Holder received payment in
respect of the sale, exchange or retirement of the Foreign Currency Note. Such
foreign currency gain or loss will be recognized only to the extent of the
total gain or loss realized by the United States Holder on the sale, exchange
or retirement of the Foreign Currency Note. Any gain or loss recognized by
such a Holder in excess of such foreign currency gain or loss will, as
described above, generally be capital gain or loss.
A United States Holder who receives United States dollar payments on the
sale, exchange or retirement of a Foreign Currency Note may have a different
amount realized for United States federal income tax purposes than the amount
it receives in cash, because the relevant exchange rates required to be used
for United States federal income tax purposes may not be the same as the
exchange rates used to convert foreign currency payments into United States
dollar payments.
Potential investors in Foreign Currency Notes should consult their own tax
advisors with regard to amortizable bond premium and market discount on a
Foreign Currency Note, the ownership of Foreign Currency Notes that are also
Original Issue Discount Notes, as well as any consequences arising under the
laws of any other taxing jurisdictions.
UNITED STATES ALIEN HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below:
(i) interest and principal payments, including premium and original issue
discount on an Original Issue Discount Note, made by the Company or any of
its paying agents on a Note to any Holder which is a corporation,
individual, fiduciary or partnership that is, as to the United States, a
foreign corporation, a nonresident alien individual or a nonresident
fiduciary of a foreign estate or trust (a "United States Alien Holder")
will not be subject to United States withholding tax, provided that in the
case of original issue discount or interest, (a) the Holder does not
actually or constructively own 10% or more of the total combined voting
power of all classes of the Company's stock entitled to vote, (b) the
Holder is not a controlled foreign corporation that is related to the
Company through stock ownership, (c) the Holder is not
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a bank receiving interest described in Section 881(c)(3)(A) of the Code,
and (d) either (1) the beneficial owner of the Note certifies to the
Company or its agents, under penalties of perjury, that it is not a United
States person (as defined above) and provides its name and address or (2) a
securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business
(a "financial institution") and holds the Note on behalf of the beneficial
owner certifies to the Company or its agents, under penalties of perjury,
that such statement has been received from the beneficial owner by it or by
a financial institution between it and the beneficial owner and furnishes
the payor with a copy thereof;
(ii) a United States Alien Holder will not be subject to the United
States federal income tax on gain realized on the sale, exchange or
retirement of a Note if such gain is not effectively connected with the
conduct of a United States trade or business and, in the case of a United
States Alien Holder who is an individual, such Holder is not present in the
United States for a total of 183 days or more during the taxable year in
which such gain is realized; and
(iii) a Note held by an individual who at the time of death is not a
citizen or resident of the United States (including its territories,
possessions or other areas subject to its jurisdiction, such as the
commonwealth of Puerto Rico) will not be subject to United States federal
estate tax as a result of such individual's death if the individual does
not actually or constructively own 10% or more of the total combined voting
power of all classes of the Company's stock entitled to vote and, at the
time of the individual's death, payments with respect to the Note would not
have been effectively connected with the conduct of a trade or business by
the individual in the United States.
Potential investors in the Notes that are non-United States Holders should
consult their own tax advisors with regard to the United States federal income
tax consequences of ownership of the Notes, as well as any consequences
arising under the laws of any other taxing jurisdictions.
WITHHOLDING TAXES AND REPORTING REQUIREMENTS
Interest payments, accrual of original issue discount and payments of
principal and any premium with respect to a Note will be reported to the
extent required by the Code to the Holders and the Internal Revenue Service.
Such amounts will ordinarily not be subject to withholding of United States
federal income tax. However, a backup withholding tax at a rate of 31% will
apply to such payments if a United States Holder fails to supply the Company
or its agent with such Holder's taxpayer identification number or to report
all interest and dividends required to be shown on its federal income tax
returns. Backup withholding and information reporting generally do not apply
to any such payments made to certain "exempt recipients," such as
corporations. The amount of original issue discount required to be reported by
the Company may not be equal to the amount of original issue discount required
to be reported as taxable income by a United States Holder of Discount Notes.
With respect to non-United States Holders, backup withholding and
information reporting will not apply to interest and principal payments,
including original issue discount, made by the Company or any of its paying
agents on a Note if the Company or such paying agents, as the case may be,
receive the certification described in paragraph (i)(d) under "--United States
Alien Holders" above and do not have actual knowledge that the payee is a
United States person, and in the case of principal payments, receive
certification from the payee as to the absence of the conditions set forth in
paragraph (ii) under "--United States Alien Holders" above.
Any amounts withheld under the backup withholding rules from a payment to a
Holder will be allowed as a refund or a credit against such Holder's United
States federal income tax liability, provided that the required information is
provided to the Internal Revenue Service.
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PLAN OF DISTRIBUTION OF NOTES
The Company has entered into a Distribution Agreement with Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse First
Boston Corporation, Lehman Brothers Inc. and Morgan Stanley & Co.
Incorporated, and may enter into similar agreements with other agents
(collectively, the "Agents"). Under the terms of such Distribution Agreement
and any such other similar agreements, the Notes will be offered on a
continuing basis by the Company through the Agents, each of which has agreed
or will have agreed to use its reasonable efforts to solicit purchases of the
Notes. The Company will pay each Agent a commission of from .125% to .925% of
the principal amount of each Note, depending on its maturity date and the
rating of the Company's debt securities, sold through such Agent. The Company
will have the sole right to accept offers to purchase Notes and may reject any
offer, in whole or in part. Each Agent shall have the right to reject any
offer to purchase Notes received by it, in whole or in part. The Company will
also have the right to sell Notes to any Agent, acting as principal, at a
discount equivalent to the commission set forth on the cover page hereof in
the case of any such principal transaction in which no other discount is
agreed, for resale to one or more investors or other purchasers from time to
time in one or more transactions, including transactions at a fixed price or
at varying prices related to prevailing market prices at the time of such
resale, as determined by such Agent. After the initial public offering of
Notes to be resold to investors and other purchasers at a fixed public
offering price, the public offering price and discount may be changed. In
addition, such Agent may offer the Notes it has purchased as principal to
other dealers. Such Agent may sell Notes to any dealer at a discount and,
unless otherwise specified in the applicable Pricing Supplement, such discount
allowed to any dealer will not be in excess of 100% of the discount to be
received by such Agent.
The Notes may also be sold by the Company directly to investors in those
jurisdictions in which the Company is permitted to do so. No commission will
be paid on Notes sold directly by the Company.
Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes will be required to be made in funds immediately
available in The City of New York.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Act"). The Company has agreed or will have agreed
to indemnify the Agents against and contribute toward certain liabilities,
including liabilities under the Act. The Company also has agreed or will have
agreed to reimburse the Agents for certain expenses in connection with the
offering of the Notes.
Each of the Agents may from time to time purchase and sell Notes in the
secondary market, but will not be obligated to do so, and there can be no
assurance that there will be a secondary market for the Notes or liquidity in
the secondary market if one develops. From time to time, each of the Agents
may make a market in the Notes.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of Notes. If the Agent creates or the Agents
create, as the case may be, a short position in Notes, i.e., if it sells or
they sell Notes in an aggregate principal amount exceeding that set forth in
the applicable Pricing Supplement, such Agent(s) may reduce that short
position by purchasing Notes in the open market. In general, purchases of
Notes for the purpose of stabilization or to reduce a short position could
cause the price of Notes to be higher than it might be in the absence of such
purchases.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described in the immediately preceding paragraph may have on the
price of Notes. In addition, neither the Company nor any of the Agents makes
any representation that the Agents will engage in any such transactions or
that such transactions, once commenced, will not be discontinued without
notice.
The Company has authorized or will authorize the Agents to solicit offers by
certain institutions to purchase Notes pursuant to delayed delivery contracts.
See "Plan of Distribution" in the Prospectus.
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PROSPECTUS
$223,350,000
GREEN TREE FINANCIAL CORPORATION
DEBT SECURITIES
----------------
Green Tree Financial Corporation (the "Company") may offer from time to time
its debt securities (the "Debt Securities") in one or more series in an
aggregate principal amount not to exceed $223,350,000, or its equivalent
(based on the applicable exchange rate at the time of the offering) in such
foreign currency or units of two or more foreign currencies as may be
designated by the Company at the time of the offering, on terms to be
determined at the time of sale. The specific designation, aggregate principal
amount, purchase price, maturity, denominations (which may be in United States
dollars, in any other currency or in a composite currency), any interest rate
or rates (which may be fixed or variable) and time of payment of any interest,
any redemption or extension terms, any terms for sinking fund payments and
other specific terms of the Debt Securities will be set forth in one or more
supplements to this Prospectus (each a "Prospectus Supplement"). As used
herein, the term "Debt Securities" shall include securities denominated in
United States dollars or, if so specified in the applicable Prospectus
Supplement, in any other currency or currency units or in amounts determined
by reference to an index.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR CERTAIN
FACTORS RELATED TO THE OFFERING OF DEBT SECURITIES.
The Debt Securities may be sold to or through underwriters, dealers or
agents for public offering or directly to other purchasers pursuant to the
terms of the offering fixed at the time of sale. See "Plan of Distribution."
Any underwriters, dealers or agents participating in an offering of Securities
will be named in the accompanying Prospectus Supplement or Prospectus
Supplements. Such underwriters, dealers or agents may be deemed "underwriters"
within the meaning of the Securities Act of 1933.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is September 23, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located at
Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies
of such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such materials may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov. The Company's
Common Stock is listed on the New York Stock Exchange and on the Pacific Stock
Exchange. Reports, proxy statements and other information concerning the
Company can also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005, and the Pacific Stock Exchange,
Inc., 301 Pine Street, San Francisco, California 94104.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby
made to the Registration Statement, and exhibits thereto, which may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies thereof may be obtained from the
Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company which have been filed with the
Commission are incorporated by reference in this Prospectus:
(a) Annual Report on Form 10-K for the year ended December 31, 1996; and
(b) Quarterly Reports on Form 10-Q for the periods ended March 31, 1997 and
June 30, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, subsequent to the date of this Prospectus and prior
to the termination of the offering of the applicable Debt Securities shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing of such documents. Any statement
contained herein or in a document all or any portion of which is incorporated
or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(other than certain exhibits to such documents). Requests for such copies
should be directed to John Dolphin, Vice President and Director of Investor
Relations, 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota
55102-1639, telephone number (612) 293-3400.
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement stated in United States dollars ("$" or "dollars").
2
<PAGE>
GREEN TREE FINANCIAL CORPORATION
Green Tree Financial Corporation (the "Company") is a diversified financial
services company that provides financing for manufactured homes, home equity,
home improvements, consumer products and equipment and provides consumer and
commercial revolving credit. The Company's insurance agencies market physical
damage and term mortgage life insurance and other credit protection relating
to the customers' contracts it services. The Company is the largest servicer
of manufactured housing contracts in the United States. Through its principal
offices in Saint Paul, Minnesota and service centers throughout the United
States, the Company serves all 50 states.
The Company pools and securitizes substantially all of the contracts it
originates, retaining the servicing on the contracts. Such pools are
structured into asset-backed securities which are sold in the public
securities markets. In servicing the contracts, the Company collects payments
from the borrower and remits principal and interest payments to the holder of
the contract or investor certificate backed by the contracts.
The Company was originally incorporated under the laws of the State of
Minnesota in 1975. In 1995 the Company reincorporated under the laws of the
State of Delaware. Green Tree Financial Corporation's principal executive
offices are located at 1100 Landmark Towers, 345 St. Peter Street, Saint Paul,
Minnesota 55102-1639, and its telephone number is (612) 293-3400. Unless the
context otherwise requires, the "Company" means Green Tree Financial
Corporation and its subsidiaries.
RISK FACTORS
In addition to the other information set forth in this Prospectus the
following factors should be considered carefully in evaluating an investment
in the Debt Securities offered by this Prospectus.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires continued access to the capital markets to support its
purchase and origination of contracts and to sell asset-backed securities. To
satisfy its financial needs, the Company relies on long-term and short-term
debt, cash flow generated from the sale of contracts, internally generated
funds from operations and, when appropriate, credit enhancement provided
through letters of credit and surety bonds issued by institutions. Any
impediments to the Company's ability to access the capital markets, including
significant changes in market interest rates, general economic conditions or
the perception in the capital markets of the Company's financial condition or
prospects, could have a material adverse effect on the Company's financial
condition and results of operations.
CREDIT AND PREPAYMENT RISK
The Company retains substantial amounts of risk of default on the loan
portfolios that it sells. The Company's interest only securities are
subordinated to the rights of investor/owners of the contracts. In addition,
under certain securitized sale structures corporate guarantees, bank letters
of credit, surety bonds that provide limited recourse to the Company, cash
deposits or other equivalent collateral have been provided by the Company as
additional forms of credit enhancement. The Company believes that the
valuation of its interest only securities is adequate in providing for
expected future credit losses consistent with current economic conditions as
well as historical default and loss experiences of the Company's entire loan
portfolio.
The Company's expectations used in valuing its interest only securities are
subject to volatility that could materially affect operating results.
Prepayments resulting from obligor mobility, general and regional economic
conditions, competitive pressures and prevailing interest rates as well as
actual losses incurred may vary from the performance projected by the Company.
The Company recognizes the impact of valuation differences considered
permanent by adjustments to earnings immediately, while temporary differences
are reflected through adjustments to equity.
3
<PAGE>
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds from the sale of the Debt Securities will be used for general
corporate purposes, including repayment or reduction of outstanding short-term
or other indebtedness of the Company, potential expansion into complementary
lines of business and possible acquisitions. Specific allocations of the
proceeds to such purposes may not have been made at the date of the applicable
Prospectus Supplement, although management of the Company will have determined
that funds should be borrowed at that time in anticipation of future funding
requirements. The precise amount and timing of the application of such
proceeds will depend upon the funding requirements of the Company and the
availability and cost of other funds. Pending such application, such net
proceeds may be temporarily invested in short-term interest-bearing
securities.
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
--------- ------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........... 5.89 8.67 7.83 7.90 7.98 4.81 3.55
</TABLE>
For the purposes of compiling these ratios, earnings consist of earnings
before income taxes plus fixed charges. Fixed charges consist of interest
expense and the interest portion of rent expense.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture (the "Indenture"),
dated as of September 1, 1992, between the Company and First Trust National
Association, as Trustee (the "Trustee"), as described in the Prospectus
Supplement relating to the Notes being offered thereby. A copy of the form of
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The following brief summary of certain provisions
of the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the
Indenture, and is further qualified by any description contained in the
applicable Prospectus Supplement or Prospectus Supplements. Certain terms
capitalized and not otherwise defined herein are defined in the Indenture.
Wherever particular sections or defined terms of the Indenture are referred
to, such sections or defined terms are incorporated herein by reference.
The Debt Securities may be issued from time to time in one or more series.
The terms of each series of Debt Securities will be established by or pursuant
to a resolution of the Board of Directors of the Company (a "Board
Resolution") and set forth or determined in the manner provided in an
Officers' Certificate or by a supplemental indenture. The particular terms of
the Debt Securities offered pursuant to any Prospectus Supplement or
Prospectus Supplements will be described in such Prospectus Supplement or
Prospectus Supplements.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder nor the amount of other debt which
may be issued by the Company. The Debt Securities will be unsecured
obligations of the Company and will rank on a parity with all other unsecured
and unsubordinated indebtedness of the Company.
Unless otherwise indicated in the applicable Prospectus Supplement or
Prospectus Supplements, the Debt Securities of any series will be issued only
in fully registered form in denominations of $1,000 or any amount in excess
thereof which is an integral multiple of $1,000. (Section 302) Debt Securities
may be issuable in the form of one or more Global Securities, as described
below under "--Global Securities." A Global Security will be issued in a
denomination equal to the aggregate principal amount of outstanding Debt
Securities of the series
4
<PAGE>
represented by such Global Security. The Debt Securities (other than those
issued in the form of a Global Security) are exchangeable or transferable
without charge therefor, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith and require the holders to furnish appropriate endorsements and
transfer documents. (Section 305)
Debt Securities may be issued as Original Issue Discount Debt Securities to
be sold at a substantial discount below their principal amount. Special
federal income tax and other considerations applicable thereto and special
federal tax and other considerations applicable to any Debt Securities which
are denominated in a currency or currency unit other than United States
dollars will be described in the Prospectus Supplement or Prospectus
Supplements relating thereto.
Unless otherwise indicated in the applicable Prospectus Supplement or
Prospectus Supplements, principal of and any premium and interest on the Debt
Securities will be payable, and the transfer of the Debt Securities will be
registrable, at the principal corporate trust office of the Trustee. In
addition, unless otherwise provided in the applicable Prospectus Supplement or
Prospectus Supplements and in the case of Global Securities, payment of
interest may be made at the option of the Company by check mailed to the
address of the person entitled thereto as it appears on the Security Register.
(Sections 301, 305, 1001 and 1002)
The applicable Prospectus Supplement or Prospectus Supplements will describe
the terms of the Debt Securities offered thereby, including the following: (1)
the title of the offered Debt Securities; (2) any limit on the aggregate
principal amount of the offered Debt Securities; (3) the price or prices
(expressed as a percentage of the aggregate principal amount thereof) at which
the offered Debt Securities will be issued; (4) the date or dates on which the
offered Debt Securities will mature and any rights of extension; (5) the rate
or rates, if any (which may be fixed or variable), per annum at which the
offered Debt Securities will bear interest, if any, or the formula pursuant to
which such rate or rates shall be determined, and the date from which any such
interest will accrue; (6) the dates on which any such interest on the offered
Debt Securities will be payable and the regular record dates therefor; (7) any
mandatory or optional sinking fund or analogous provisions; (8) the period or
periods, if any, within which and the price or prices at which the offered
Debt Securities may be redeemed, pursuant to any redemption provisions, at the
option of the Company or of the holder thereof and other detailed terms of any
such optional redemption provision; (9) if the Debt Securities are Original
Issue Discount Debt Securities, the amount (or the method of calculating such
amount) of the principal payable upon acceleration of such Debt Securities
following an Event of Default; (10) any provisions enabling the Company or the
Holders of Debt Securities to elect to make or receive payments of principal
of and any premium and interest on the Debt Securities in a coin or currency
other than that in which the Debt Securities are stated to be payable; (11)
the manner in which the amount of payments of principal of and any premium or
interest on the Debt Securities is to be determined if such determination is
to be made with reference to an index; (12) the currency or currency units,
including European Currency Units ("ECUs") or other composite currencies, for
the payment of principal of and any premium and interest payable on the
offered Debt Securities, if other than United States dollars; (13) the place
or places where the principal of and any premium and interest on the offered
Debt Securities will be payable; (14) any other event or events of default
applicable with respect to the offered Debt Securities in addition to or in
lieu of those described below under "--Events of Default"; (15) the
denominations in which any offered Debt Securities will be issuable, if other
than denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000; (16) whether such Debt Securities are to be
issued in whole or in part in the form of one or more Global Securities and,
if so, the identity of the Depositary for such Global Security or Securities
and the circumstances under which any such Global Security may be exchanged
for Securities registered in the name of, and any transfer of such Global
Security may be registered to, a Person other than such Depositary or its
nominee; and (17) any other terms of the offered Debt Securities not
inconsistent with the provisions of the Indenture.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on
behalf of, a Depositary identified in the applicable Prospectus
5
<PAGE>
Supplement or Prospectus Supplements. Unless otherwise indicated in the
applicable Prospectus Supplement or Prospectus Supplements, Global Securities
will be issued in registered form. (Section 305) The specific terms of the
depositary arrangement with respect to a series of Debt Securities will be
described in the applicable Prospectus Supplement or Prospectus Supplements.
ABSENCE OF RESTRICTIVE COVENANTS AND EVENT RISK PROVISIONS
Except as may be otherwise specified in the applicable Prospectus
Supplement, the Indenture does not contain any provision which restricts the
Company from incurring or becoming liable with respect to any indebtedness or
other obligations, whether secured or unsecured, or from paying dividends or
making other distributions on its capital stock or purchasing or redeeming its
capital stock. Except as may be otherwise specified in the applicable
Prospectus Supplement, the Indenture will not contain any financial ratios, or
specified levels of net worth or liquidity to which the Company must adhere,
or restrict the Company from creating any liens on its property for any
purpose. In addition, except as may be otherwise specified in the applicable
Prospectus Supplement, the Indenture does not contain covenants specifically
designed to protect Holders in the event of a highly leveraged transaction
involving the Company.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default"
with respect to the Debt Securities of any series issued pursuant to such
Indenture, unless otherwise provided with respect to such series: (1) failure
to pay any interest on any Debt Security of that series when due and payable,
continued for 30 days; (2) failure to pay principal of or any premium on any
Debt Security of that series when due and payable; (3) failure to deposit any
sinking fund payment, when due, in respect of any Debt Security of that
series; (4) failure to perform any other covenant of the Company in the
Indenture (other than a covenant included in the Indenture solely for the
benefit of a series of Debt Securities other than that series), continued for
60 days after written notice as provided in the Indenture; (5) the occurrence
of an event of default under any mortgage, indenture, loan agreement or other
instrument under which the Company has or shall hereafter have outstanding
indebtedness for borrowed money in excess of $1,000,000 which has become due
and payable by its terms and has not been paid or whose maturity has been
accelerated and such payment default has not been cured or such acceleration
has not been annulled within 30 days after written notice as provided in the
Indenture; (6) certain events in bankruptcy, insolvency or reorganization
involving the Company; and (7) any other Event of Default provided with
respect to Debt Securities of that series. (Section 501)
If an Event of Default with respect to any series of Debt Securities
Outstanding under the Indenture occurs and is continuing, then either the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series by notice as provided in the
Indenture may declare the principal amount (or, if any of the Debt Securities
of that series are Original Issue Discount Debt Securities, such lesser
portion of the principal amount of such Debt Securities as may be specified in
the terms thereof) of all of the Debt Securities of that series to be due and
payable immediately. At any time after a declaration of acceleration with
respect to Debt Securities of any series has been made, but before a judgment
or decree for payment of money has been obtained by the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Debt Securities
of that series may, under certain circumstances, rescind and annul such
acceleration. (Section 502)
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Sections 601, 603) Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debt Securities of that series. (Section 512)
6
<PAGE>
The Company is required to furnish to each Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 704)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (1) change the Stated Maturity of
the principal of, or any installment of principal of or interest on, any Debt
Security, (2) reduce the principal amount of, or premium or interest on, any
Debt Security, (3) change any obligation of the Company to pay additional
amounts, (4) reduce the amount of principal of an Original Issue Discount Debt
Security due and payable upon acceleration of the Maturity thereof, (5) change
the place of payment where or coin or currency in which the principal of, or
any premium or interest on, any Debt Security is payable, (6) impair the right
to institute suit for the enforcement of any payment on or with respect to any
Debt Security, (7) reduce the percentage in principal amount of Outstanding
Debt Securities of any series, the consent of the Holders of which is required
for modification or amendment of the Indenture or for waiver of compliance
with certain provisions of the Indenture or for waiver of certain defaults or
(8) modify any of the above provisions. (Section 902)
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Debt Securities of each series may, on behalf of the Holders of
all Debt Securities of that series, waive, insofar as that series is
concerned, compliance by the Company with certain restrictive provisions of
the Indenture. (Section 1007) The Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
may, on behalf of the Holders of all Debt Securities of that series, waive any
past default under the Indenture with respect to Debt Securities of that
series, except a default (1) in the payment of principal of, or any premium or
interest on, any Debt Security of such series, or (2) in respect of a covenant
or provision of the Indenture which cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of such series
affected. (Section 513)
The Indenture provides that, in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (1) the principal amount of an Original Issue Discount Debt
Security that will be deemed to be Outstanding will be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof to such date, and (2)
the principal amount of a Debt Security denominated in a foreign currency or
currency unit that will be deemed to be Outstanding will be the United States
dollar equivalent, determined as of the date of original issuance of such Debt
Security, of the principal amount of such Debt Security (or, in the case of an
Original Issue Discount Debt Security, the United States dollar equivalent,
determined as of the date of original issuance of such Debt Security, of the
amount determined as provided in (1) above). (Section 101)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Debt Securities under the Indenture, may consolidate or merge with or into, or
convey, transfer or lease its properties and assets substantially as an
entirety to, any Person which is a corporation, partnership or trust organized
and validly existing under the laws of any domestic jurisdiction, provided
that (1) any successor Person is a domestic corporation and assumes by
supplemental indenture the Company's obligations on the Debt Securities and
under the Indenture and (2) after giving effect to the transaction no Event of
Default, and no event which, after notice or lapse of time, would become an
Event of Default, shall have occurred and be continuing under the Indenture.
(Section 801)
7
<PAGE>
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt Securities to investors directly or
through agents. The applicable Prospectus Supplement or Prospectus Supplements
will set forth the terms of the offering of the Debt Securities, including the
name or names of any agents, underwriters or dealers, the purchase price of
the Debt Securities and the proceeds to be received by the Company from such
sale, any underwriting discounts and other items constituting underwriters'
compensation and any discounts and commissions allowed or reallowed or paid to
dealers or agents. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers or agents may be changed
from time to time.
In connection with the sale of Debt Securities, underwriters or agents may
be deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Debt Securities for whom they may act as agent. Underwriters may
sell Debt Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent. Underwriters, dealers and agents participating in the distribution of
Debt Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Debt Securities may be deemed to be underwriting discounts and commissions,
under the Securities Act of 1933, as amended. Such underwriters, dealers and
agents may be entitled under agreements which may be entered into by the
Company to indemnification by the Company against and contribution toward
certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
The Debt Securities may be distributed in one or more transactions from time
to time at a fixed price or prices, which may be changed, or from time to time
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Company also may offer
and sell the Debt Securities in exchange for one or more of its outstanding
issues of debt or convertible debt securities.
If so indicated in the applicable Prospectus Supplement or Prospectus
Supplements, the Company will authorize dealers or other persons acting as the
Company's agents to solicit offers by certain institutions to purchase Debt
Securities from the Company at the public offering price set forth in the
applicable Prospectus Supplement or Prospectus Supplements pursuant to delayed
delivery contracts ("Contracts") providing for payment and delivery on the
date or dates stated in the applicable Prospectus Supplement or Prospectus
Supplements. Each Contract will be for an amount not less than, and the
aggregate amount of Debt Securities sold pursuant to Contracts shall be not
less nor more than, the respective amounts stated in the applicable Prospectus
Supplement or Prospectus Supplements. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but will in all cases be subject to the
approval of the Company. The obligations of any purchaser under any Contract
will not be subject to any conditions except (1) the purchase by an
institution of the Debt Securities covered by its Contract shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the
United States to which such institution is subject and (2) if Debt Securities
are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of such Debt Securities less the
principal amount thereof covered by Contracts.
The Debt Securities will be a new issue of securities with no established
trading market. Any underwriters or agents to or through whom Debt Securities
are sold by the Company for public offering and sale may make a market in such
Debt Securities, but such underwriters and agents will not be obligated to do
so and may
8
<PAGE>
discontinue any market-making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Debt Securities.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the accompanying Prospectus
Supplement.
In connection with any offering of the Debt Securities, the underwriters or
agents of such Debt Securities may engage in transactions that stabilize,
maintain or otherwise affect the price of such Debt Securities during and
after the offering. Specifically, the underwriters or agents of such Debt
Securities may over-allot or otherwise create a short position in such Debt
Securities for their own account by selling more Debt Securities than have
been sold to them by the Company. Such underwriters or agents may elect to
cover any such short position by purchasing Debt Securities in the open
market. In addition, such underwriters or agents may stabilize or maintain the
price of such Debt Securities by bidding for or purchasing Debt Securities in
the open market and may impose penalty bids, under which selling concessions
allowed to syndicate members or other broker-dealers participating in the
offering are reclaimed if Debt Securities previously distributed in the
offering are repurchased in connection with stabilization transactions or
otherwise. The effect of these transactions may be to stabilize or maintain
the market price of the Debt Securities at a level above that which might
otherwise prevail in the open market. The imposition of a penalty bid may also
affect the price of such Debt Securities to the extent that it discourages
resales thereof. No representation is made as to the magnitude or effect of
any stabilization or other transactions. Such transactions, if commenced, may
be discontinued at any time.
Certain of the underwriters, dealers and/or agents and their associates may
be customers of, engage in transactions with and perform services for the
Company, including its subsidiaries, in the ordinary course of business.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1996
and 1995 and for each of the years in the three-year period ended December 31,
1996 incorporated by reference herein have been audited by KPMG Peat Marwick
LLP, independent accountants, as stated in their report given upon their
authority as experts in accounting and auditing.
VALIDITY OF DEBT SECURITIES
The validity of the Debt Securities will be passed upon for the Company by
Dorsey & Whitney LLP, Minneapolis, Minnesota, and, unless otherwise indicated
in the applicable Prospectus Supplement or Prospectus Supplements, for any
underwriters or agents by Brown & Wood llp, New York, New York. The opinions
of Dorsey & Whitney LLP and Brown & Wood llp are conditioned upon, and subject
to certain assumptions regarding, future action required to be taken by the
Company and the Trustee in connection with the issuance and sale of any
particular Debt Security, the specific terms of Debt Securities and other
matters which may affect the validity of Debt Securities but which cannot be
ascertained on the date of such opinions.
9
<PAGE>
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT, A PRICING SUPPLEMENT OR THE PROSPEC-
TUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RE-
LIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT. THIS PROSPEC-
TUS SUPPLEMENT, A PRICING SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OF-
FERED HEREBY AND THEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UN-
LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPEC-
TUS SUPPLEMENT, A PRICING SUPPLEMENT OR THE PROSPECTUS AT ANY TIME DOES NOT
IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSE-
QUENT TO THEIR RESPECTIVE DATES.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Description of Notes....................................................... S-2
Foreign Currency Risks..................................................... S-13
United States Taxation..................................................... S-14
Plan of Distribution of Notes.............................................. S-21
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Green Tree Financial Corporation........................................... 3
Risk Factors............................................................... 3
Use of Proceeds............................................................ 4
Ratios of Earnings to Fixed Charges........................................ 4
Description of Debt Securities............................................. 4
Plan of Distribution....................................................... 8
Experts.................................................................... 9
Validity of Debt Securities................................................ 9
</TABLE>
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$223,350,000
LOGO
MEDIUM-TERM NOTES,
SERIES A
DUE NINE MONTHS
OR MORE FROM
DATE OF ISSUE
-----------------
PROSPECTUS SUPPLEMENT
-----------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
SEPTEMBER 23, 1997
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