PROSPECTUS SUPPLEMENT
(To Prospectus dated June 2, 1997)
U.S.$7,000,000,000
Morgan Stanley, Dean Witter, Discover & Co.
GLOBAL MEDIUM-TERM NOTES, SERIES D AND SERIES E
GLOBAL UNITS, SERIES D AND SERIES E
------------
Due More Than Nine Months from Date of Issue
------------
Morgan Stanley, Dean Witter, Discover & Co. (the "Company") may
offer from time to time, either alone or as part of a Unit, its Global
Medium-Term Notes, which are issuable in one or more series and may be offered
and sold in the United States, outside the United States or both in and
outside the United States simultaneously. Global Medium-Term Notes issued as
part of a Unit will be issued in conjunction with one or more Universal
Warrants, Purchase Contracts or any combination thereof. See "Description of
Units." The Global Medium-Term Notes, Series D (the "Series D Notes"), the
Global Medium-Term Notes, Series E (the "Series E Notes" and, together with
the Series D Notes, the "Notes"), the Global Units, Series D, each consisting
of one or more Series D Notes and one or more Universal Warrants, Purchase
Contracts or any combination thereof ("Series D Units"), and the Global Units,
Series E, each consisting of one or more Series E Notes and one or more
Universal Warrants, Purchase Contracts or any combination thereof ("Series E
Units" and, together with the Series D Units, the "Units," and the Units
together with the Notes, the "Program Securities"), offered hereby are offered
outside the United States at an aggregate initial offering price of up to
U.S.$7,000,000,000, or the equivalent thereof in other currencies, including
composite currencies such as the ECU (the "Specified Currency"). See
"Description of Notes -- Payment Currency." Such aggregate offering price is
subject to reduction as a result of the sale by the Company of certain other
Debt Securities, including the sale of the Company's Global Medium-Term Notes,
Series C, and Global Units, Series C, primarily in the United States, and
certain Warrants, Preferred Stock, Purchase Contracts and Units. See "Plan of
Distribution."
The Notes may be issued as Senior Indebtedness or
Subordinated Indebtedness. Subordinated Indebtedness will be subordinate
to all Senior Indebtedness. See "Description of Debt Securities --
Subordinated Debt" in the accompanying Prospectus. The interest rate on
each Note will be either a fixed rate established by the Company at the
date of issue of such Note, which may be zero in the case of certain
Original Issue Discount Notes, or a floating rate as set forth therein and
specified in the applicable Pricing Supplement. Such interest rates may be
determined by reference to the prices of certain securities or commodities.
A Fixed Rate Note may pay a level amount in respect of both interest and
principal amortized over the life of the Note (an "Amortizing Note"). Each
Fixed Rate Note will mature on any day more than nine months from the date
of issue, as set forth in the applicable Pricing Supplement. Each Floating
Rate Note will mature on an Interest Payment Date more than nine months
from the date of issue, as set forth in the applicable Pricing Supplement.
The Notes may be redeemed by the Company prior to the maturity (including
upon the occurrence of certain events involving United States taxation or
information reporting requirements) and will be issued in fully registered
form, in bearer form, or in any combination of such registered and bearer
forms. See "Description of Notes." Unless otherwise specified in the
applicable Pricing Supplement, the Notes will be issued in denominations of
U.S.$1,000 (or, in the case of Notes not denominated in U.S. dollars, the
equivalent thereof in the Specified Currency, rounded to the nearest 1,000
units of the Specified Currency) or any amount in excess thereof which is
an integral multiple of U.S.$1,000 (or, in the case of Notes not
denominated in U.S. dollars, 1,000 units of the Specified Currency). Any
terms relating to Notes being denominated in a Specified Currency other
than U.S. dollars will be as set forth in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing
Supplement, payments on the Notes will be increased by the amount of any
deduction for United States withholding taxes to the extent described under
"Description of Notes -- Payment of Additional Amounts."
Universal Warrants included in Units will entitle the
holders thereof to purchase or sell (a) securities of an entity
unaffiliated with the Company, a basket of such securities, an index or
indices of such securities or any combination of the above, (b) currencies
or composite currencies or (c) commodities. The Company may satisfy its
obligations, if any, with respect to any Universal Warrants by delivering
the underlying securities, currencies or commodities or, in the case of
underlying securities or commodities, the cash value thereof, as set forth
in the applicable Pricing Supplement. A Universal Warrant issued as part
of a Unit may not be separated from the other securities comprising such
Unit prior to such Warrant's expiration date unless otherwise specified in
the applicable Pricing Supplement.
Purchase Contracts included in Units will require the
holders thereof to purchase or sell (a) securities of an entity
unaffiliated with the Company, a basket of such securities, an index or
indices of such securities or any combination of the above, (b) currencies
or composite currencies or (c) commodities. A Purchase Contract issued as
part of a Unit may not be separated from the other securities comprising
such Unit prior to such Purchase Contract's settlement date, unless
otherwise specified in the applicable Pricing Supplement. The applicable
Pricing Supplement will also specify the methods by which the holders may
purchase or sell such securities, currencies or commodities and any
acceleration, cancellation or termination provisions or other provisions
relating to the settlement of a Purchase Contract.
Application has been made to the London Stock Exchange
Limited (the "London Stock Exchange") for Series D Notes only, up to an
aggregate principal amount outstanding at any time of up to
U.S.$7,000,000,000 offered hereby during the twelve months after the date
of this Prospectus Supplement, to be admitted to the Official List of the
London Stock Exchange. The Company may make application from time to time
for issues of Series D Units to be admitted to the Official List of the
London Stock Exchange, in connection with which further listing particulars
will be produced. Application will, in certain circumstances as described
herein, be made to list Series D Notes and Series D Units on the Bourse de
Paris (the "Paris Bourse"). For the sole purpose of listing Series D Notes
and Series D Units on the Paris Bourse, this Prospectus Supplement and the
accompanying Prospectus have been submitted to the clearance procedures of
the Commission des Operations de Bourse (the "COB") and have been
registered by the COB under no. P97-198 on June 13, 1997. The Series E
Notes and Series E Units will not be listed on any stock exchange.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
<TABLE>
<S> <C> <C> <C>
Price to Agent's Proceeds to
Public (1) Commission (2) Company (2)(3)
---------- -------------- --------------
Per Note or Unit.... 100.000% .125% - .750% 99.875% - 99.250%
Total(4)............ U.S.$7,000,000,000 U.S.$8,750,000 -U.S.$52,500,000 U.S.$6,991,250,000 - U.S.$6,947,500,000
</TABLE>
- ----------
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes
will be sold at 100% of their principal amount, and Units will be sold
at 100% of the principal amount of the Notes included therein.
(2) Unless otherwise specified in the applicable Pricing Supplement, the
commission payable to an Agent for each Program Security sold through
such Agent will range from .125% to .750% of the Price to Public of
such Program Security; provided, however, that commissions with respect
to Program Securities having a maturity of 30 years or greater will be
negotiated. The Company may also sell Program Securities to an Agent,
as principal, at negotiated discounts, for resale to investors and
other purchasers.
(3) Before deducting expenses payable by the Company estimated at
U.S.$3,703,000.
(4) Or the equivalent thereof in other currencies, including composite
currencies.
------------
Offers to purchase the Program Securities are being
solicited from time to time by Morgan Stanley & Co. International Limited,
Bank Morgan Stanley AG, Morgan Stanley S.A. (the French Franc arranger),
Morgan Stanley Bank AG (the Deutsche Mark arranger) and Dean Witter
International Ltd. each of which is an affiliate of the Company (each an
"Agent" and, together, the "Agents"). The Agents have agreed to use
reasonable efforts to solicit purchases of such Program Securities. The
Company may also sell Program Securities to an Agent acting as principal
for its own account or otherwise, as determined by such Agent. No
termination date for the offering of the Program Securities has been
established. The Company or the Agents may reject any order in whole or in
part. There can be no assurance that the Program Securities offered hereby
will be sold or that there will be a secondary market for the Program
Securities. See "Plan of Distribution."
This Prospectus Supplement and the accompanying Prospectus
may be used by the Agents in connection with offers and sales of the
Program Securities in market-making transactions at negotiated prices
related to prevailing market prices at the time of sale or otherwise. The
Agents may act as principal or agent in such transactions.
------------
MORGAN STANLEY DEAN WITTER
June 17, 1997
No dealer, salesman or any other person has been authorized
to give any information or to make any representations other than those
contained in this Prospectus Supplement, any Pricing Supplement and the
accompanying Prospectus in connection with the offer contained in this
Prospectus Supplement, any Pricing Supplement and the accompanying
Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or by the
Agents. This Prospectus Supplement, any Pricing Supplement and the
accompanying Prospectus do not constitute an offer to sell or a
solicitation of an offer to buy Securities by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make such offer or solicitation.
References herein to "U.S. dollars" or "U.S.$" or "$" are to
the currency of the United States of America.
A copy of this Prospectus Supplement and the accompanying
Prospectus dated June 2, 1997, which together comprise listing particulars
with regard to the issuance by the Company of the Series D Notes in compliance
with the rules of the London Stock Exchange and in accordance with Part IV of
the Financial Services Act 1986, will be delivered for registration to the
Registrar of Companies in England and Wales as required by Section 149 of such
Act. Each Sterling Note (as defined below) will be either a shorter term debt
security issued in accordance with regulations made under Section 4 of the
Banking Act 1987 or a longer term debt security issued in accordance with
regulations made under Section 4 of the Banking Act 1987. References to
"Sterling Notes" are to shorter term debt securities and longer term debt
securities (as defined in the Banking Act 1987 (Exempt Transactions)
Regulations 1997) ("the Regulations"). References to "Sterling" are to the
lawful currency of the United Kingdom. The issue of Notes denominated in
Deutsche Marks will take place in compliance with the guidelines of the German
Central Bank regarding the issuance of Deutsche Mark denominated debt
securities. In particular, only credit institutions domiciled in Germany will
act as dealers with respect to such Notes, except in the case of an issue of
Deutsche Mark denominated Notes as part of a syndicated placement (which will
be lead managed by a credit institution domiciled in Germany). The issuance of
Notes or Units denominated in French Francs, or Notes or Units denominated in
another currency but which provide for payments that are linked directly or
indirectly to French Francs ("French Franc Notes" and "French Franc Units,"
respectively) will comply with the rules and regulations relating to the
Marche de l'eurofranc from time to time of the Comite des Emissions ("French
EuroFranc Regulations") and the Principes Generaux etablis par la Commission
des Operations de Bourse ("COB") et du Conseil des Bourses de Valeurs ("CBV"
that has since changed its name to "CMF") relatifs a l'emission en France sur
le marche International et a l'admission a la cote officielle de warrants et
d'obligations complexes (the "General Principles"). The French EuroFranc
Regulations recommend the listing of French Franc Notes and French Franc Units
on the Paris Bourse where (i) such French Franc Notes or French Franc Units
are, or are intended to be, listed on any other stock exchange or (ii) such
French Franc Notes or French Franc Units are, or are intended to be,
distributed as a public offer (within the meaning of the French EuroFranc
Regulations). The minimum aggregate principal amount of Series D French Franc
Notes or Series D French Franc Units listed on the Paris Bourse ("Series D
French Franc Notes" and "Series D French Franc Units," respectively) and
distributed in a public offer shall be 300,000,000 French Francs. Under
current applicable French regulations, "private placements" shall be construed
as issuances of Notes or Units placed on a firm basis with a small number of
predetermined nonresident investors. So long as any Notes or Units are listed
on the Paris Bourse, copies of this Prospectus Supplement and the accompanying
Prospectus (and all publicly available documents incorporated by reference
herein) will be available from the principal office of Morgan Stanley S.A. as
the listing agent for Notes and Units listed on the Paris Bourse. The Company
accepts responsibility for the information contained in this Prospectus
Supplement and the accompanying Prospectus. To the best of the knowledge and
belief of the Company (which has taken all reasonable care to ensure that such
is the case), the information contained in this Prospectus Supplement and the
accompanying Prospectus (including the existing publicly available documents
incorporated by reference therein) is in accordance with the facts and does
not omit anything likely to affect the import of such information.
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Description of Notes................................................... S-4
Description of Units................................................... S-29
Foreign Currency Risks................................................. S-37
United States Federal Taxation......................................... S-38
Plan of Distribution................................................... S-40
Legal Matters.......................................................... S-43
Capitalization......................................................... S-44
Board of Directors..................................................... S-46
General Information.................................................... S-46
Paris Listing Information.............................................. S-48
Paris Bourse Responsibility Statement.................................. S-50
Prospectus
Available Information.................................................. 2
Incorporation of Certain Documents by Reference........................ 2
The Company............................................................ 4
Use of Proceeds........................................................ 4
Consolidated Ratios of Earnings to Fixed Charges and Earnings to
Fixed Charges and Preferred Stock Dividends........................... 5
Description of Debt Securities......................................... 5
Description of Warrants................................................ 11
Description of Purchase Contracts...................................... 14
Description of Units................................................... 14
Limitations on Issuance of Bearer Securities and Bearer Debt
Warrants.............................................................. 14
Description of Capital Stock........................................... 15
Global Securities...................................................... 28
Plan of Distribution................................................... 30
Legal Matters.......................................................... 31
Experts................................................................ 31
ERISA Matters for Pension Plans and Insurance Companies................ 32
------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
PROGRAM SECURITIES OR ANY SECURITIES THE PRICES OF WHICH MAY BE USED TO
DETERMINE PAYMENTS ON SUCH PROGRAM SECURITIES. SPECIFICALLY, THE AGENTS
SPECIFIED IN THE RELEVANT PRICING SUPPLEMENT MAY OVERALLOT IN CONNECTION
WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE PROGRAM SECURITIES OR
ANY SECURITIES THE PRICES OF WHICH MAY BE USED TO DETERMINE PAYMENTS ON
SUCH PROGRAM SECURITIES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "PLAN OF DISTRIBUTION" HEREIN AND IN THE RELEVANT PRICING
SUPPLEMENT.
------------
DESCRIPTION OF NOTES
The following description of the particular terms of the
Notes offered hereby supplements the description of the general terms and
provisions of the Debt Securities set forth in the Prospectus, to which
reference is hereby made. Unless otherwise defined, the terms used herein
shall have the same meaning as those set forth in the Prospectus. In
particular, as used under this caption, the term "Company" means Morgan
Stanley, Dean Witter, Discover & Co. The particular terms of the Notes
sold pursuant to any pricing supplement (a "Pricing Supplement") will be
described therein. The terms and conditions set forth in "Description of
Notes" will apply to each Note unless otherwise specified in the applicable
Pricing Supplement and in such Note. The Notes described herein may be
offered either alone or as part of a Unit. See "Description of Units."
If any Note is not to be denominated in U.S. dollars, the
applicable Pricing Supplement will specify the currency or currencies,
including composite currencies such as the European Currency Unit (the "ECU"),
in which the principal, premium, if any, and interest, if any, with respect to
such Note are to be paid, along with any other terms relating to the non-U.S.
dollar denomination. See "Foreign Currency Risks."
General
The Notes may be issued either alone or as part of a Unit,
under the Senior Debt Indenture ("Senior Notes") or the Subordinated Debt
Indenture ("Subordinated Notes"). The Notes issued under each Indenture,
together with the Company's Global Medium-Term Notes, Series C, referred to
below under "Plan of Distribution," will constitute a single series under such
Indenture, together with any medium-term notes of the Company issued in the
future under such Indenture which are designated by the Company as
constituting a single series of securities with the Notes and the Global
Medium-Term Notes, Series C, for purposes of such Indenture. Neither Indenture
limits the amount of additional indebtedness that the Company may incur. At
February 28, 1997, the Company had approximately U.S.$13.7 billion aggregate
principal amount of medium-term notes outstanding under the Senior Debt
Indenture and approximately U.S.$82.5 million aggregate principal amount of
medium-term notes outstanding under the Subordinated Debt Indenture. Such
aggregate principal amounts may be increased from time to time as authorized
by, or pursuant to authority delegated by, the Board of Directors of the
Company. For the purpose of this paragraph, (i) the principal amount of any
Original Issue Discount Note (as defined below) means the Issue Price (as
defined below) of such Note and (ii) the principal amount of any Note issued
in a foreign currency or composite currency means the U.S. dollar equivalent
on the date of issue of the Issue Price of such Note.
Notes issued under the Senior Debt Indenture will rank pari
passu with all other Senior Indebtedness of the Company and with all other
unsecured and unsubordinated indebtedness of the Company, subject to certain
statutory exceptions in the event of liquidation upon insolvency. Notes
issued under the Subordinated Debt Indenture will rank pari passu with all
other subordinated indebtedness of the Company and, together with such other
subordinated indebtedness, will be subordinated in right of payment to the
prior payment in full of the Senior Indebtedness of the Company. See
"Description of Debt Securities -- Subordinated Debt" in the Prospectus. At
February 28, 1997, the Company had outstanding approximately U.S.$32.5 billion
of Senior Indebtedness, approximately U.S.$1.3 billion of subordinated
indebtedness and approximately U.S.$999 million of Capital Units. Each
Capital Unit consists of a subordinated debenture of Morgan Stanley Finance
plc, a subsidiary of the Company, guaranteed by the Company on a subordinated
basis and a related purchase contract issued by the Company requiring the
holder to purchase one depositary share representing ownership of a fraction
or multiple of a share of the Company's preferred stock.
Fixed Rate Notes, Amortizing Notes and Original Issue Discount
Notes will mature on any day more than nine months from the date of issue, as
set forth in the applicable Pricing Supplement. Floating Rate Notes will
mature on an Interest Payment Date (as defined below) more than nine months
from the date of issue, as set forth in the applicable Pricing Supplement.
Notes denominated or payable in Deutsche Marks will mature at least two years
after the date of issue. French Franc Notes will mature at least one year
after the date of issue. The Notes will be offered on a continuing basis, and
any Note purchased on original issuance by or on behalf of a United States
person must, subject to certain exceptions, be a Registered Note (as defined
below). Bearer Notes (as defined below) purchased on original issuance by any
other purchaser initially will be represented by a temporary global Bearer
Note to be deposited with a common depositary for Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the Euroclear System (the
"Euroclear Operator"), Cedel Bank, societe anonyme ("Cedel Bank") and/or any
other relevant clearing system (including Sicovam S.A. and the Intermediaires
financiers habilites authorized to maintain accounts therein ("Sicovam")).
Interests in each temporary global Bearer Note will be exchangeable for
interests in permanent global Bearer Notes or for definitive Registered or
Bearer Notes in the manner and upon compliance with the procedures described
under "Description of Notes -- Forms, Denominations, Exchange and Transfer."
The applicable Pricing Supplement will specify the price (the
"Issue Price") of each Note to be sold pursuant thereto, the interest rate or
interest rate formula, ranking, maturity, currency or composite currency,
principal amount and any other terms on which each such Note will be issued.
As used herein, the following terms shall have the meanings set
forth below:
"Business Day" means any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close in The City of New York or
in The City of London and (i) with respect to LIBOR Notes (as defined below),
that is also a London Banking Day, (ii) with respect to Notes denominated in a
Specified Currency other than U.S. dollars, Australian dollars or ECUs, in the
principal financial center of the country of the Specified Currency, (iii)
with respect to Notes denominated in Australian dollars, in Sydney and (iv)
with respect to Notes denominated in ECUs, that is not a non-ECU clearing day,
as determined by the ECU Banking Association in Paris.
An "Interest Payment Date" with respect to any Note shall be a
date on which, under the terms of such Note, regularly scheduled interest
shall be payable.
"London Banking Day" means any day on which dealings in
deposits in the relevant Index Currency (as defined below) are transacted in
the London interbank market.
"Original Issue Discount Note" means any Note that provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to the relevant
Indenture.
The "Record Date" with respect to any Interest Payment Date for
a Registered Note shall be the date 15 calendar days prior to such Interest
Payment Date, whether or not such date shall be a Business Day.
Payment Currency
If the applicable Pricing Supplement provides for all or a
portion of payments of interest and principal on a non-U.S. dollar denominated
Note to be made, at the option of the holder of such Note, in U.S. dollars,
conversion of the Specified Currency into U.S. dollars will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent (as defined below) at approximately 11:00 A.M., New York City time, on
the second Business Day preceding the applicable payment date from three
recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent unless the Exchange Rate Agent is an affiliate of the Company) for the
purchase by the quoting dealer of the Specified Currency for U.S. dollars for
settlement on such payment date in the aggregate amount of the Specified
Currency payable to the holders of Notes and at which the applicable dealer
commits to execute a contract. If such bid quotations are not available,
payments will be made in the Specified Currency. All currency exchange costs
will be borne by the holders of Notes by deductions from such payments.
Unless otherwise indicated in the applicable Pricing Supplement, the Exchange
Rate Agent will be Morgan Stanley & Co. International Limited.
Except as set forth below, if the principal of, premium, if
any, or interest on, any Note is payable in a Specified Currency other than
U.S. dollars and such Specified Currency is not available to the Company for
making payments thereof due to the imposition of exchange controls or other
circumstances beyond the control of the Company or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking
community, then the Company will be entitled to satisfy its obligations to
holders of the Notes by making such payments in U.S. dollars on the basis of
the Market Exchange Rate (as defined below) on the date of such payment or, if
the Market Exchange Rate is not available on such date, as of the most recent
practicable date; provided, however, that if such Specified Currency is
replaced by the Euro (as described under "Special Provisions Relating to Notes
Denominated in ECU" below), the payment of principal of, premium, if any, or
interest on any Note denominated in such currency shall be effected in Euro in
conformity with legally applicable measures taken pursuant to, or by virtue
of, the treaty establishing the European Community (the "EC"), as amended by
the treaty on European Union (as so amended, the "Treaty"). Any payment made
under such circumstances in U.S. dollars (or, if applicable, Euro) where the
required payment is in a Specified Currency other than U.S. dollars will not
constitute an Event of Default. "Market Exchange Rate" means the noon U.S.
dollar buying rate in The City of New York for wire transfers of the relevant
currency or composite currency as certified for customs purposes by the
Federal Reserve Bank of New York.
Special Provisions Relating to Notes Denominated in ECU
Valuation of the ECU
Subject to the provisions under "Payment in a Component
Currency" below, the value of the ECU, in which the Notes may be denominated
or may be payable, is equal to the value of the ECU that is from time to time
used as the unit of account of the EC and which is at the date hereof valued
on the basis of specified amounts of the currencies of 12 of the 15 member
states of the EC. Under Article 109G of the Treaty, the currency composition
of the ECU may not be changed. Other changes to the ECU may be made by the EC
in conformity with EC law, in which event the ECU will change accordingly.
From the start of the third stage of European monetary union, the value of the
ECU as against the currencies of member states participating in the third
stage will be irrevocably fixed and the ECU will become a currency in its own
right, replacing all or some of the currencies of the 15 member states of the
EC (as of the date of this Prospectus Supplement, such currencies include the
Austrian shilling, Belgian franc, Danish krone, Dutch guilder, Finnish markka,
French franc, German mark, Greek drachma, Irish pound, Italian lira,
Luxembourg franc, Portuguese escudo, Spanish peseta, Swedish krona and
Sterling). In contemplation of the third stage, the European Council meeting
in Madrid on December 16, 1995 decided that the name of the new currency will
be the Euro and that, in accordance with the Treaty, substitution of the Euro
for the ECU will be at the rate of one Euro for one ECU. From the start of
the third stage of European monetary union, all payments in respect of the
Notes denominated or payable in ECU will be payable in Euro at the rate then
established in accordance with the Treaty. In such circumstances, the
provisions for payment in a component currency described below will not apply.
Payment in a Component Currency
With respect to each due date for the payment of principal of,
or interest on, the Notes on or after the first business day in Brussels on
which the ECU ceases to be used as the unit of account of the EC and has not
become a currency in its own right replacing all or some of the currencies of
the member states of the EC, the Company shall choose a substitute currency
(the "Chosen Currency"), which may be any currency which was, on the last day
on which the ECU was used as the unit of account of the EC, a component
currency of the ECU or U.S. dollars, in which all payments due on or after
that date with respect to the Notes and coupons shall be made. Notice of the
Chosen Currency so selected shall, where practicable, be published in the
manner described in "Notices" below. The amount of each payment in such
Chosen Currency shall be computed on the basis of the equivalent of the ECU in
that currency, determined as described below, as of the fourth business day in
Brussels prior to the date on which such payment is due.
On the first business day in Brussels on which the ECU ceases
to be used as the unit of account of the EC and has not become a currency in
its own right replacing all or some of the currencies of the member states of
the EC, the Company shall select a Chosen Currency in which all payments with
respect to Notes and coupons having a due date prior thereto but not yet
presented for payment are to be made. Notice of the Chosen Currency so
selected shall, where practicable, be published in the manner described in
"Notices" below. The amount of each payment in such Chosen Currency shall be
computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first business day.
The equivalent of the ECU in the relevant Chosen Currency as of
any date (the "Day of Valuation") shall be determined by, or on behalf of, the
Exchange Rate Agent on the following basis. The amounts and components
composing the ECU for this purpose (the "Components") shall be the amounts and
components that composed the ECU as of the last date on which the ECU was used
as the unit of account of the EC. The equivalent of the ECU in the Chosen
Currency shall be calculated by, first, aggregating the U.S. dollar
equivalents of the Components; and then, in the case of a Chosen Currency
other than U.S. dollars, using the rate used for determining the U.S. dollar
equivalent of the Components in the Chosen Currency as set forth below,
calculating the equivalent in the Chosen Currency of such aggregate amount in
U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by, or on behalf of, the Exchange Rate Agent on the basis of the
middle spot delivery quotations prevailing at 2:30 P.M., Brussels time, on the
Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent
from one or more major banks, as selected by the Company, in the country of
issue of the component currency in question.
If for any reason no direct quotations are available for a
Component as of a Day of Valuation from any of the banks selected for this
purpose, in computing the U.S. dollar equivalent of such Component, the
Exchange Rate Agent shall (except as provided below) use the most recent
direct quotations for such Component obtained by it or on its behalf, provided
that such quotations were prevailing in the country of issue not more than two
Business Days before such Day of Valuation. If such most recent quotations
were so prevailing in the country of issue more than two Business Days before
such Day of Valuation, the Exchange Rate Agent shall determine the U.S. dollar
equivalent of such Component on the basis of cross rates derived from the
middle spot delivery quotations for such component currency and for the U.S.
dollar prevailing at 2:30 P.M., Brussels time, on such Day of Valuation, as
obtained by, or on behalf of, the Exchange Rate Agent from one or more major
banks, as selected by the Company, in a country other than the country of
issue of such component currency. Notwithstanding the foregoing, the Exchange
Rate Agent shall determine the U.S. dollar equivalent of such Component on the
basis of such cross rates if the Company or such agent judges that the
equivalent so calculated is more representative than the U.S. dollar
equivalent calculated as provided in the first sentence of this paragraph.
Unless otherwise specified by the Company, if there is more than one market
for dealing in any component currency by reason of foreign exchange
regulations or for any other reason, the market to be referred to in respect
of such currency shall be that upon which a nonresident issuer of securities
denominated in such currency would purchase such currency in order to make
payments in respect of such securities.
Payments in the Chosen Currency will be made at the specified
office of a paying agent in the country of the Chosen Currency, or, if none,
or at the option of the holder, at the specified office of any Paying Agent
either by a check drawn on, or by transfer to an account maintained by the
holder with, a bank in the principal financial center of the country of the
Chosen Currency; provided, however, that in the case of Bearer Notes, payments
in U.S. dollars will be subject to the restrictions described below under
"Interest and Principal Payments."
All determinations referred to above made by, or on behalf of,
the Company or by, or on behalf of, the Exchange Rate Agent shall be at such
entity's sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on holders of Notes and coupons.
Notes Denominated in the Currencies of EC Member States
If, pursuant to the Treaty, all or some of the currencies of
the member countries of the EC are replaced by the Euro, the payment of
principal of, premium, if any, or interest on, the Notes denominated in such
currencies shall be effected in Euro in conformity with legally applicable
measures taken pursuant to, or by virtue of, the Treaty.
Forms, Denominations, Exchange and Transfer
Unless otherwise specified in the applicable Pricing
Supplement, the Notes may be issued, either alone or as part of a Unit, (i) in
fully registered definitive form without coupons ("Registered Notes") or (ii)
in definitive bearer form with coupons attached or in temporary or permanent
global bearer form without coupons attached (in each case, "Bearer Notes") or
in any combination of the above such registered or bearer forms.
Except as provided below or as otherwise specified in the
applicable Pricing Supplement, Notes denominated in U.S. dollars will be
issued only in denominations of U.S.$1,000, or any amount in excess thereof
that is an integral multiple of U.S.$1,000, and Notes denominated in a
Specified Currency other than U.S. dollars will be issued in denominations of
the equivalent of U.S.$1,000 (rounded to an integral multiple of 1,000 units
of such Specified Currency), or any amount in excess thereof which is an
integral multiple of 1,000 units of such Specified Currency, as determined by
reference to the Market Exchange Rate of such Specified Currency on the
Business Day immediately preceding the date of issuance; provided, however,
that, in the case of the ECU, the Market Exchange Rate shall be the rate of
exchange determined by the Commission of the European Communities (or any
successor thereto) as published in the Official Journal of the European
Communities, or any successor publication, on the Business Day immediately
preceding the date of issuance.
Each Bearer Note and interest coupon, if any, will bear the
following legend: "Any United States person who holds this obligation will be
subject to limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the United States
Internal Revenue Code of 1986."
Registered Notes will be exchangeable for Registered Notes in
other authorized denominations, in an equal aggregate principal amount in
accordance with the provisions set forth in the applicable Indenture. Bearer
Notes will not be issuable in exchange for Registered Notes. Registered Notes
may be presented for registration of transfer or exchange at the offices of
the Registrar (as defined below) or at the offices of any transfer agent
designated by the Company for such purpose. See "Registrar, Paying Agents and
Transfer Agents." Bearer Notes may be presented for exchange in the manner
set forth below. No service charge will be made for any registration of
transfer or exchange of Notes but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Bearer Notes and any coupons appertaining thereto will be
transferable by delivery.
Each Bearer Note will be represented initially by a temporary
global Bearer Note, without interest coupons, and which, unless otherwise
specified in the applicable Pricing Supplement, will be deposited with a common
depositary (a "Common Depositary") for the Euroclear Operator and Cedel Bank,
for credit to the account designated by or on behalf of the subscriber
thereof. Upon deposit of each such temporary global Bearer Note, the
Euroclear Operator or Cedel Bank, as the case may be, will credit each
subscriber with a principal amount of Notes equal to the principal amount
thereof for which it has subscribed and paid. The interests of the beneficial
owner or owners in a temporary global Bearer Note will be exchangeable, after
the date (the "Exchange Date") that is 40 days after the date on which the
Company receives the proceeds of the sale of such Note (the "Closing Date"),
for an interest in a permanent global Bearer Note to be held by a Common
Depositary for the Euroclear Operator and Cedel Bank, for credit to the
account designated by or on behalf of the beneficial owner thereof; provided
that (i) the Exchange Date for any Note held by an Agent as part of an unsold
allotment or subscription more than 40 days after the Closing Date for such
Note shall be the day after the date such Note is sold by such Agent and (ii)
such exchange will be made only upon receipt of Ownership Certificates (as
defined below). No principal or interest may be paid on a temporary global
Bearer Note until the person entitled to receive such interest furnishes an
Ownership Certificate. An "Ownership Certificate" is a signed certificate in
writing (or an electronic certificate described in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(3)(ii)) stating that on such date such
Bearer Note (i) is owned by a person that is not a United States person (as
defined in the Prospectus), (ii) is owned by a United States person that (a)
is a foreign branch of a United States financial institution (as defined in
United States Treasury Regulations Section 1.165-12(c)(1)(v)) (a "financial
institution") purchasing for its own account or for resale, or (b) is
acquiring such Bearer Note through a foreign branch of a United States
financial institution and who holds the Bearer Note through such financial
institution through such date (and in either case (a) or (b), each such United
States financial institution agrees, on its own behalf or through its agent,
that the Company may be advised that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) is owned by a United States
or foreign financial institution for the purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7) (the "Restricted Period")), and in addition if the
owner of such Bearer Note is a United States or foreign financial institution
described in clause (iii) above (whether or not also described in clause (i)
or (ii)), such financial institution certifies that it has not acquired the
Bearer Note for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
The beneficial owner of a Note represented by a permanent
global Bearer Note may, upon 30 days' written notice to the Principal Paying
Agent (as defined below), given by the beneficial owner through either the
Euroclear Operator or Cedel Bank or other relevant clearing system, exchange
such owner's interest in such permanent global Bearer Note for a definitive
Bearer Note or Notes, which will be serially numbered, with coupons, if any,
attached or, if so indicated in the applicable Pricing Supplement, at the
beneficial holder's option, a definitive Registered Note or Notes, of any
authorized denominations. Upon receipt by the Principal Paying Agent of an
initial request to exchange an interest in a permanent global Bearer Note for
a definitive Bearer Note or Notes, all other interests in such permanent
global Bearer Note shall be exchanged for definitive Notes. Interests in a
permanent global Bearer Note will also be exchanged by the Company in whole,
but not in part, for definitive Bearer Notes, which will be serially numbered,
with coupons, if any, attached or, if so indicated in the applicable Pricing
Supplement, at the beneficial owner's option, for definitive Registered Notes,
of any authorized denominations if (i) any Note represented by such permanent
global Bearer Note is accelerated following an Event of Default or (ii) either
Euroclear or Cedel Bank or any other relevant clearing system is closed for
business for a continuous period of fourteen days (other than by reason of
public holidays) or announces an intention to cease business permanently or in
fact does so. The Common Depositary for the Euroclear Operator and Cedel Bank
will instruct the Principal Paying Agent regarding the aggregate principal
amount and denominations of definitive Bearer Notes that must be authenticated
and delivered to each of the Euroclear Operator and Cedel Bank. Such
exchanges shall occur at no expense to the beneficial owners as soon as
practicable after the receipt of the initial request for definitive Bearer
Notes or of a notice of such acceleration or clearing system closure. No
Bearer Note will be delivered in the United States. References herein to
"Bearer Notes" shall, except where otherwise indicated, include interests in
a permanent or temporary global Bearer Note as well as definitive Bearer Notes
and any appurtenant coupons.
If the applicable Pricing Supplement so specifies, at the
option of the holder, and subject to the terms of the applicable Indenture or
procedures established pursuant thereto, definitive Bearer Notes (with all
unmatured coupons, and all matured coupons, if any, in default) will be
exchangeable into Registered Notes of any authorized denominations of like
tenor and in an equal aggregate principal amount at the office of the
Registrar (as defined below) or at the office of any transfer agent designated
by the Company for such purpose. See "Registrar, Paying Agents and Transfer
Agents." Definitive Bearer Notes surrendered in exchange for Registered Notes
after the close of business at any such office on any Record Date for the
payment of interest on a Registered Note and before the opening of business at
such office on the relevant Interest Payment Date shall be surrendered without
the coupon relating to such payment of interest. Definitive Bearer Notes will
be exchangeable for definitive Bearer Notes in other authorized denominations,
in an equal aggregate principal amount, in accordance with the provisions of
the applicable Indenture and at the offices of the Principal Paying Agent in
London, England or at the office of any transfer agent designated by the
Company for such purpose. See "Registrar, Paying Agents and Transfer Agents."
The Company will not be required (i) to register the transfer
of or exchange Notes to be redeemed for a period of fifteen calendar days
preceding the first publication of the relevant notice of redemption, or if
Registered Notes are outstanding and there is no publication, the mailing of
the relevant notice of redemption, or (ii) to register the transfer of or
exchange any Registered Note selected for redemption or surrendered for
optional repayment, in whole or in part, except the unredeemed or unpaid
portion of any such Registered Note being redeemed or repaid, as the case may
be, in part, or (iii) to exchange any Bearer Note selected for redemption or
surrendered for optional repayment, except that such Bearer Note may be
exchanged for a Registered Note of like tenor, provided that such Registered
Note shall be simultaneously surrendered for redemption or repayment, as the
case may be.
Interest and Principal Payments
Interest payable on a Bearer Note represented by a temporary
global Bearer Note or any portion thereof will, unless otherwise specified in
the applicable Pricing Supplement, be paid to each of the Euroclear Operator
and Cedel Bank, as the case may be, with respect to that portion of such
temporary global Bearer Note held for its account upon delivery to the
Principal Paying Agent of an Ownership Certificate signed by the Euroclear
Operator or Cedel Bank, as the case may be, dated no earlier than such
Interest Payment Date, which certificate must be based on Ownership
Certificates provided to the Euroclear Operator or Cedel Bank, as the case may
be, by its member organizations. Each of the Euroclear Operator and Cedel
Bank will in such circumstances credit the interest received by it in respect
of such temporary global Bearer Note or any portion thereof to the accounts of
or for the beneficial owners thereof to the extent that they have furnished
such Ownership Certificates.
Each permanent global Bearer Note will, unless otherwise
specified in the applicable Pricing Supplement, provide that principal of, and
premium, if any, and interest on such permanent global Bearer Note will be paid
to each of the Euroclear Operator and Cedel Bank, as the case may be, with
respect to that portion of such permanent global Bearer Note held for its
account. Each of the Euroclear Operator and Cedel Bank will in such
circumstances credit such principal, premium, if any, and any interest
received by it in respect of such permanent global Bearer Note to the
respective accounts of or for the beneficial owners of such permanent global
Bearer Note at maturity, redemption or repayment or on an Interest Payment
Date, as the case may be. If a Registered Note is issued in exchange for any
portion of a permanent global Bearer Note after the close of business at the
office or agency where such exchange occurs on any Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, any interest (or any principal and interest in the case of an Amortizing
Note) will not be payable on such Interest Payment Date in respect of such
Registered Note, but will be payable on such Interest Payment Date only to the
Euroclear Operator and Cedel Bank, and the Euroclear Operator and Cedel Bank
will in such circumstances credit any such interest to the account of or for
the beneficial owner of such portion of such permanent global Bearer Note on
such Record Date. Payment of principal of, premium, if any, and any interest
in respect of any permanent global Bearer Note will, unless otherwise specified
in the applicable Pricing Supplement, be made to the Euroclear Operator and
Cedel Bank in immediately available funds.
Payment of principal of, premium, if any, and any interest on a
definitive Bearer Note at maturity or upon redemption or repayment will be
made in immediately available funds, subject to any applicable laws and
regulations, only against presentation and surrender of such Note and any
coupons at the offices of a Paying Agent (as defined below) outside the United
States, at the option of the holder, by check or by wire transfer of
immediately available funds to an account maintained by the payee with a bank
located outside the United States if appropriate wire transfer instructions
have been received by a Paying Agent not less than 15 calendar days prior to
an applicable payment date. Payment of interest on a definitive Bearer Note
due on any Interest Payment Date will be made only against presentation and
surrender of the coupon relating to such Interest Payment Date.
No payment with respect to any Bearer Note will be made at any
office or agency of the Company in the United States or by check mailed to any
address in the United States or by wire transfer to an account maintained with
a bank located in the United States except as may be permitted under United
States federal tax laws and regulations then in effect without adverse tax
consequences to the Company. Notwithstanding the foregoing, payments of
principal of, premium, if any, and interest on Bearer Notes payable in U.S.
dollars will be made at the office of the Company's paying agent in the
Borough of Manhattan, The City of New York, if, and only if (i) payment of the
full amount thereof in U.S. dollars at all offices or agencies outside the
United States is illegal or effectively precluded by exchange controls or
other similar restrictions and (ii) such paying agent in the Borough of
Manhattan, The City of New York, under applicable law and regulations, would
be able to make such payment.
Interest will be payable on a Registered Note to the person in
whose name the Registered Note is registered at the close of business on the
applicable Record Date; provided that the interest payable upon maturity,
redemption or repayment (whether or not the date of maturity, redemption or
repayment is an Interest Payment Date) will be payable to the person to whom
principal is payable. The initial interest payment on a Registered Note will
be made on the first Interest Payment Date falling after the date the
Registered Note is issued; provided, however, that (i) payments of interest
(or, in the case of an Amortizing Note, principal and interest) on a
Registered Note originally issued less than 15 calendar days before an
Interest Payment Date will be paid on the next succeeding Interest Payment
Date to the holder of record on the Record Date with respect to such
succeeding Interest Payment Date and (ii) payments of interest (or, in the
case of an Amortizing Note, principal and interest) on a Registered Note
issued in exchange for an interest in a permanent global Bearer Note less than
15 calendar days before an Interest Payment Date will be paid as described
above.
U.S. dollar payments of interest on a Registered Note, other
than interest payable at maturity (or on the date of redemption or repayment,
if a Note is redeemed or repaid by the Company prior to maturity), will be
made by check mailed to the address of the person entitled thereto as shown on
the Note register. U.S. dollar payments of principal, premium, if any, and
interest upon maturity, redemption or repayment of a Registered Note will be
made in immediately available funds against presentation and surrender of the
Note. Notwithstanding the foregoing, a holder of U.S.$10,000,000 (or the
equivalent) or more in aggregate principal amount of Registered Notes having
the same Interest Payment Date shall be entitled to receive payments of
interest by wire transfer of immediately available funds upon written request
to the Paying Agent not later than 15 calendar days prior to the applicable
Interest Payment Date. See "United States Federal Taxation."
With respect to any moneys paid by the Company and held by the
applicable Trustee or any Paying Agent for payment of the principal of,
premium, if any, or interest on any Notes that remain unclaimed at the end of
two years after such principal, premium, or interest shall have become due and
payable (whether at maturity or upon call for redemption or otherwise), (i)
such Trustee or such Paying Agent shall notify the holders of such Notes that
such moneys shall be repaid to the Company and any person claiming such moneys
shall thereafter look only to the Company for payment thereof and (ii) such
moneys shall be so repaid to the Company. Upon such repayment all liability
of such Trustee or such Paying Agent with respect to such moneys shall
thereupon cease, without, however, limiting in any way any obligation that the
Company may have to pay the principal of, premium, if any, or interest on the
Notes as the same shall become due.
Certain Notes, including Original Issue Discount Notes, may be
considered to be issued with original issue discount. Unless otherwise
specified in the applicable Pricing Supplement, if the principal of any
Original Issue Discount Note is declared to be due and payable immediately as
described under "Description of Debt Securities -- Events of Default" in the
Prospectus, the amount of principal due and payable with respect to such Note
shall be limited to the aggregate principal amount of such Note multiplied by
the sum of its Issue Price (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the date of
issue to the date of declaration, which amortization shall be calculated using
the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration). Special
considerations applicable to any such Notes will be set forth in the
applicable Pricing Supplement.
Registrar, Paying Agents and Transfer Agents
The Company has initially designated The Chase Manhattan Bank
(formerly known as Chemical Bank), acting through its principal corporate
trust office in the Borough of Manhattan, The City of New York, as its
registrar and transfer agent for the Registered Notes (the "Registrar," which
term includes any successor Registrar appointed by the Company) and as the
Company's paying agent for Registered Notes in the United States, and The Chase
Manhattan Bank, London Branch, as transfer and paying agent for the Notes and
as its principal paying agent for the Notes outside the United States (the
"Principal Paying Agent," which term includes any successor principal paying
agent appointed by the Company). Any initial designation by the Company of
the Registrar or a transfer agent may be rescinded at any time, except that,
so long as any Notes remain outstanding, the Company will maintain in the
Borough of Manhattan, The City of New York, one or more offices or agencies
where Registered Notes may be presented for registration of transfer and
exchange. The Company may at any time appoint additional transfer agents with
respect to the Notes and may appoint additional paying agents for the Notes
outside the United States (each a "Paying Agent," which term includes the
Principal Paying Agent and any additional or successor paying agent appointed
by the Company). So long as the Series D Notes are listed on the London Stock
Exchange and such exchange so requires, the Company will maintain a transfer
agent and a Paying Agent in London. So long as any Series D Notes or Series D
Units are listed on the Paris Bourse and such exchange so requires, the
Company will maintain a Paying Agent in Paris.
Fixed Rate Notes
Each Fixed Rate Note will bear interest from the date of
issuance at the annual rate stated on the face thereof until the principal
thereof is paid or made available for payment. Unless otherwise specified in
the applicable Pricing Supplement, such interest will be computed on the basis
of a 360-day year of twelve 30-day months. Unless otherwise specified in the
applicable Pricing Supplement, payments of interest on Fixed Rate Notes other
than Amortizing Notes will be made annually on each March 1 and at maturity or
upon any earlier redemption or repayment. Unless otherwise specified in the
applicable Pricing Supplement, payments of principal and interest on
Amortizing Notes, which are securities on which payments of principal and
interest are made in equal installments over the life of the security, will be
made either quarterly on each March 1, June 1, September 1 and December 1 or
semiannually on each March 1 and September 1, as set forth in the applicable
Pricing Supplement, and at maturity or upon any earlier redemption or
repayment. Payments with respect to Amortizing Notes will be applied first to
interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. A table setting forth repayment information in
respect of each Amortizing Note will be provided to the original purchaser and
will be available, upon request made to the Company, to subsequent holders.
If any Interest Payment Date for any Fixed Rate Note would fall
on a day that is not a Business Day, the interest payment shall be postponed
to the next day that is a Business Day, and no interest on such payment shall
accrue for the period from and after the Interest Payment Date. If the
maturity date (or date of redemption or repayment) of any Fixed Rate Note
would fall on a day that is not a Business Day, the payment of interest and
principal (and premium, if any) may be made on the next succeeding Business
Day, and no interest on such payment shall accrue for the period from and
after the maturity date (or date of redemption or repayment).
Interest payments for Fixed Rate Notes will include accrued
interest from and including the date of issue or from and including the last
date in respect of which interest has been paid, as the case may be, to, but
excluding, the Interest Payment Date or the date of maturity or earlier
redemption or repayment, as the case may be. The interest rates the Company
will agree to pay on newly issued Fixed Rate Notes are subject to change
without notice by the Company from time to time, but no such change will
affect any Fixed Rate Notes theretofore issued or that the Company has agreed
to issue.
Floating Rate Notes
Each Floating Rate Note will bear interest from the date of
issuance until the principal thereof is paid or made available for payment at
a rate determined by reference to an interest rate basis or formula (the "Base
Rate"), which may be adjusted by a Spread and/or Spread Multiplier (each as
defined below). The applicable Pricing Supplement will designate one or more
of the following Base Rates as applicable to each Floating Rate Note: (a) the
CD Rate (a "CD Rate Note"), (b) the Commercial Paper Rate (a "Commercial Paper
Rate Note"), (c) the Federal Funds Rate (a "Federal Funds Rate Note"), (d)
LIBOR (a "LIBOR Note"), (e) the Prime Rate (a "Prime Rate Note"), (f) the
Treasury Rate (a "Treasury Rate Note"), (g) the Constant-Maturity Treasury
Rate (a "CMT Rate Note") or (h) such other Base Rate or interest rate formula
as is set forth in such Pricing Supplement and in such Floating Rate Note.
The "Index Maturity" for any Floating Rate Note is the period of maturity of
the instrument or obligation from which the Base Rate is calculated and will
be specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, the interest rate on each Floating Rate Note will be calculated by
reference to the specified Base Rate (i) plus or minus the Spread, if any,
and/or (ii) multiplied by the Spread Multiplier, if any. The "Spread" is the
number of basis points (one one-hundredth of a percentage point) specified in
the applicable Pricing Supplement to be added to or subtracted from the Base
Rate for such Floating Rate Note, and the "Spread Multiplier" is the
percentage specified in the applicable Pricing Supplement to be applied to the
Base Rate for such Floating Rate Note.
As specified in the applicable Pricing Supplement, a Floating
Rate Note may also have either or both of the following: (i) a maximum
limitation, or ceiling, on the rate of interest which may accrue during any
interest period ("Maximum Interest Rate"); and (ii) a minimum limitation, or
floor, on the rate of interest that may accrue during any interest period
("Minimum Interest Rate"). In addition to any Maximum Interest Rate that may
be applicable to any Floating Rate Note pursuant to the above provisions, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by United
States law of general application. Under current New York law, the maximum
rate of interest, subject to certain exceptions, for any loan in an amount
less than U.S.$250,000 is 16% and for any loan in the amount of U.S.$250,000
or more but less than U.S.$2,500,000 is 25% per annum on a simple interest
basis. These limits do not apply to loans of U.S.$2,500,000 or more.
Unless otherwise specified in the applicable Pricing
Supplement, the rate of interest on each Floating Rate Note will be reset
daily, weekly, monthly, quarterly, semiannually or annually (such period being
the "Interest Reset Period" for such Note, and the first day of each Interest
Reset Period being an "Interest Reset Date"), as specified in the applicable
Pricing Supplement. The determination of the rate of interest at which a
Floating Rate Note will be reset on any Interest Reset Date will be made on
the Interest Determination Date (as defined below) pertaining to such Interest
Reset Date. Unless otherwise specified in the Pricing Supplement, the
Interest Reset Date will be, in the case of Floating Rate Notes which reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes which reset weekly, the Tuesday of each week,
except as provided below; in the case of Floating Rate Notes which reset
monthly, the third Wednesday of each month; in the case of Floating Rate Notes
which reset quarterly, the third Wednesday of March, June, September and
December; in the case of Floating Rate Notes which reset semiannually, the
third Wednesday of two months of each year, as specified in the applicable
Pricing Supplement; and in the case of Floating Rate Notes which reset
annually, the third Wednesday of one month of each year, as specified in the
applicable Pricing Supplement; provided, however, that (a) the interest rate
in effect from the date of issue to the first Interest Reset Date with respect
to a Floating Rate Note will be the initial interest rate set forth in the
applicable Pricing Supplement (the "Initial Interest Rate") and (b) unless
otherwise specified in the applicable Pricing Supplement, the interest rate in
effect for the ten calendar days immediately prior to maturity, redemption or
repayment will be that in effect on the tenth calendar day preceding such
maturity, redemption or repayment date. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the next succeeding Business Day,
except that in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
Except as provided below, unless otherwise specified in the
applicable Pricing Supplement, interest on Floating Rate Notes will be
payable: (i) in the case of Floating Rate Notes with a daily, weekly or
monthly Interest Reset Date, on the third Wednesday of each month or on the
third Wednesday of March, June, September and December, as specified in the
applicable Pricing Supplement; (ii) in the case of Floating Rate Notes with a
quarterly Interest Reset Date, on the third Wednesday of March, June,
September and December; (iii) in the case of Floating Rate Notes with a
semiannual Interest Reset Date, on the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (iv) in the case of
Floating Rate Notes with an annual Interest Reset Date, on the third Wednesday
of the month specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, if any Interest Payment Date
(other than the maturity date or any earlier redemption or repayment date) for
any Floating Rate Note would fall on a day that is not a Business Day with
respect to such Floating Rate Note, such Interest Payment Date will be the
following day that is a Business Day with respect to such Floating Rate Note,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding day that is a Business Day with respect to such LIBOR Note. If the
maturity date or any earlier redemption or repayment date of a Floating Rate
Note would fall on a day that is not a Business Day, the payment of principal,
premium, if any, and interest will be made on the next succeeding Business
Day, and no interest on such payment shall accrue for the period from and
after such maturity, redemption or repayment date, as the case may be.
Unless otherwise specified in the applicable Pricing
Supplement, interest payments for Floating Rate Notes shall be the amount of
interest accrued from and including the date of issue or from and including
the last date to which interest has been paid to, but excluding, the Interest
Payment Date or maturity date or date of redemption or repayment.
With respect to a Floating Rate Note, accrued interest shall be
calculated by multiplying the principal amount of such Floating Rate Note by
an accrued interest factor. Such accrued interest factor will be computed by
adding the interest factors calculated for each day in the period for which
interest is being paid. Unless otherwise specified in the applicable Pricing
Supplement, the interest factor for each such day is computed by dividing the
interest rate applicable to such day by 360, in the case of CD Rate Notes,
Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime
Rate Notes or by the actual number of days in the year, in the case of
Treasury Rate Notes and CMT Rate Notes. All percentages used in or resulting
from any calculation of the rate of interest on a Floating Rate Note will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point (.0000001), with five one-millionths of a percentage point rounded
upward, and all dollar amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded to the nearest cent, with one-half cent
rounded upward. The interest rate in effect on any Interest Reset Date will
be the applicable rate as reset on such date. The interest rate applicable to
any other day is the interest rate from the immediately preceding Interest
Reset Date (or, if none, the Initial Interest Rate).
The applicable Pricing Supplement shall specify a calculation
agent (the "Calculation Agent") with respect to any issue of Floating Rate
Notes. Upon the request of the holder of any Floating Rate Note, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note. The Calculation Agent
will notify the London Stock Exchange (in the case of the Series D Notes
listed on such exchange) and the Paying Agents of each determination of the
interest rate applicable to any Floating Rate Note promptly after such
determination is made.
The "Interest Determination Date" pertaining to an Interest
Reset Date for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate
Notes, Prime Rate Notes and CMT Rate Notes will be the second Business Day
next preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for a LIBOR Note will be the second
London Banking Day preceding such Interest Reset Date, except that the Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note for
which the Index Currency is Sterling will be such Interest Reset Date. The
Interest Determination Date pertaining to an Interest Reset Date for a
Treasury Rate Note will be the day of the week in which such Interest Reset
Date falls on which Treasury bills would normally be auctioned. Treasury
bills are normally sold at auction on Monday of each week, unless that day is
a legal holiday, in which case the auction is normally held on the following
Tuesday, but such auction may be held on the preceding Friday. If, as the
result of a legal holiday, an auction is so held on the preceding Friday, such
Friday will be the Interest Determination Date pertaining to the Interest
Reset Date occurring in the next succeeding week. If an auction falls on a
day that is an Interest Reset Date, such Interest Reset Date will be the next
following Business Day.
Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," where applicable, pertaining to an
Interest Determination Date will be the earlier of (i) the tenth calendar day
after such Interest Determination Date, or, if such day is not a Business Day,
the next succeeding Business Day, or (ii) the Business Day preceding the
applicable Interest Payment Date or Maturity Date, as the case may be.
Interest rates will be determined by the Calculation Agent as
follows:
CD Rate Notes
CD Rate Notes will bear interest at the interest rate
(calculated with reference to the CD Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the CD Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, "CD Rate" means, with respect to any Interest Determination Date,
the rate on such date for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates," or any successor publication of the Board
of Governors of the Federal Reserve System ("H.15(519)") under the heading
"CDs (Secondary Market)," or, if not so published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the CD Rate will be the rate on such Interest Determination Date for
negotiable certificates of deposit of the Index Maturity designated in the
applicable Pricing Supplement as published by the Federal Reserve Bank of New
York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S.
Government Securities" (the "Composite Quotations") under the heading
"Certificates of Deposit." If such rate is not yet published in either
H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the CD Rate
on such Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00 A.M., New York City time, on such Interest Determination Date for
certificates of deposit in an amount that is representative for a single
transaction at that time with a remaining maturity closest to the Index
Maturity designated in the Pricing Supplement of three leading nonbank dealers
in negotiable U.S. dollar certificates of deposit in The City of New York
selected by the Calculation Agent for negotiable certificates of deposit of
major United States money center banks; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as set forth
above, the "CD Rate" in effect for the applicable period will be the same as
the CD Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest payable on the CD Rate
Notes for which such CD Rate is being determined shall be the Initial Interest
Rate).
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest
rate (calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and
the Maximum Interest Rate, if any) specified in the Commercial Paper Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date, the Money Market Yield (as defined below) of the rate on
such date for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement, as such rate shall be published in H.15(519),
under the heading "Commercial Paper." In the event that such rate is not
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the Commercial Paper Rate shall be
the Money Market Yield of the rate on such Interest Determination Date for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper." If by 3:00 P.M., New York
City time, on such Calculation Date such rate is not yet available in either
H.15(519) or Composite Quotations, then the Commercial Paper Rate shall be the
Money Market Yield of the arithmetic mean of the offered rates as of 11:00
A.M., New York City time, on such Interest Determination Date of three leading
dealers of commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the specified Index Maturity, placed
for an industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting offered rates
as mentioned in this sentence, the "Commercial Paper Rate" in effect for the
applicable period will be the same as the Commercial Paper Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the Commercial Paper Rate Notes
for which such Commercial Paper Rate is being determined shall be the Initial
Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance
with the following formula:
D x 360
Money Market Yield = ----------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Index Maturity.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest
rate (calculated with reference to the Federal Funds Rate and the Spread
and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and
the Maximum Interest Rate, if any) specified in the Federal Funds Rate Notes
and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, the "Federal Funds Rate" means, with respect to any Interest
Determination Date, the rate on such date for Federal funds as published in
H.15(519) under the heading "Federal Funds (Effective)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Federal Funds Rate will be the rate
on such Interest Determination Date as published in the Composite Quotations
under the heading "Federal Funds/Effective Rate." If such rate is not yet
published in either H.15(519) or the Composite Quotations by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate for such Interest Determination
Date will be calculated by the Calculation Agent and will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds, as of
11:00 A.M., New York City time, on such Interest Determination Date, arranged
by three leading brokers of Federal funds transactions in The City of New York
selected by the Calculation Agent; provided, however, that if the brokers
selected as aforesaid by the Calculation Agent are not quoting as set forth
above, the "Federal Funds Rate" in effect for the applicable period will be the
same as the Federal Funds Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable on the Federal Funds Rate Notes for which such Federal Funds Rate is
being determined shall be the Initial Interest Rate).
LIBOR Notes
LIBOR Notes will bear interest at the interest rate (calculated
with reference to LIBOR and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, "LIBOR" for each Interest Determination Date will be determined by
the Calculation Agent as follows:
(i) As of the Interest Determination Date, the Calculation
Agent will determine (a) if "LIBOR Reuters" is specified in
the applicable Pricing Supplement, the arithmetic mean of the
offered rates (unless the specified Designated LIBOR Page (as
defined below) by its terms provides only for a single rate,
in which case such single rate shall be used) for deposits in
the Index Currency for the period of the Index Maturity, each
as designated in the applicable Pricing Supplement, commencing
on the second London Banking Day immediately following such
Interest Determination Date, which appear on the Designated
LIBOR Page at approximately 11:00 A.M., London time, on such
Interest Determination Date, if at least two such offered
rates appear (unless, as aforesaid, only a single rate is
required) on such Designated LIBOR Page, or (b) if "LIBOR
Telerate" is specified in the applicable Pricing Supplement,
the rate for deposits in the Index Currency for the period of
the Index Maturity, each as designated in the applicable
Pricing Supplement, commencing on the second London Banking
Day following such Interest Determination Date (or, if
Sterling is the Index Currency, commencing on such Interest
Determination Date), that appears on the Designated LIBOR Page
at approximately 11:00 A.M., London time, on such Interest
Determination Date. If fewer than two offered rates appear
(if "LIBOR Reuters" is specified in the applicable Pricing
Supplement and calculation of LIBOR is based on the arithmetic
mean of the offered rates) or if no rate appears (if the
applicable Pricing Supplement specifies either (x) "LIBOR
Reuters" and the Designated LIBOR Page by its terms provides
only for a single rate or (y) "LIBOR Telerate"), LIBOR in
respect of that Interest Determination Date will be determined
as if the parties had specified the rate described in (ii)
below.
(ii) With respect to an Interest Determination Date on
which fewer than two offered rates appear (if "LIBOR Reuters"
is specified in the applicable Pricing Supplement and
calculation of LIBOR is based on the arithmetic mean of the
offered rates) or no rate appears (if the applicable Pricing
Supplement specifies either (x) "LIBOR Reuters" and the
Designated LIBOR Page by its terms provides only for a single
rate or (y) "LIBOR Telerate"), the Calculation Agent will
request the principal London offices of each of four major
reference banks in the London interbank market, as selected by
the Calculation Agent (after consultation with the Company),
to provide the Calculation Agent with its offered quotations
for deposits in the Index Currency for the period of the
specified Index Maturity, commencing on the second London
Banking Day immediately following such Interest Determination
Date (or if Sterling is the Index Currency, commencing on such
Interest Determination Date), to prime banks in the London
interbank market at approximately 11:00 A.M., London time, on
such Interest Determination Date and in a principal amount
equal to an amount of not less than U.S.$1 million (or the
equivalent in the Index Currency, if the Index Currency is not
the U.S. dollar) that is representative of a single
transaction in such Index Currency in such market at such
time. If at least two such quotations are provided, LIBOR
determined on such Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR determined on such Interest
Determination Date will be the arithmetic mean of rates quoted
at approximately 11:00 A.M. (or such other time specified in
the applicable Pricing Supplement), in the applicable
principal financial center for the country of the Index
Currency on such Interest Determination Date, by three major
banks in such principal financial center selected by the
Calculation Agent (after consultation with the Company) on
such Interest Determination Date for loans in the Index
Currency to leading European banks, for the period of the
specified Index Maturity commencing on the second London
Banking Day immediately following such Interest Determination
Date (or, if Sterling is the Index Currency, commencing on
such Interest Determination Date) and in a principal amount of
not less than U.S.$1 million (or the equivalent in the Index
Currency, if the Index Currency is not the U.S. dollar) that
is representative of a single transaction in such Index
Currency in such market at such time; provided, however, that
if the banks selected as aforesaid by the Calculation Agent
are not quoting rates as mentioned in this sentence, "LIBOR"
for such Interest Reset Period will be the same as LIBOR for
the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest
payable on the LIBOR Notes for which LIBOR is being determined
shall be the Initial Interest Rate).
"Index Currency" means the currency (including composite
currencies) specified in the applicable Pricing Supplement as the currency for
which LIBOR shall be calculated. If no such currency is specified in the
applicable Pricing Supplement, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is
designated in the applicable Pricing Supplement, the display on the Reuters
Monitor Money Rates Service for the purpose of displaying the London interbank
rates of major banks for the applicable Index Currency, or (b) if "LIBOR
Telerate" is designated in the applicable Pricing Supplement, the display on
the Dow Jones Telerate Service for the purpose of displaying the London
interbank rates of major banks for the applicable Index Currency. If neither
LIBOR Reuters nor LIBOR Telerate is specified in the applicable Pricing
Supplement, LIBOR for the applicable Index Currency will be determined as if
LIBOR Telerate (and, if the U.S. dollar is the Index Currency, Page 3750) had
been specified. This condition may be subject to amendment in respect of
Paris Listed Instruments as disclosed in the applicable Pricing Supplement.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rate
(calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Interest Determination
Date, the rate set forth in H.15(519) for such date opposite the caption "Bank
Prime Loan." If such rate is not yet published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Prime Rate for such Interest Determination Date will be the arithmetic
mean of the rates of interest publicly announced by each bank named on the
Reuters Screen USPRIME1 Page (as defined below) as such bank's prime rate or
base lending rate as in effect for such Interest Determination Date as quoted
on the Reuters Screen USPRIME1 Page on such Interest Determination Date, or,
if fewer than four such rates appear on the Reuters Screen USPRIME1 Page for
such Interest Determination Date, the rate shall be the arithmetic mean of the
prime rates quoted on the basis of the actual number of days in the year
divided by 360 as of the close of business on such Interest Determination Date
by at least two of the three major money center banks in The City of New York
selected by the Calculation Agent from which quotations are requested. If
fewer than two quotations are provided, the Prime Rate shall be calculated by
the Calculation Agent and shall be determined as the arithmetic mean on the
basis of the prime rates in The City of New York by the appropriate number of
substitute banks or trust companies organized and doing business under the
laws of the United States, or any State thereof, in each case having total
equity capital of at least U.S.$500 million and being subject to supervision
or examination by federal or state authority, selected by the Calculation
Agent to quote such rate or rates; provided, however, that if the banks or
trust companies selected as aforesaid by the Calculation Agent are not quoting
rates as set forth above, the "Prime Rate" in effect for such Interest Reset
Period will be the same as the Prime Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
rate of interest payable on the Prime Rate Notes for which such Prime Rate is
being determined shall be the Initial Interest Rate). "Reuters Screen
USPRIME1 Page" means the display designated as Page "USPRIME1" on the Reuters
Monitor Money Rates Service (or such other page as may replace the USPRIME1
Page on that service for the purpose of displaying prime rates or base lending
rates of major United States banks).
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rate
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the Treasury Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, the "Treasury Rate" means, with respect to any Interest
Determination Date, the rate for the auction held on such date of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
designated in the applicable Pricing Supplement, as published in H.15(519)
under the heading "Treasury Bills -- auction average (investment)" or, if not
so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the auction average rate on
such Interest Determination Date (expressed as a bond equivalent, on the basis
of a year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury Bills having the Index
Maturity designated in the applicable Pricing Supplement are not published or
reported as provided above by 3:00 P.M., New York City time, on such
Calculation Date or if no such auction is held on such Interest Determination
Date, then the Treasury Rate shall be calculated by the Calculation Agent and
shall be a yield to maturity (expressed as a bond equivalent, on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis)
calculated using the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on such Interest Determination
Date, of three leading primary United States government securities dealers
selected by the Calculation Agent for the issue of Treasury Bills with a
remaining maturity closest to the Index Maturity designated in the applicable
Pricing Supplement; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting bid rates as mentioned in
this sentence, the "Treasury Rate" for such Interest Reset Date will be the
same as the Treasury Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable
on the Treasury Rate Notes for which the Treasury Rate is being determined
shall be the Initial Interest Rate).
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rate
(calculated with reference to the CMT Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the CMT Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement,
"CMT Rate" means, with respect to any Interest Determination Date, the rate
displayed for the Index Maturity designated in such CMT Rate Note on the
Designated CMT Telerate Page (as defined below) under the caption "...
Treasury Constant Maturities ... Federal Reserve Board Release H.15" under the
column for the Designated CMT Maturity Index (as defined below) for (i) if the
Designated CMT Telerate Page is 7055, the rate on such Interest Determination
Date and (ii) if the Designated CMT Telerate Page is 7052, the week or the
month, as applicable, ended immediately preceding the week in which the
related Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant Maturity rate for
the Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate is no longer published, or if not published by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the Interest Determination Date with
respect to the related Interest Reset Date as may then be published by either
the Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided
by 3:00 P.M., New York City time, on the related Calculation Date, then the
CMT Rate for the Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately
3:30 P.M., New York City time, on the Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York (which may include the Agents or their affiliates) selected by the
Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent, after consultation with the Company, and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury notes") with an original maturity of approximately the
Designated CMT Maturity Index and remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent
cannot obtain three such Treasury notes quotations, the CMT Rate for such
Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the secondary
market offer side prices as of approximately 3:30 P.M., New York City time,
on the Interest Determination Date of three Reference Dealers in The City of
New York (from five such Reference Dealers selected by the Calculation Agent,
after consultation with the Company, and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation
(or, in the event of equality, one of the lowest)), for Treasury notes with an
original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least U.S.$100,000,000.
If three or four (and not five) of such Reference Dealers are quoting as
described above, then the CMT Rate will be based on the arithmetic mean of the
offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated; provided, however, that if fewer than three Reference
Dealers selected by the Calculation Agent are quoting as described herein, the
CMT Rate for such Interest Reset Date will be the same as the CMT Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the CMT Rate Notes for which the
CMT Rate is being determined shall be the Initial Interest Rate). If two
Treasury notes with an original maturity as described in the second preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury note with the shorter remaining
term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow
Jones Telerate Service on the page designated in an applicable Pricing
Supplement (or any other page as may replace such page on that service for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519)),
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519). If no such page is specified in the applicable Pricing Supplement,
the Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified in an applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the
applicable Pricing Supplement, the Designated CMT Maturity Index shall be two
years.
Exchangeable Notes
Notes may be issued, from time to time, that are optionally or
mandatorily exchangeable into the securities of an entity unaffiliated with
the Company, into a basket of such securities, into an index or indices of such
securities or into any combination of the above, as may be set forth in the
applicable Pricing Supplement (the "Exchangeable Notes"). The Exchangeable
Notes may or may not bear interest or be issued with original issue discount
or at a premium.
Unless otherwise specified in the applicable Pricing
Supplement, optionally Exchangeable Notes (the "Optionally Exchangeable
Notes") will entitle the holder of such a Note, during a period, or at
specific times, to exchange such Note for the underlying security, basket of
securities or index or indices of securities (or combination thereof) at a
specified rate of exchange. If so specified in the applicable Pricing
Supplement, Optionally Exchangeable Notes will be redeemable at the option of
the Company prior to maturity. If the holder of an Optionally Exchangeable
Note does not elect to exchange such Note prior to maturity or any applicable
redemption date, such holder will receive the principal amount of such Note.
Unless otherwise specified in the applicable Pricing
Supplement, mandatorily Exchangeable Notes (the "Mandatorily Exchangeable
Notes") do not entitle the holder of such a Note to exchange such Note prior to
maturity; at maturity, the holder is required to exchange such Note for the
underlying security, basket of securities or index or indices of securities
(or combination thereof) at a specified rate of exchange, and, therefore, the
holder of a Mandatorily Exchangeable Note may receive less than the principal
amount of such Note at maturity. If so indicated in the applicable Pricing
Supplement, the specified rate at which a Mandatorily Exchangeable Note may
be exchanged may vary depending on the value of the underlying security,
basket of securities or index or indices (or combination thereof) so that,
upon exchange, the holder participates in a percentage, which may be less than,
equal to, or greater than 100% of the change in value of the underlying
security, basket of securities or index or indices (or combination thereof).
Upon exchange, at maturity or otherwise, the holder of an
Exchangeable Note may receive, at the specified exchange rate, either the
underlying security or the securities constituting the relevant basket or
index or indices at the specified exchange rate or the cash value of such
underlying security or securities, as may be specified in the applicable
Pricing Supplement. The underlying security or securities constituting any
basket, index or indices may be the securities of either U.S. or foreign
entities or both, and the Exchangeable Notes may or may not provide for
protection against fluctuations in the rate of currency exchange between the
currency in which such Note is denominated and the currency or currencies in
which the market prices of such underlying security or securities are quoted,
as may be specified in the applicable Pricing Supplement. Exchangeable Notes
may have other terms, which will be specified in the applicable Pricing
Supplement. Exchangeable Notes for which a holder may receive the underlying
security or securities constituting a basket of securities or an index or
indices will not be listed on the London Stock Exchange unless listing
particulars with respect thereto are approved by the London Stock Exchange.
If an Optionally Exchangeable Note is represented by a global
Bearer Note or by definitive Notes that remain on deposit with a Common
Depositary for the Euroclear Operator or Cedel Bank, the exercise of the right
to exchange must be made through the Euroclear Operator or Cedel Bank. In
order to ensure that the Euroclear Operator or Cedel Bank will timely exercise
a right to exchange with respect to a particular Note on behalf of a
beneficial owner of such Note or an interest in such Note, the beneficial
owner of such Note must instruct the broker or other direct or indirect
participant through which it holds an interest in such Note to notify the
Euroclear Operator or Cedel Bank of its desire to exercise a right to exchange
in accordance with the then applicable operating procedures of the Euroclear
Operator or Cedel Bank. Different firms have different deadlines for
accepting instructions from their customers and, accordingly, each beneficial
owner should consult the broker or other direct or indirect participant
through which it holds an interest in a Note in order to ascertain the deadline
for such an instruction in order for timely notice to be delivered to the
Euroclear Operator or Cedel Bank.
Payments upon Acceleration of Maturity or upon Tax Redemption
If the principal amount payable at maturity of any Exchangeable
Note is declared due and payable prior to maturity or is redeemed as set forth
below under "Tax Redemption," and unless otherwise specified in the applicable
Pricing Supplement, the amount payable with respect to (i) an Optionally
Exchangeable Note will equal the face amount of such Note plus accrued
interest, if any, to but excluding the date of payment, provided that if a
holder shall have exchanged an Optionally Exchangeable Note prior to such time
without having received the amount due upon such exchange, the amount payable
shall be the amount due upon exchange and shall not include any accrued but
unpaid interest, and (ii) a Mandatorily Exchangeable Note will equal an amount
determined as if the date of such declaration or tax redemption were the
maturity date plus accrued interest, if any, to but excluding the date of
payment.
Currency Linked Notes
Notes may be issued from time to time with the principal amount
payable on any principal payment date, or the amount of interest payable on
any interest payment date, to be determined by reference to the value of one or
more currencies (or composite currencies) as compared to the value of one or
more other currencies (or composite currencies) ("Currency Linked Notes").
Information as to the one or more currencies (or composite currencies) to
which the principal amount payable on any principal payment date or the amount
of interest payable on any interest payment date is indexed, the currency in
which the face amount of the Currency Linked Note is denominated (the
"Denominated Currency"), the currency in which principal on the Currency
Linked Note will be paid (the "Payment Currency"), specific historic exchange
rate information, any currency risks relating to the specific currencies
selected, and certain additional tax considerations, if any, will be set forth
in the applicable Pricing Supplement. The Denominated Currency and the
Payment Currency may be the same currency or different currencies. Unless
otherwise specified in the applicable Pricing Supplement, interest on Currency
Linked Notes will be paid in the Denominated Currency based on the face amount
of the Currency Linked Note at the rate per annum and on the dates set forth
in the applicable Pricing Supplement. Currency Linked Notes may include, but
are not limited to, Notes of the types described below. The issuance of
Currency Linked Notes denominated or payable in Deutsche Marks will be made in
compliance with the policy of the German Central Bank, as amended from time to
time, regarding indexation of Deutsche Mark-denominated debt obligations.
Principal Exchange Rate Linked Securities (PERLS)
PERLS are Currency Linked Notes pursuant to which the principal
amount payable on any principal payment date equals the Payment Currency
equivalent at such date of a fixed amount of a designated currency (or
composite currency) (the "Indexed Currency"). Generally, the fixed amount of
Indexed Currency to which the principal of a PERLS will be linked will be
approximately equal in value to the face amount of the PERLS in the Denominated
Currency based on the exchange rate between the Indexed Currency and the
Denominated Currency in effect at the time of pricing. The Denominated
Currency, the Indexed Currency and the Payment Currency will be identified in
the applicable Pricing Supplement. In addition, the fixed amount of the
Indexed Currency to which the principal of the PERLS is linked will be set
forth in the applicable Pricing Supplement for a specific representative face
amount of the PERLS as well as for the aggregate face amount of all PERLS
forming part of the same issue (the "Conversion Reference Amount").
Holders of PERLS may receive an amount of principal greater
than, less than or equal in value to the face amount of the PERLS, depending
on the change, if any, in the relative exchange rates of the Denominated
Currency, the Payment Currency and the Indexed Currency from the issue date to
the date that is two Exchange Rate Days (as defined below) preceding the
maturity date.
The Payment Currency equivalent of any Indexed Currency amount
on any date will be determined by an exchange rate agent (identified in the
applicable Pricing Supplement) based on the arithmetic mean of the quotations
obtained by such agent from reference dealers (identified in the applicable
Pricing Supplement) at 11:00 A.M., New York City time, on the second Exchange
Rate Day preceding such date for the purchase by the reference dealers of the
Conversion Reference Amount of the Indexed Currency with the Payment Currency
for settlement on such date; provided that if there is no cross-exchange rate
available in New York City between the Indexed Currency and the Payment
Currency, the quotations will be calculated by the exchange rate agent at the
time referred to above using the U.S. dollar equivalent of the Indexed
Currency and the Payment Currency as the basis for comparing the values of
such currencies; and provided further that if the Payment Currency and the
Indexed Currency are identical, then the Payment Currency equivalent of any
Indexed Currency amount will be such amount.
"Exchange Rate Day" means, with respect to any currency
conversion, any day other than a Saturday or Sunday or a day on which banking
institutions in New York City are authorized or required by law or executive
order to close and that is a business day in each of the cities designated in
the Pricing Supplement for the currencies being converted and, in the case of
conversions involving ECUs, that is not a non-ECU clearing day, as determined
by the ECU Banking Association in Paris.
Reverse Principal Exchange Rate Linked Securities (Reverse
PERLS)
Reverse PERLS are Currency Linked Notes pursuant to which the
principal amount payable on any principal payment date equals the Payment
Currency equivalent at such date of a fixed amount of a designated currency (or
composite currency) (the "First Indexed Currency") minus the Payment Currency
equivalent at maturity of a fixed amount of another designated currency (or
composite currency) (the "Second Indexed Currency"); provided that the minimum
principal amount payable at maturity will be zero. Generally, the fixed
amount of the First Indexed Currency to which the principal of a Reverse PERLS
will be linked will be approximately equal in value to twice the face amount
of the Reverse PERLS in the Denominated Currency, and the fixed amount of the
Second Indexed Currency to which the principal of a Reverse PERLS will be
linked will be approximately equal in value to the face amount of the Reverse
PERLS in the Denominated Currency, in each case based on the exchange rate
between each Indexed Currency and the Denominated Currency in effect at the
time of pricing.
Holders of Reverse PERLS may receive an amount of principal
greater than, less than (with a minimum of zero) or equal in value to the face
amount of the Reverse PERLS, depending on the change, if any, in the relative
exchange rates of the Denominated Currency, the Payment Currency and the First
and Second Indexed Currencies from the issue date to the date that is two
Exchange Rate Days preceding the maturity date.
The Denominated Currency, the First and Second Indexed
Currencies and the Payment Currency will be identified in the applicable
Pricing Supplement. In addition, the fixed amounts of the First and Second
Indexed Currencies to which the principal of the Reverse PERLS is linked will
be set forth in the applicable Pricing Supplement for a specific
representative face amount of the Reverse PERLS as well as for the aggregate
face amount of all Reverse PERLS forming part of the same issue (respectively,
the "First Conversion Reference Amount" and the "Second Conversion Reference
Amount").
The Payment Currency equivalent of any First Indexed Currency
amount on any date will be determined by an exchange rate agent (identified in
the applicable Pricing Supplement) based on the arithmetic mean of the
quotations obtained by such agent from reference dealers (identified in the
applicable Pricing Supplement) at 11:00 A.M., New York City time, on the
second Exchange Rate Day preceding such date for the purchase by the reference
dealers of the First Conversion Reference Amount of the First Indexed Currency
with the Payment Currency for settlement on such date; provided that if there
is no cross-exchange rate available in New York City between the First Indexed
Currency and the Payment Currency, the quotations will be calculated by the
exchange rate agent at the time referred to above using the U.S. dollar
equivalent of the First Indexed Currency and the Payment Currency as the basis
for comparing the values of such currencies; provided further that if the First
Indexed Currency and the Payment Currency are identical, then the Payment
Currency equivalent of any First Indexed Currency amount will be such amount.
The Payment Currency equivalent of any Second Indexed Currency
amount on any date will be determined by an exchange rate agent (identified in
the applicable Pricing Supplement) based on the arithmetic mean of the
quotations obtained by such agent from the reference dealers (identified in
the applicable Pricing Supplement) at 11:00 A.M., New York City time, on the
second Exchange Rate Day preceding such date for the sale by the reference
dealers of the Second Conversion Reference Amount of the Second Indexed
Currency for the Payment Currency for settlement on such date; provided that
if there is no cross-exchange rate available in New York City between the
Second Indexed Currency and the Payment Currency, the quotations will be
calculated by the exchange rate agent at the time referred to above using the
U.S. dollar equivalent of the Second Indexed Currency and the Payment Currency
as the basis for comparing the values of such currencies; provided further
that if the Second Indexed Currency and the Payment Currency are identical,
then the Payment Currency equivalent of any Second Indexed Currency amount
will be such amount.
Multicurrency Principal Exchange Rate Linked Securities
(Multicurrency PERLS)
Multicurrency PERLS are Currency Linked Notes pursuant to which
the principal amount payable on any principal payment date equals the Payment
Currency equivalent at such date of a fixed amount of a designated currency
(or composite currency) (the "First Indexed Currency") plus or minus the
Payment Currency equivalent at maturity of a fixed amount of a second
designated currency (or composite currency) (the "Second Indexed Currency")
plus or minus the Payment Currency equivalent at maturity of a fixed amount of
a third designated currency (or composite currency) (the "Third Indexed
Currency"); provided that the minimum principal amount payable at maturity
will be zero. Generally, the added and subtracted fixed amounts of the First,
Second and Third Indexed Currencies (each, an "Indexed Currency") to which the
principal of a Multicurrency PERLS will be linked will have an aggregate value
approximately equal to the face amount of the Multicurrency PERLS in the
Denominated Currency based on exchange rates between each Indexed Currency and
the Denominated Currency in effect at the time of pricing.
Holders of Multicurrency PERLS may receive an amount of
principal greater than, less than (with a minimum of zero) or equal in value
to the face amount of the Multicurrency PERLS, depending on the change, if
any, in the relative exchange rates for the Denominated Currency, the Payment
Currency and the First, Second and Third Indexed Currencies from the issue
date to the date that is two Exchange Rate Days preceding the maturity date.
The Denominated Currency, each Indexed Currency, the Payment
Currency and whether the fixed amounts of the Second and Third Indexed
Currencies are to be added or subtracted to determine the principal amount
payable at maturity of the Multicurrency PERLS will be set forth in the
applicable Pricing Supplement. In addition, the fixed amounts of the First,
Second and Third Indexed Currencies to which the principal of the
Multicurrency PERLS is linked will be set forth in the applicable Pricing
Supplement for a specific representative face amount of the Multicurrency
PERLS as well as for the aggregate face amount of all Multicurrency PERLS
forming part of the same issue (respectively, the "First Conversion Reference
Amount," the "Second Conversion Reference Amount" and the "Third Conversion
Reference Amount," each, a "Conversion Reference Amount"). As used herein,
"Added Indexed Currency" means the First Indexed Currency and any other
Indexed Currency that is added to determine the principal amount payable at
maturity of the Multicurrency PERLS and a "Subtracted Indexed Currency" means
an Indexed Currency that is subtracted to determine the principal amount
payable at maturity of the Multicurrency PERLS.
The Payment Currency equivalent of any Added Indexed Currency
amount on any date will be determined by an exchange rate agent (identified in
the applicable Pricing Supplement) based on the arithmetic mean of the
quotations obtained by such agent from reference dealers (identified in the
applicable Pricing Supplement) at 11:00 A.M., New York City time, on the
second Exchange Rate Day preceding such date for the purchase by the reference
dealers of the applicable Conversion Reference Amount of the Added Indexed
Currency with the Payment Currency for settlement on such date; provided that
if there is no cross-exchange rate available in New York City between the
Added Indexed Currency and the Payment Currency, the quotations will be
calculated by the exchange rate agent at the time referred to above using the
U.S. dollar equivalent of the Added Indexed Currency and the Payment Currency
as the basis for comparing the values of such currencies; provided further
that if the Added Indexed Currency and the Payment Currency are identical,
then the Payment Currency equivalent of any Added Indexed Currency amount will
be such amount.
The Payment Currency equivalent of any Subtracted Indexed
Currency amount on any date will be determined by an exchange rate agent
(identified in the applicable Pricing Supplement) based on the arithmetic mean
of the quotations obtained by such agent from reference dealers (identified in
the applicable Pricing Supplement) at 11:00 A.M., New York City time, on the
second Exchange Rate Day preceding such date for the sale by the reference
dealers of the applicable Conversion Reference Amount of the Subtracted
Indexed Currency for the Payment Currency for settlement on such date;
provided that if there is no cross-exchange rate available in New York City
between the Subtracted Indexed Currency and the Payment Currency, the
quotations will be calculated by the exchange rate agent at the time referred
to above using the U.S. dollar equivalent of the Subtracted Indexed Currency
and the Payment Currency as the basis for comparing the values of such
currencies; provided further that if the Subtracted Indexed Currency and the
Payment Currency are identical, then the Payment Currency equivalent of any
Subtracted Indexed Currency amount will be such amount.
Payments upon Acceleration of Maturity or upon Tax Redemption
If the principal amount payable at maturity of any PERLS,
Reverse PERLS or Multicurrency PERLS is declared due and payable prior to
maturity, or if any PERLS, Reverse PERLS or Multicurrency PERLS are redeemed
as set forth below under "Tax Redemption," and unless otherwise specified in
the applicable Pricing Supplement, the amount payable with respect to such
Note will be paid in the Denominated Currency and will equal the face amount
of such Note plus accrued interest to but excluding the date of payment.
Notes Linked to Commodity Prices, Single Securities, Baskets of Securities or
Indices
Notes may be issued, from time to time, with the principal
amount payable on any principal payment date, or the amount of interest
payable on any interest payment date, to be determined by reference to one or
more commodity prices, securities of entities unaffiliated with the Company,
baskets of such securities or indices and on such other terms as may be set
forth in the relevant Pricing Supplement. The issuance of such Notes
denominated or payable in Deutsche Marks will be made in compliance with the
policy of the German Central Bank, as amended from time to time, regarding
indexation of Deutsche Mark denominated debt obligations of non-German
issuers. Each issue of index-linked French Franc Notes which are to be
listed on the Paris Bourse must be made in compliance with the general
principles of the COB and the Conseil des Bourses de Valeurs ("CBV") published
on July 26, 1996 (Decisions et Avis No. 96-2580 published by the Societe de
Bourses Francaises ("SBF")) or any other general principles that could replace
those mentioned above.
Optional Redemption
The Pricing Supplement will indicate either that the Notes
cannot be redeemed prior to maturity (other than as provided under "Tax
Redemption" below) or will indicate the terms on which the Notes will be
redeemable at the option of the Company. Notes denominated or payable in
French Francs may not be redeemed at the option of the Company during the
first year after issuance and Notes denominated or payable in Deutsche Marks
may not be redeemed during the first two years after issuance, except in each
case pursuant to a Tax Redemption or following an Event of Default. Each
issue of Sterling Notes shall comply with all applicable laws and regulations
(as amended from time to time) of United Kingdom authorities. In particular
(but without limitation) see "General Information--The Banking Act 1987
(Exempt Transactions) Regulations 1997" below. Sterling Notes which are
described as shorter term debt securities are, for purposes of the
Regulations, required to have a minimum maturity of the first anniversary from
the date of issue and a maximum maturity of prior to the third anniversary
from the date of issue. Such shorter term Sterling Notes may not be redeemed
in whole or in part (other than in the case of a Tax Redemption or following
an Event of Default) until the first anniversary of the date of issue and must
be redeemed before the third anniversary of the date of issue. Sterling Notes
which are described as longer term debt securities are, for purposes of the
Regulations, required to have a minimum maturity of three years from the date
of issue. Such longer term Sterling Notes may not be redeemed in whole or in
part (other than in the case of a Tax Redemption or following an Event of
Default) until the third anniversary of the date of issue.
Unless otherwise specified in the applicable Pricing
Supplement, notice of redemption to holders of Notes will be published in the
manner described under "Notices" below, once in each of three successive
calendar weeks, the first publication to be not less than 30 nor more than 60
days prior to the date set for redemption. Unless otherwise specified in the
applicable Pricing Supplement, notice of redemption shall also be provided to
holders of Registered Notes in the manner described under "Notices" below, not
less than 30 days and not more than 60 days prior to the date fixed for
redemption. The Notes, except for Amortizing Notes, will not be subject to any
sinking fund.
Repayment at the Noteholders' Option; Repurchase
If applicable, the Pricing Supplement relating to each Note
will indicate that the Note will be repayable at the option of the holder on a
date or dates specified prior to its maturity date (which, in the case of
Notes denominated or payable in French Francs may not occur during the first
year after issuance and, in the case of Deutsche Marks, may not occur during
the first two years after issuance) and, unless otherwise specified in such
Pricing Supplement, at a price equal to 100% of the principal amount thereof,
together with accrued interest to the date of repayment, unless such Note was
issued with original issue discount, in which case the Pricing Supplement will
specify the amount payable upon such repayment.
In order for such a Note to be repaid, the Principal Paying
Agent must receive at least 15 days but not more than 30 days prior to the
repayment date (i) the Note with the form entitled "Option to Elect Repayment"
on the reverse of the Note duly completed, together with any coupons
appertaining thereto, or (ii) a telegram, telex, facsimile transmission or
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD") or a commercial bank or
trust company in the United States, Western Europe or Japan setting forth the
name of the holder of the Note (in the case only of a Registered Note), the
principal amount of the Note, the principal amount of the Note to be repaid,
the certificate number or a description of the tenor and terms of the Note, a
statement that the option to elect repayment is being exercised thereby and
a guarantee that the Note to be repaid, together with the duly completed form
entitled "Option to Elect Repayment" on the reverse of the Note, together with
any coupons appertaining thereto, will be received by the Principal Paying
Agent not later than the fifth Business Day after the date of such telegram,
telex, facsimile transmission or letter; provided, however, that such
telegram, telex, facsimile transmission or letter shall only be effective if
such Note and form duly completed, together with any coupons appertaining
thereto, are received by the Principal Paying Agent by such fifth Business
Day. Unless otherwise specified in the applicable Pricing Supplement,
exercise of the repayment option by the holder of a Note will be irrevocable.
The repayment option may be exercised by the holder of a Note for less than
the entire principal amount of the Note but, in that event, the principal
amount of the Note remaining outstanding after repayment must be an authorized
denomination.
The Company may purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may, at the discretion of the
Company, be held or resold or surrendered to the relevant Trustee for
cancellation.
Tax Redemption
All Notes
Notes may be redeemed as a whole, at the option of the Company
at any time prior to maturity, upon the giving of a notice of redemption as
described below, at a redemption price equal to 100% of the principal amount
thereof (except as otherwise specified in the applicable Pricing Supplement or
unless such Note is a Mandatorily Exchangeable Note), together with accrued
interest to the date fixed for redemption, if the Company determines that, as
a result of any change in or amendment to the laws (or any regulations or
rulings promulgated thereunder) of the United States or of any political
subdivision or taxing authority thereof or therein affecting taxation, or any
change in official position regarding the application or interpretation of
such laws, regulations or rulings, which change or amendment becomes effective
on or after the date of the Pricing Supplement in connection with the issuance
of such Notes (or other date specified in the applicable Pricing Supplement),
the Company has or will become obligated to pay Additional Amounts with
respect to such Notes as described below under "Payment of Additional
Amounts." Prior to the giving of any notice of redemption pursuant to this
paragraph, the Company shall deliver to the applicable Trustee (i) a
certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to
the right of the Company to so redeem have occurred (the date on which such
certificate is delivered to the Trustee is the "Redemption Determination
Date"), and (ii) an opinion of independent counsel satisfactory to such
Trustee to such effect based on such statement of facts; provided that no such
notice of redemption shall be given earlier than 60 days prior to the earliest
date on which the Company would be obligated to pay such Additional Amounts if
a payment in respect of such Note were then due.
Notice of redemption will be given not less than 30 nor more
than 60 days prior to the date fixed for redemption, which date and the
applicable redemption price will be specified in the notice. Such notice will
be given in accordance with "Notices" below.
If any date fixed for redemption is a date prior to the
Exchange Date, definitive Bearer Notes will be issuable on and after such
redemption date as if such redemption date had been the Exchange Date, subject
to receipt of Ownership Certificates described above under "Forms,
Denominations, Exchange and Transfer," delivery of which is a condition to
delivery of definitive Bearer Notes.
Special Tax Redemption of Bearer Notes
If the Company shall determine that any payment made outside
the United States by the Company or any Paying Agent of principal, premium, if
any, or interest due in respect of any Bearer Note or coupon would, under any
present or future laws or regulations of the United States, be subject to any
certification, identification or other information reporting requirement of
any kind, the effect of which is the disclosure to the Company, any Paying
Agent or any governmental authority of the nationality, residence or identity
of a beneficial owner of such Bearer Note or coupon who is a United States
Alien (as defined below in "Payment of Additional Amounts") (other than such a
requirement (a) that would not be applicable to a payment made by the Company
or any Paying Agent (i) directly to the beneficial owner or (ii) to a
custodian, nominee or other agent of the beneficial owner, or (b) that can be
satisfied by such custodian, nominee or other agent certifying to the effect
that such beneficial owner is a United States Alien; provided that in each
case referred to in clauses (a)(ii) and (b) payment by such custodian, nominee
or agent to such beneficial owner is not otherwise subject to any such
requirement), the Company shall redeem the Bearer Notes, as a whole, at a
redemption price equal to 100% of the principal amount thereof, together with
accrued interest to the date fixed for redemption, or, at the election of the
Company if the conditions of the next paragraph are satisfied, pay the
additional amounts specified in such paragraph. The Company shall make such
determination and election as soon as practicable and publish prompt notice
thereof (the "Determination Notice") stating the effective date of such
certification, identification or other information reporting requirements,
whether the Company will redeem the Bearer Notes or has elected to pay the
additional amounts specified in the next paragraph, and (if applicable) the
last date by which the redemption of the Bearer Notes must take place, as
provided in the next sentence. If the Company redeems the Bearer Notes, such
redemption shall take place on such date, not later than one year after the
publication of the Determination Notice, as the Company shall elect by notice
to the applicable Trustee at least 60 days prior to the date fixed for
redemption. Notice of such redemption of the Bearer Notes will be given to
the holders of the Bearer Notes not more than 60 nor less than 30 days prior
to the date fixed for redemption. Such redemption notice shall include a
statement as to the last date by which the Bearer Notes to be redeemed may be
exchanged for Registered Notes. Notwithstanding the foregoing, the Company
shall not so redeem the Bearer Notes if the Company shall subsequently
determine, not less than 30 days prior to the date fixed for redemption, that
subsequent payments would not be subject to any such certification,
identification or other information reporting requirement, in which case the
Company shall publish prompt notice of such determination and any earlier
redemption notice shall be revoked and of no further effect. The right of the
holders of Bearer Notes called for redemption pursuant to this paragraph to
exchange Bearer Notes for Registered Notes will terminate at the close of
business of the Principal Paying Agent on the fifteenth day prior to the date
fixed for redemption, and no further exchanges of Bearer Notes for Registered
Notes shall be permitted.
If and so long as the certification, identification or other
information reporting requirements referred to in the preceding paragraph
would be fully satisfied by payment of a backup withholding tax or similar
charge, the Company may elect to pay as additional amounts such amounts as may
be necessary so that every net payment made outside the United States
following the effective date of such requirements by the Company or any Paying
Agent of principal, premium or interest due in respect of any Bearer Note or
any coupon of which the beneficial owner is a United States Alien (but without
any requirement that the nationality, residence or identity of such beneficial
owner be disclosed to the Company, any Paying Agent or any governmental
authority, with respect to the payment of such additional amounts), after
deduction or withholding for or on account of such backup withholding tax or
similar charge (other than a backup withholding tax or similar charge that (i)
would not be applicable in the circumstances referred to in the second
parenthetical clause of the first sentence of the preceding paragraph, or (ii)
is imposed as a result of presentation of such Bearer Note or coupon for
payment more than 15 days after the date on which such payment becomes due and
payable or on which payment thereof is duly provided for, whichever occurs
later), will not be less than the amount provided for in such Bearer Note or
coupon to be then due and payable. In the event the Company elects to pay any
additional amounts pursuant to this paragraph, the Company shall have the
right to redeem the Bearer Notes as a whole at any time pursuant to the
applicable provisions of the preceding paragraph and the redemption price of
such Bearer Notes will not be reduced for applicable withholding taxes. If
the Company elects to pay additional amounts pursuant to this paragraph and the
condition specified in the first sentence of this paragraph should no longer
be satisfied, then the Company will redeem the Bearer Notes as a whole,
pursuant to the applicable provisions of the preceding paragraph.
Payment of Additional Amounts
Except as otherwise provided in the applicable Pricing
Supplement, the Company will, subject to certain exceptions and limitations
set forth below, pay such additional amounts (the "Additional Amounts") to the
holder of any Note or of any coupon appertaining thereto who is a United
States Alien as may be necessary in order that every net payment of the
principal of and interest on such Note and any other amounts payable on such
Note, after withholding for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment
by the United States (or any political subdivision or taxing authority thereof
or therein), will not be less than the amount provided for in such Note or
coupon to be then due and payable. The Company will not, however, be required
to make any payment of Additional Amounts to any such holder for or on account
of:
(a) any such tax, assessment or other governmental charge that
would not have been so imposed but for (i) the existence of any present or
former connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of such holder, if such holder is an
estate, a trust, a partnership or a corporation) and the United States and its
possessions, including, without limitation, such holder (or such fiduciary,
settlor, beneficiary, member or shareholder) being or having been a citizen or
resident thereof or being or having been engaged in a trade or business or
present therein or having, or having had, a permanent establishment therein or
(ii) the presentation by the holder of any such Note or coupon for payment on
a date more than 15 days after the date on which such payment became due and
payable or the date on which payment thereof is duly provided for, whichever
occurs later;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or governmental charge;
(c) any tax, assessment or other governmental charge imposed by
reason of such holder's past or present status as a personal holding company
or foreign personal holding company or controlled foreign corporation or
passive foreign investment company with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal income
tax or as a private foundation or other tax-exempt organization;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by withholding from payments on or in respect of any
Note;
(e) any tax, assessment or other governmental charge required
to be withheld by any Paying Agent from any payment of principal of, or
interest on, any Note, if such payment can be made without such withholding by
any other Paying Agent in a city in Western Europe;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for the failure to comply with certification,
information or other reporting requirements concerning the nationality,
residence or identity of the holder or beneficial owner of such Note, if such
compliance is required by statute or by regulation of the United States or of
any political subdivision or taxing authority thereof or therein as a
precondition to relief or exemption from such tax, assessment or other
governmental charge;
(g) any tax, assessment or other governmental charge imposed by
reason of such holder's past or present status as the actual or constructive
owner of 10% or more of the total combined voting power of all classes of
stock entitled to vote of the Company or as a direct or indirect subsidiary of
the Company; or
(h) any combination of item (a), (b), (c), (d), (e), (f) or (g);
nor shall Additional Amounts be paid with respect to any payment on a Note to
a United States Alien who is a fiduciary or partnership or other than the sole
beneficial owner of such payment to the extent such payment would be required
by the laws of the United States (or any political subdivision thereof) to be
included in the income, for tax purposes, of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a beneficial
owner who would not have been entitled to the Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the holder of the Note.
The term "United States Alien" means any person who, for United
States federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a nonresident alien fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is a foreign
corporation, a nonresident alien individual or a nonresident alien fiduciary
of a foreign estate or trust.
Replacement of Notes and Coupons
Any Notes or coupons that become mutilated, destroyed, lost or
stolen or are apparently destroyed, lost or stolen will be replaced by the
Company at the expense of the holder upon delivery of such Notes or coupons or
satisfactory evidence of the destruction, loss or theft thereof to the
Company, the Principal Paying Agent, the Registrar (in the case of Registered
Notes) and the applicable Trustee. In each case, an indemnity satisfactory to
the Company, the Principal Paying Agent, the Registrar (in the case of
Registered Notes) and the applicable Trustee may be required at the expense of
the holder of such Note or coupon before a replacement Note or coupon will be
issued.
Notices
Notices to holders of the Notes will be given by publication in
a newspaper in the English language of general circulation in the Borough of
Manhattan, The City of New York, and in The City of London or, if publication
in London is not practical, in an English language newspaper with general
circulation in Western Europe. Such publication is expected to be made in The
Wall Street Journal and the Financial Times. In respect of Notes that are
listed on the Paris Bourse, and so long as required by the Paris Bourse,
notices to holders of the Notes will be given by publication in a French
language daily newspaper published in Paris (which is expected to be either
Les Echos or la Tribune Desfosses or, if such publication is not practicable,
in a French language newspaper with general circulation in Europe. Such
notices will be deemed to have been given on the date of such publication or,
if published in such newspapers on different dates, on the date of the first
such publication.
Notices to holders of Registered Notes will also be given by
mailing such notices to each holder by first class mail, postage prepaid, at
the respective address of each holder as that address appears upon the books
of the Company.
DESCRIPTION OF UNITS
The following description of the Units offered hereby,
including the designation and the terms of the Notes, Universal Warrants and
Purchase Contracts that may be included in a Unit, supplements the description
of the Units, Universal Warrants and Purchase Contracts set forth in the
Prospectus, to which reference is hereby made. In particular, the terms of
the Universal Warrants and Purchase Contracts offered hereby relate solely to
Universal Warrants and Purchase Contracts issued in conjunction with Notes as
part of a Unit. The terms and conditions of Notes issued as part of a Unit
are set forth above under "Description of Notes."
The particular terms of the Units, including the terms of the
Notes, Universal Warrants and Purchase Contracts that may be included in a
Unit, offered pursuant to any Pricing Supplement will be described therein.
The terms and conditions set forth in the Prospectus under "Description of
Units," "Description of Warrants," "Description of Purchase Contracts" and
"Description of Debt Securities" and those set forth below under "-- General,"
"-- Certain Provisions of the Unit Agreement," "-- Purchase Contracts," "--
Universal Warrants" and "-- Certain Provisions of the Universal Warrant
Agreement" and above under "Description of Notes" will apply to each Unit and
to any Universal Warrant, Purchase Contract or Note included in such Unit,
respectively, unless otherwise specified in the applicable Pricing Supplement.
General
The Company may issue from time to time Units that may include,
in addition to Notes, one or more Universal Warrants or Purchase Contracts.
Reference is made to the applicable Pricing Supplement for (i) the designation
and the terms of the Units and of the Notes, Universal Warrants, Purchase
Contracts, or any combination thereof, comprising such Units, including
whether and under what circumstances such Notes, Universal Warrants or
Purchase Contracts may be traded separately, (ii) a description of any
additional terms of the Unit Agreement (as defined below) and (iii) a
description of any additional provisions for the issuance, payment,
settlement, transfer or exchange of the Units or of the securities comprised
by the Units.
The Units will be issued pursuant to the Unit Agreement dated
as of June 2, 1997 (the "Unit Agreement") among the Company, The Chase
Manhattan Bank, as Unit Agent for the Units (the "Unit Agent"), as Collateral
Agent (the "Collateral Agent"), and as Trustee and Paying Agent under the
Senior Debt Indenture and as Warrant Agent under the Universal Warrant
Agreement (as defined below), and the holders from time to time of the Units.
Unless otherwise specified in the applicable Pricing Supplement, the Units
will be issued in the form corresponding to the form of the Notes comprised by
such Units and, therefore, will be issued (i) in fully registered definitive
form ("Registered Units") or (ii) in definitive bearer form or in temporary or
permanent global bearer form (in each case, "Bearer Units") or in any
combination of the above such registered or bearer forms. Each other security
comprised by a Unit will be in the corresponding form.
Unless otherwise specified in the applicable Pricing
Supplement, Units will be issued in denominations of a single Unit and any
integral multiple thereof, with face amounts as indicated in the applicable
Pricing Supplement, generally corresponding to the principal amount of the
Notes comprised by such Units. See "Description of Notes -- Forms,
Denominations, Exchange and Transfer" above.
Registered Units will be exchangeable for Registered Units in
other authorized denominations, in an equal aggregate principal amount in
accordance with the provisions set forth in the Unit Agreement. Bearer Units
will not be issuable in exchange for Registered Units. Registered Units may
be presented for registration of transfer or exchange at the offices of the
Unit Agent or at the offices of any other agent designated by the Company for
such purpose. Bearer Units may be presented for exchange in the manner set
forth below. No service charge will be made for any registration of transfer
or exchange of Units but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Bearer Units (together with the securities comprised by such Unit) will be
transferable by delivery.
Each Bearer Unit will be represented initially by a temporary
global Bearer Unit which, unless otherwise specified in the applicable Pricing
Supplement, will be deposited with a Common Depositary for credit to the
account designated by or on behalf of the subscriber thereof. Upon deposit of
each such temporary global Bearer Unit, the Euroclear Operator or Cedel Bank,
as the case may be, will credit each subscriber with a number (and specified
face amount) of Units equal to the number (and specified face amount) thereof
for which it has subscribed and paid. The interests of the beneficial owner
or owners in a temporary global Bearer Unit will be exchangeable, after the
date (the "Exchange Date") that is 40 days after the date on which the Company
receives the proceeds of the sale of the Note comprised by such Unit (the
"Closing Date"), for an interest in a permanent global Bearer Unit to be held
by a Common Depositary for the Euroclear Operator and Cedel Bank, for credit
to the account designated by or on behalf of the beneficial owner thereof.
The exchange of such interests of the beneficial owner or owners in a
temporary global Bearer Unit (and in the temporary global form of any
Universal Warrant or Purchase Contract comprised by such Unit) will be made at
the time, and to the extent, of the exchange of such interests in the
temporary global Bearer Note comprised by such Unit in accordance with the
procedures described above under "Description of Notes -- Forms,
Denominations, Exchange and Transfer."
The beneficial owner of a Unit represented by a permanent
global Bearer Unit may, upon 30 days' written notice to the Unit Agent given
by the beneficial owner through either the Euroclear Operator or Cedel Bank,
exchange such owner's interest in such permanent global Bearer Unit for a
definitive Bearer Unit or Units, which will be serially numbered, or a
definitive Registered Unit or Units (consisting of the definitive registered
forms of each security comprised by such Unit or Units), in any authorized
denominations. Upon receipt by the Unit Agent of an initial request to
exchange an interest in a permanent global Bearer Unit for a definitive Bearer
Unit or Units, all other interests in such permanent global Bearer Unit shall
be exchanged for a definitive Bearer Unit or Units (consisting of the
definitive forms of each security comprised by such Unit). The Common
Depositary for the Euroclear Operator and Cedel Bank will instruct the Unit
Agent regarding the aggregate face amount and denominations of definitive
Bearer Units that must be authenticated and delivered to each of the Euroclear
Operator and Cedel Bank. Such exchanges shall occur at no expense to the
beneficial owners as soon as practicable after the receipt of the initial
request for definitive Bearer Units. No Bearer Unit will be delivered in the
United States. References herein to "Bearer Units" shall, except where
otherwise indicated, include interests in a permanent or temporary global
Bearer Unit as well as definitive Bearer Units. At the option of the holder,
and subject to the terms of the Unit Agreement or procedures established
pursuant thereto, definitive Bearer Units will be exchangeable into Registered
Units (consisting of the registered forms of each security comprised by such
Unit) of any authorized denominations of like tenor and in an equal number and
aggregate face amount at the office of the Unit Agent or at the office of any
other agent designated by the Company for such purpose.
If a Unit represented by a global Bearer Unit or by definitive
Units that remain on deposit with a Common Depositary for the Euroclear
Operator or Cedel Bank (i) includes a Universal Warrant entitling the holder to
exercise the Universal Warrant to purchase or sell Warrant Property (as
defined below), (ii) includes any Note or Purchase Contract that entitles the
holder thereof to redeem, accelerate or take any other action with respect to
such Note or Purchase Contract or (iii) otherwise entitles the holder of the
Unit to take any action with respect to the Unit or any security comprised by
such Unit, the exercise of such right must be made through the Euroclear
Operator or Cedel Bank. In order to ensure that the Euroclear Operator or
Cedel Bank will timely exercise a right conferred by a Unit (or by the
securities comprised by such Unit) with respect to a particular Unit (or any
security comprised by such Unit) or any portion thereof, the beneficial owner
of such Unit must instruct the broker or other direct or indirect participant
through which it holds an interest in such Unit to notify the Euroclear
Operator or Cedel Bank of its desire to exercise any such right. Different
firms have different deadlines for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Unit in
order to ascertain the deadline for such an instruction in order for timely
notice to be delivered to the Euroclear Operator or Cedel Bank.
Payments with respect to Units and Securities Comprised by
Units. At the office of the Unit Agent in the Borough of Manhattan, The City
of New York, maintained by the Company for such purpose, or at the office of
The Chase Manhattan Bank, London Branch, as Unit Agent and Collateral Agent
for the Units outside the United States, (i) the Units, accompanied by each of
the securities comprised by such Unit (unless the applicable Pricing
Supplement indicates that any such securities are separable from such Unit),
may be presented for payment or delivery of Warrant Property or Purchase
Contract Property (as defined below) or any other amounts due with respect
thereto, (ii) transfer of the Units will be registrable and (iii) the Units
will be exchangeable, provided that global Bearer Units will be exchangeable
only in the manner and to the extent set forth above. The Company may at any
time appoint additional unit agents or other agents with respect to the Units
outside the United States (each a "Unit Agent," which term includes the
initial Unit Agent named above and any additional or successor unit agent
appointed by the Company). No service charge will be made for any
registration of transfer or exchange of the Units (or of any security
comprised by such Unit) or interest therein, except for any tax or other
governmental charge that may be imposed in connection therewith.
Certain Provisions of the Unit Agreement
Under the terms of the Unit Agreement, each holder of a
definitive Unit and each beneficial owner of a global Unit, by its acceptance
thereof, (i) consents to and agrees to be bound by the terms of the Unit
Agreement and (ii) appoints the Unit Agent as its authorized agent to execute,
deliver and perform any Purchase Contract included in such Unit in which such
holder or beneficial owner has an interest on behalf of such holder or
beneficial owner, as the case may be. Under the terms of the Unit Agreement,
each holder of a definitive Unit and each beneficial owner of a global Unit,
by acceptance thereof, irrevocably agrees to be a party to and be bound by the
terms of any Purchase Contract included in such Unit in which such holder or
beneficial owner has an interest. Upon the registration of transfer of a
registered Unit or the transfer by delivery of a Bearer Unit, the transferee
will assume the obligations of the transferor under any Purchase Contract
included in such Unit and under any other security comprised by such Unit in
which such holder or beneficial owner has an interest, and the transferor will
be released from such obligations. Pursuant to the terms of the Unit
Agreement, the Company has consented to the transfer of any such obligations
to the transferee, to the assumption of such obligations by the transferee and
the release of the transferor, if such transfer is made in accordance with the
provisions of the Unit Agreement.
Remedies. The Unit Agreement provides that upon the
acceleration of the Notes comprised by any Units, the obligations of the
Company and the holders under any Purchase Contracts comprised by such Units
may also be accelerated, on behalf of all such holders, upon the request of
the holders of not less than 25% of the Purchase Contracts that constitute a
part of Units that comprise such accelerated Notes. No holder of any Unit or
interest therein shall have any right by virtue of or by availing itself of
any provision of the Unit Agreement to institute any action or proceeding at
law or in equity or in bankruptcy or otherwise upon or under or with respect
to the Unit Agreement, or for the appointment of a trustee, receiver,
liquidator, custodian or other similar official, unless such holder shall have
given written notice to the Unit Agent and the Company of the occurrence and
continuance of a default thereunder and, (i) in the case of an Event of
Default under the Notes or the Senior Debt Indenture, unless the procedures
(including notice to the Trustee and the Company) described in Article Five of
the Senior Debt Indenture have been complied with and (ii) in the case of
certain defaults under any Purchase Contracts included in such Unit, unless
the holders of not less than 25% of the affected Purchase Contracts comprised
by all Units then outstanding shall have made written request upon the Unit
Agent to institute such action or proceeding in its own name as Unit Agent
under the Unit Agreement and shall have offered to the Unit Agent such
reasonable indemnity as it may require, and the Unit Agent for 60 days after
its receipt of such notice, request and offer of indemnity shall have failed
to institute any such action or proceedings and no direction inconsistent with
such request shall have been given to the Unit Agent pursuant to the Unit
Agreement in writing by the holders of a majority of the outstanding affected
Units. If such conditions have been satisfied, any holder of an affected Unit
may then (but only then) institute such action or proceeding. Notwithstanding
the above, the holder of any Unit or Purchase Contract will have the
unconditional right to purchase or sell, as the case may be, Purchase Contract
Property pursuant to such Purchase Contract and to institute suit for the
enforcement of such right.
Except as may be described in a Pricing Supplement applicable
to a particular series of Units, there are no covenants or other provisions in
the Unit Agreement providing for a put or increased interest or otherwise that
would afford holders of Units additional protection in the event of a
recapitalization transaction, a change of control of the Company or a highly
leveraged transaction.
Modification. The Unit Agreement and the terms of the Purchase
Contracts and the Purchase Contract Certificates may be amended by the Company
and the Unit Agent, without the consent of the holders, for the purpose of
curing any ambiguity, or of curing, correcting or supplementing any defective
or inconsistent provision therein or in any other manner which the Company may
deem necessary or desirable and which will not adversely affect the interests
of the affected holders in any material respect.
The Unit Agreement will contain provisions permitting the
Company and the Unit Agent, with the consent of the holders of not less than a
majority of all series of Units at the time outstanding under such Unit
Agreement and affected thereby (voting as one class), to modify the rights of
the holders of the Units of each series so affected or the terms of any
Purchase Contracts included in any such series of Units and the terms of the
Unit Agreement relating to the Purchase Contracts of each series so affected,
except that no such modification may, without the consent of the holder of
each outstanding Unit affected thereby, (i) impair the right to institute suit
for the enforcement of any Purchase Contract, (ii) materially adversely affect
the holders' rights under any Purchase Contract or Unit or (iii) reduce the
aforesaid percentage of outstanding Units issued under the Unit Agreement, the
consent of the holders of which is required for the modification or amendment
of the provisions of the Unit Agreement relating to any such Purchase
Contracts or for any waiver of compliance with certain provisions of the Unit
Agreement or waiver of certain defaults relating to any such Purchase
Contracts. Modifications of any Notes comprised by Units may only be made in
accordance with the Senior Debt Indenture, as described in the Prospectus
under "Description of Debt Securities -- Modification of the Indentures."
Modifications of any Universal Warrants comprised by Units may only be made in
accordance with the terms of the Universal Warrant Agreement as described
below under "Certain Provisions of the Universal Warrant Agreement."
Title. The Company, the Unit Agent and any agent of the
Company or the Unit Agent will treat the registered owner of any Registered
Unit or registered Purchase Contract and the bearer of any Bearer Unit or
Purchase Contract in bearer form as the owner thereof (whether or not the Note
constituting a part of such Unit shall be overdue and notwithstanding any
notice to the contrary) for the purpose of making payment, the performance of
any Purchase Contracts included in any series of Units and for all other
purposes; provided that, with respect to Units consisting of Purchase
Contracts together with securities, the Company agrees, and each beneficial
holder of such Unit shall be deemed by its acceptance thereof to agree, that
none of Euroclear, Cedel Bank or any other relevant clearing system (or any
securities intermediary through which any such clearing system directly or
indirectly holds any interest in any such Unit and that is not itself the
beneficial owner thereof) shall have any obligation by virtue of being the
holder of such Unit to perform the Purchase Contract included in such Unit.
Replacement of Unit Certificates or Purchase Contract
Certificates. Any mutilated certificate evidencing a definitive Unit or
Purchase Contract will be replaced at the expense of the holder upon surrender
of such certificate to the Unit Agent. Certificates that have been destroyed,
lost or stolen will be replaced at the expense of the holder upon delivery to
the Company and the Unit Agent of evidence of the destruction, loss or theft
thereof satisfactory to the Company and the Unit Agent. In the case of a
destroyed, lost or stolen certificate, an indemnity satisfactory to the Unit
Agent and the Company may be required at the expense of the holder of the
Units or Purchase Contracts evidenced by such certificate before a replacement
will be issued.
The Unit Agreement provides that, notwithstanding the
foregoing, no such replacement certificate need be delivered (i) during the
period beginning 15 days before the day of mailing of or publishing a notice
of redemption or of any other exercise of any right held by the Company with
respect to the Unit (or any security comprised by such Unit) evidenced by the
mutilated, destroyed, lost or stolen certificate and ending on the day of the
giving of such notice, (ii) if such mutilated, destroyed, lost or stolen
certificate evidences any security selected or called for redemption or other
exercise of a right held by the Company or (iii) at any time on or after the
date of settlement or redemption, as applicable, with respect to any Purchase
Contract included in the Unit (or at any time on or after the last exercise
date with respect to any Universal Warrant included in the Unit) evidenced by
such mutilated, destroyed, lost or stolen certificate, except with respect to
any Units that remain or will remain outstanding following such date of
settlement or redemption or such last exercise date.
Governing Law. The Unit Agreement, the Units and the Purchase
Contracts will be governed by, and construed in accordance with, the laws of
the State of New York.
Purchase Contracts
The Company may, issue from time to time, as part of a Unit
with one or more Notes or Universal Warrants, Purchase Contracts for the
purchase or sale of (a) securities of an entity unaffiliated with the Company,
a basket of such securities, and index or indices of such securities or any
combination of the above, (b) currencies or composite currencies or (c)
commodities (collectively, "Purchase Contract Property"). Such Purchase
Contracts will be governed by the terms and provisions of the Unit Agreement.
See "Description of Units--Certain Provisions of the Unit Agreements." The
applicable Pricing Supplement will specify whether or not a Purchase Contract
issued as part of a Unit may be separated from the other securities comprised
by such Unit prior to such Purchase Contract's settlement date. Purchase
Contracts may not be so separated prior to the 91st day after the issuance of
a Unit, unless otherwise specified in the applicable Pricing Supplement. The
applicable Pricing Supplement will also specify the methods by which the
holders may purchase or sell such Purchase Contract Property and any
acceleration, cancellation or termination provisions or other provisions
relating to the settlement of a Purchase Contract. The Unit Agreement will
not be qualified as an indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), the Unit Agent will not be required to
qualify as a trustee thereunder and the holders of Units and Purchase
Contracts will not have the benefits of the protections of the Trust Indenture
Act. However, any Notes issued as part of a Unit will be issued under an
indenture qualified under the Trust Indenture Act and the trustee thereunder
will have qualified as a trustee under the Trust Indenture Act.
The Purchase Contracts may be issued in fully registered
definitive form or in global or definitive bearer form or in any combination
of the above such registered or bearer forms, as specified in the applicable
Pricing Supplement. In each case, the form of the Purchase Contract included
in a Unit will correspond to the form of the Unit and of the Note and any
Universal Warrant included in such Unit.
Under circumstances specified in the applicable Pricing
Supplement, payments in respect of principal of Notes that are part of Units
that include Purchase Contracts requiring the holders to purchase Purchase
Contract Property may be applied by the Unit Agent in satisfaction of the
obligations of the holders of the Units under the related Purchase Contracts
(unless a holder has delivered cash in respect of its obligations under such
Purchase Contract). Upon settlement of any such Purchase Contract, the
Purchase Contract Property will be delivered only upon presentation and
surrender of the certificates evidencing Units at the office of the Unit
Agent. If a holder delivers cash in settlement of its obligations under a
Purchase Contract that is part of a Unit, the related Note that is a part of
such Unit will remain outstanding if the maturity extends beyond the relevant
settlement date and, as more fully described in the applicable Pricing
Supplement, the holder will receive a definitive Bearer Note or an interest in
a global Bearer Note.
In order to secure the observance and performance of the
covenants and agreements of the holders of Purchase Contracts contained in the
Unit Agreement and in such Purchase Contracts, holders of Purchase Contracts
acting through the Unit Agent, as their attorney-in-fact, shall be deemed to
grant, sell, convey, assign, transfer and pledge unto The Chase Manhattan
Bank, in its capacity as Collateral Agent, for the benefit of the Company, as
collateral security for the performance when due by such holders of their
respective obligations under the Unit Agreement and under such Purchase
Contracts, a security interest in and to, and a lien upon and right of set-off
(the "Pledge") against, all of their right, title and interest in and to (i)
the Notes that are part of Units that include such Purchase Contracts, or such
other property as may be specified in the applicable Pricing Supplement (the
"Pledged Items"); (ii) all additions to and substitutions for such Pledged
Items as may be permissible, if so specified in the applicable Pricing
Supplement; (iii) all income, proceeds and collections received or to be
received, or derived or to be derived, at any time from or in connection with
(i) and (ii) above; and (iv) all powers and rights owned or thereafter
acquired under or with respect to the Pledged Items. All payments with
respect to any Pledged Items received by the Collateral Agent shall be paid by
the Collateral Agent, unless such payments have been released from the Pledge
pursuant to the Unit Agreement, to the Company in satisfaction of the
respective obligations of the holders of the Units of which such Pledged Items
are a part under the Purchase Contracts forming a part of such Units.
Unless otherwise specified in the applicable Pricing
Supplement, in the event that a holder does not elect to deliver cash in
settlement of its obligations under a Purchase Contract that is part of a Unit
and fails to present and surrender the certificate evidencing the Units held
by such holder to the Unit Agent when required, the Purchase Contract Property
to be purchased by such holder under the Purchase Contracts evidenced thereby
shall be registered in the name of, and together with any distributions
thereon shall be held by, the Unit Agent in trust for the benefit of such
holder until such certificate is presented and surrendered or the holder
provides satisfactory evidence that such certificate has been destroyed, lost
or stolen, together with any indemnity that may be required by the Unit Agent
or the Company in respect thereof. In the event that a certificate is not
presented (or such evidence and indemnity are not provided) on or prior to the
date two years after the relevant settlement date with respect to the related
Purchase Contract, any payments received by the Unit Agent in respect of the
Purchase Contract Property delivered in respect of the Units evidenced by such
certificate will be paid by the Unit Agent to the Company and such holder will
thereafter be required to look solely to the Company for payment thereof. The
Unit Agent will have no obligation to invest or to pay interest on any amounts
held by the Unit Agent pending distribution, as described above.
Unsecured Obligations of the Company. The Purchase Contracts
are unsecured contractual obligations of the Company and will rank pari passu
with the Company's other unsecured contractual obligations and with the
Company's unsecured and unsubordinated debt. Most of the assets of the
Company are owned by its subsidiaries. Therefore, the Company's rights and
the rights of its creditors, including holders of Purchase Contracts, to
participate in the distribution of assets of any subsidiary upon such
subsidiary's liquidation or recapitalization will be subject to the prior
claims of such subsidiary's creditors, except to the extent that the Company
may itself be a creditor with recognized claims against the subsidiary. In
addition, dividends, loans and advances from certain subsidiaries to the
Company are restricted by legal requirements, including (in the case of Morgan
Stanley & Co. Incorporated ("MS & Co.") and Dean Witter Reynolds Inc. ("DWR")
net capital requirements under the Exchange Act and under rules of certain
exchanges and other regulatory bodies and (in the case of Greenwood Trust
Company and other bank subsidiaries) by banking regulations.
Universal Warrants
The Company may issue from time to time, as part of a Unit with
one or more Notes or Purchase Contracts, Universal Warrants to purchase or
sell (a) securities of an entity unaffiliated with the Company, a basket of
such securities, an index or indices of such securities or any combination of
the above, (b) currencies or composite currencies or (c) commodities
(collectively, "Warrant Property"). The Company may satisfy its obligations,
if any, with respect to any Universal Warrants by delivering the Warrant
Property or, in the case of underlying securities or commodities, the cash
value thereof, as set forth in the applicable Pricing Supplement. The
applicable Pricing Supplement will specify whether or not a Universal Warrant
issued as part of a Unit may be separated from the other securities comprised
by such Unit prior to such Universal Warrant's expiration. Universal Warrants
may not be so separated prior to the 91st day after the issuance of a Unit,
unless otherwise specified in the applicable Pricing Supplement.
The Universal Warrants comprising part of a Unit will be issued
under the Universal Warrant Agreement dated as of June 2, 1997 (the "Universal
Warrant Agreement") between the Company and The Chase Manhattan Bank, as
Warrant Agent (the "Warrant Agent"), and may be issued in one or more series
as set forth in the applicable Pricing Supplement. The following summaries of
certain provisions of the Universal Warrant Agreement and Universal Warrants
do not purport to be complete and such summaries are subject to the detailed
provisions of the Universal Warrant Agreement to which reference is hereby
made for a full description of such provisions, including the definition of
certain terms used herein, and for other information regarding the Universal
Warrants.
Reference is made to the applicable Pricing Supplement for the
following terms of and information relating to any Universal Warrants: (i)
the specific designation and aggregate number of and the price at which the
Universal Warrants will be issued; (ii) the currency or composite currency for
which the Universal Warrants may be purchased; (iii) the date on which the
right to exercise the Universal Warrants shall commence and the date on which
such right shall expire or, if the Universal Warrants are not continuously
exercisable throughout such period, the specific date or dates on which they
will be exercisable; (iv) the identity of any depositaries, execution or
paying agents, transfer agents, registrars or calculation or other agents in
respect of the Universal Warrants; (v) whether such Universal Warrants are put
Warrants or call Warrants; (vi) (a) the specific Warrant Property (and the
amount thereof) purchasable or saleable upon exercise of each Universal
Warrant; (b) the price at which and the currency or composite currency with
which such Warrant Property may be purchased or sold upon such exercise (or
the method of determining the same); (c) whether such exercise price may be
paid in cash, by the exchange of any other security offered with such
Universal Warrants or both and the method of such exercise; and (d) whether
the exercise of such Universal Warrants is to be settled in cash or by
delivery of the underlying securities or commodities or both; and (vii) any
other terms of the Universal Warrants.
Unless otherwise specified in the applicable Pricing
Supplement, the Universal Warrants may be issued (i) in fully registered
definitive form ("Registered Warrants"), (ii) in global bearer or definitive
bearer form ("Bearer Warrants") or (iii) any combination thereof, as specified
in the applicable Pricing Supplement. In each case, the form of the Universal
Warrant included in a Unit will correspond to the form of the Unit and of any
other security included in such Unit.
At the option of the holder, upon request confirmed in writing
and subject to the terms of the Universal Warrant Agreement, Registered
Universal Warrants in definitive form may be presented for exchange and for
registration of transfer (with the form of transfer endorsed thereon duly
executed), but only in connection with the transfer of the applicable Unit and
each of the securities comprised by such Unit, unless otherwise specified in
the applicable Pricing Supplement, at the corporate trust office of the
Warrant Agent (or any other office indicated in the Pricing Supplement
relating to the Units comprising such Universal Warrants) without service
charge and upon payment of any taxes and other governmental charges as
described in such Universal Warrant Agreement. Such transfer or exchange will
be effected only if the Warrant Agent is satisfied with the documents of title
and identity of the person making the request.
Certain Provisions of the Universal Warrant Agreement
Modifications. The Universal Warrant Agreement and the terms
of the Universal Warrants and the Universal Warrant Certificates may be
amended by the Company and the Warrant Agent, without the consent of the
holders, for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective or inconsistent provision therein or in any other
manner which the Company may deem necessary or desirable and which will not
adversely affect the interests of the affected holders in any material respect.
The Company and the Warrant Agent may also modify or amend the
Universal Warrant Agreement and the terms of the Universal Warrants, with the
consent of the owners of not less than a majority in number of the then
outstanding unexercised Universal Warrants affected, provided that no such
modification or amendment that changes the exercise price of the Universal
Warrants, reduces the amount receivable upon exercise, cancellation or
expiration, shortens the period of time during which the Universal Warrants
may be exercised or otherwise materially and adversely affects the rights of
the owners of the Universal Warrants or reduces the percentage of outstanding
Universal Warrants, the consent of whose owners is required for modification
or amendment of the Universal Warrant Agreement or the terms of the Universal
Warrants, may be made without the consent of the owners affected thereby.
Merger, Consolidation, Sale or Other Disposition. If at any
time there shall be a merger or consolidation of the Company or a transfer of
substantially all of its assets, as permitted under the applicable Indentures,
the successor corporation thereunder shall succeed to and assume all
obligations of the Company under the Universal Warrant Agreement and the
Universal Warrant Certificates. The Company shall thereupon be relieved of any
further obligation under the Universal Warrant Agreement and the Universal
Warrants. The Company shall notify the Warrantholders of the occurrence of
any such event. See "Description of Debt Securities -- Certain Covenants" in
the Prospectus.
Enforceability of Rights of Warrantholders; Governing Law. The
Warrant Agent will act solely as an agent of the Company in connection with
the Universal Warrant Certificates and will not assume any obligation or
relationship of agency or trust for or with any holders of Universal Warrant
Certificates or beneficial owners of Universal Warrants. Any holder of
Universal Warrant Certificates and any beneficial owner of Universal Warrants
may, without the consent of the Warrant Agent, any other holder or beneficial
owner, enforce by appropriate legal action, on its own behalf, its right to
exercise the Universal Warrants evidenced by such Universal Warrant
Certificates, in the manner provided therein and in the Universal Warrant
Agreement. No holder of any Universal Warrant Certificate or beneficial owner
of any Universal Warrants shall be entitled to any of the rights of a holder
of the Warrant Property purchasable upon exercise of such Universal Warrants.
The Universal Warrants and the Universal Warrant Agreement will be governed
by, and construed in accordance with, the laws of the State of New York.
Unsecured Obligations of the Company. The Universal Warrants
are unsecured contractual obligations of the Company and will rank pari passu
with the Company's other unsecured contractual obligations and with the
Company's unsecured and unsubordinated debt. Most of the assets of the
Company are owned by its subsidiaries. Therefore, the Company's rights and
the rights of its creditors, including Warrantholders, to participate in the
distribution of assets of any subsidiary upon such subsidiary's liquidation or
recapitalization will be subject to the prior claims of such subsidiary's
creditors, except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary. In addition, dividends, loans and
advances from certain subsidiaries to the Company are restricted by legal
requirements, including (in the case of MS & Co. and DWR) net capital
requirements under the Exchange Act and under rules of certain exchanges and
other regulatory bodies and (in the case of Greenwood Trust Company and other
bank subsidiaries) by banking regulations.
FOREIGN CURRENCY RISKS
Exchange Rates and Exchange Controls
An investment in Notes, Units or any of the securities
constituting such Units that are denominated in, or the payment of which is
related to the value of, a Specified Currency other than the currency of the
country in which the purchaser is a resident or the currency (including the
ECU, Euro and any other such composite currency) in which the purchaser
conducts its business or activities (the "home currency") entails significant
risks that are not associated with a similar investment in a security
denominated in the home currency. Such risks include, without limitation, the
possibility of significant changes in rates of exchange between the home
currency and the various foreign currencies (or composite currencies) and the
possibility of the imposition or modification of exchange controls by either
the U.S. or foreign governments. Such risks generally depend on economic and
political events over which the Company has no control. In recent years,
rates of exchange for certain currencies have been highly volatile and such
volatility may be expected to continue in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations in such rate that may occur during the
term of any Note, Unit or security included in such Unit. Depreciation of the
Specified Currency for a Note, Unit or security included in such Unit against
the relevant home currency would result in a decrease in the effective yield
of such Note below its coupon rate or in the payout of such Unit (or security
included therein) and, in certain circumstances, could result in a loss to the
investor on a home currency basis. In addition, depending on the specific
terms of a Currency Linked Note, changes in exchange rates relating to any of
the currencies involved may result in a decrease in its effective yield and,
in certain circumstances, could result in a loss of all or a substantial
portion of the principal of a Note to the investor.
Fluctuations in the rates of exchange between the home currency
and any other currency (i) in which payment of the exercise price of a
Universal Warrant is to be made, (ii) in which the Warrant Property is
denominated or (iii) that is to be purchased or sold by exercise of such
Universal Warrant (or between any of the currencies noted in clauses (i)
through (iii) above) may change the value of such Universal Warrant or of the
Unit comprising such Universal Warrant and could result in a loss to the
investor even if the spot price of the Warrant Property were such that the
Universal Warrant appeared to be "in the money." Similarly, currency
fluctuations between any of the home currency, the currency in which the
purchase price is denominated, the currency in which the Purchase Contract
Property is denominated or, if applicable, the currency to be purchased or
sold pursuant to such Purchase Contract could adversely affect the value of
any Purchase Contract or of the Unit comprising such Purchase Contract and
could result in a loss to the investor.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN FINANCIAL AND
LEGAL ADVISORS AS TO ANY SPECIFIC RISKS ENTAILED BY AN INVESTMENT BY SUCH
INVESTOR IN NOTES, UNITS OR ANY OF THE SECURITIES CONSTITUTING SUCH UNITS THAT
ARE DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, FOREIGN
CURRENCY. SUCH NOTES, UNITS OR OTHER SECURITIES INCLUDED IN SUCH UNITS ARE NOT
AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT
TO FOREIGN CURRENCY TRANSACTIONS.
Foreign exchange rates can either float or be fixed by
sovereign governments. Exchange rates of most economically developed nations
are permitted to fluctuate in value relative to the U.S. dollar. National
governments, however, rarely voluntarily allow their currencies to float
freely in response to economic forces. From time to time governments use a
variety of techniques, such as intervention by a country's central bank or
imposition of regulatory controls or taxes, to affect the exchange rate of
their currencies. Governments may also issue a new currency to replace an
existing currency or alter the exchange rate or relative exchange
characteristics by devaluation or revaluation of a currency. Thus, a special
risk in purchasing non-home currency-denominated Notes or Currency Linked
Notes (or Universal Warrants or Purchase Contracts where the exercise or
purchase price and the underlying property is denominated in currencies
differing from one another or from the home currency) is that their home
currency-equivalent yields or payouts could be affected by governmental
actions, which could change or interfere with theretofore freely determined
currency valuation, fluctuations in response to other market forces, and the
movement of currencies across borders. There will be no adjustment or change
in the terms of such Notes, Units or any of the securities constituting such
Units in the event that exchange rates should become fixed, or in the event of
any devaluation or revaluation or imposition of exchange or other regulatory
controls or taxes, or in the event of other developments affecting the U.S.
dollar or any applicable Specified Currency.
Governments have imposed from time to time, and may in the
future impose, exchange controls that could affect exchange rates as well as
the availability of a specified foreign currency (or of securities denominated
in such currency) at the time of payment of principal of, premium, if any, or
interest on a Note (or of any payment due with respect to a Unit or any
security constituting such Unit). Even if there are no actual exchange
controls, it is possible that the Specified Currency for any particular Note
not denominated in U.S. dollars (or the applicable currency for any payment
with respect to a Unit (or any of the securities constituting such Unit))
would not be available when payments on such Note are due, including as a
result of the replacement of such Specified Currency by the Euro. In that
event, the Company would make required payments in U.S. dollars on the basis
of the Market Exchange Rate on the date of such payment or, if such rate of
exchange is not then available, on the basis of the Market Exchange Rate as of
the most recent practicable date; provided, however, that if the Specified
Currency for any Note (or the applicable currency for any payment with respect
to a Unit (or any of the securities constituting such Unit)) is not available
because it has been replaced by the Euro, the Company would make such payments
in Euro in conformity with legally applicable measures taken pursuant to, or
by virtue of, the Treaty. See "Description of Notes -- Payment Currency."
Governing Law and Judgments
The Notes, Units, Universal Warrants and Purchase Contracts
will be governed by and construed in accordance with the laws of the State of
New York. The courts of the States of New York and Delaware will have
jurisdiction over claims relating to the Series D Notes. If a court in the
United States were to grant a judgment in an action based on Notes denominated
in a Specified Currency other than U.S. dollars or on any Units, Universal
Warrants and Purchase Contracts denominated in any such currency, it is likely
that such court would grant judgment only in U.S. dollars. If the court were
a New York court, however, such court would grant a judgment in the Specified
Currency or currency in respect of which any payment on a Unit, Universal
Warrant, or Purchase Contract was due. Such judgment would then be converted
into U.S. dollars at the rate of exchange prevailing on the date of entry of
the judgment.
UNITED STATES FEDERAL TAXATION
In the opinion of Brown & Wood LLP, counsel to the Company, the
following summary accurately describes the principal United States federal
income and estate tax consequences of ownership and disposition of the Program
Securities by a Foreign Holder (as defined below). This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"), and existing and
proposed Treasury regulations, revenue rulings, administrative interpretations
and judicial decisions (all as currently in effect and all of which are
subject to change, possibly with retroactive effect). This summary does not
discuss all of the tax consequences that may be relevant to holders in light
of their particular circumstances or to holders subject to special rules, such
as persons other than Foreign Holders, nonresident alien individuals who have
lost United States citizenship or who have ceased to be treated as resident
aliens, corporations that are treated as foreign or domestic personal holding
companies, controlled foreign corporations, or passive foreign investment
companies and Foreign Holders that are owned or controlled by persons subject
to United States federal income tax. Persons considering the purchase of the
Program Securities should consult their own tax advisors with regard to the
application of the United States federal income and estate tax laws to their
particular situations as well as to any tax consequences arising under the
laws of any state, local or foreign jurisdiction.
As used herein, the term "Foreign Holder" means a beneficial
owner of a Program Security who or that is for United States federal income
tax purposes (i) a nonresident alien individual, (ii) a corporation,
partnership or other entity that was not created or organized in or under the
laws of the United States or any political subdivision thereof, (iii) an
estate the income of which is not subject to United States federal income tax
on a net basis, or (iv) a trust if either (A) primary supervision over the
administration of the trust is unable to be exercised by a United States
court, or (B) the authority to control all substantial decisions of the trust
does not rest with one or more United States trustees or fiduciaries.
Income Taxes
Notes
Except as otherwise discussed below, a Foreign Holder will
generally not be subject to United States federal income tax, including
withholding tax, on payments of principal of, premium, if any, or interest
(including original issue discount, if any) on, a Note or coupon, or proceeds
from the sale or disposition of a Note or coupon, provided that (i) such
payments or proceeds are not effectively connected with the conduct of a trade
or business by such holder within the United States, (ii) such holder does not
own (directly or by attribution) ten percent or more of the total combined
voting power of all classes of stock of the Company entitled to vote, (iii)
such holder does not have a "tax home" (as defined in section 911(d)(3) of the
Code) or an office or other fixed place of business in the United States and
(iv) in the case of a Note issued in registered form, required certification
of such holder's non-United States status is provided to the Company or the
Agent.
Exchangeable Notes
A Foreign Holder will generally not be subject to United States
federal income tax, including withholding tax, with regard to an Exchangeable
Note if (i) the Exchangeable Note is treated as indebtedness of the Company for
United States federal income tax purposes, (ii) the Exchangeable Note is
exchangeable only into securities that are actively traded, into a basket of
securities that are actively traded or an index or indices of securities that
are actively traded, and (iii) the requirements for exemption from tax listed
above under "--Notes" are met. With regard to the above requirements,
Optionally Exchangeable Notes for which the principal amount payable in cash
equals or exceeds the issue price (i.e., the initial offering price to the
public at which price a substantial amount of the respective Optionally
Exchangeable Notes is sold) will be treated as indebtedness of the Company for
United States federal income tax purposes. Under current United States
federal income tax law, it is unclear how a Mandatorily Exchangeable Note will
be treated. Prospective purchasers of Mandatorily Exchangeable Notes are
urged to review the applicable Pricing Supplement and consult with their tax
advisors. No opinion is expressed herein as to the impact of the "United
States real property holding company" rules, which could affect the taxation
of Foreign Holders in certain circumstances. Persons considering the purchase
of Exchangeable Notes should refer to the discussion relating to United States
federal taxation in the applicable Pricing Supplement for disclosure, if any
is deemed necessary, concerning the applicability of such rules. For
information regarding the United States federal income tax consequence of
ownership and disposition of the property received in exchange for an
Exchangeable Note, please refer to the publicly available documents described
in the applicable Pricing Supplement.
Notes Linked to Commodity Prices, Single Securities, Baskets of
Securities or Indices
The United States federal income tax consequences to a Foreign
Holder of the ownership and disposition of Notes that have principal or
interest determined by reference to commodity prices, securities of entities
unaffiliated with the Company, baskets of such securities or indices may vary
depending upon the exact terms of the Notes and related factors. Certain
Notes containing such features may be subject to rules that differ from the
general rules discussed above under "-- Notes." In such circumstances,
persons intending to purchase such Notes should refer to the discussion
relating to United States federal taxation in the applicable Pricing
Supplement for additional disclosure, if any is deemed necessary.
Units
Under current United States federal income tax law, the
treatment of a Foreign Holder of a Unit (including a Foreign Holder of the
Note and/or the Universal Warrants or Purchase Contracts comprising a Unit) is
unclear. Prospective purchasers of Units are urged to review the discussion
relating to United States federal taxation in the applicable Pricing
Supplement and consult with their tax advisors.
Backup Withholding
A Foreign Holder of a Bearer Note or coupon will generally not
be subject to backup withholding or information reporting with respect to
payments on, and to proceeds of the sale before maturity of, the Bearer Note
or coupon. Such requirements will likewise generally not apply to such
payments made on a Registered Note if required certification of the holder's
non-United States status is provided to the Company or the Agent.
Foreign Holders of Program Securities should consult their tax
advisors regarding the application of information reporting and backup
withholding in their particular situations, the availability of an exemption
therefrom, and the procedure for obtaining such an exemption, if available.
Any amounts withheld from a payment to a Foreign Holder under the backup
withholding rules will be allowed as a credit against such holder's United
States federal income tax liability and may entitle such holder to a refund,
provided that the required information is furnished to the United States
Internal Revenue Service (the "Service").
Estate Taxes
A Note held by an individual who at the time of his death is
not a citizen or domiciliary of the United States will generally not be
subject to United States federal estate tax as a result of such individual's
death, that (i) income derived by such individual on the Note would not be
subject to United States federal income tax or (ii) an applicable estate tax
treaty provides an exemption therefrom. Unless an applicable estate tax
treaty provides otherwise, the fair market value of Program Securities (other
than Notes that were not issued as part of a Unit) may be includible in the
gross estate of a non-resident alien individual for United States federal
estate tax purposes.
THE UNITED STATES FEDERAL INCOME AND ESTATE TAX DISCUSSION SET
FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE
DEPENDING ON A FOREIGN HOLDER'S PARTICULAR SITUATION. PERSONS CONSIDERING THE
PURCHASE OF PROGRAM SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
REGARD TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF
PROGRAM SECURITIES.
PLAN OF DISTRIBUTION
The Program Securities are being offered on a continuing basis
by the Company exclusively through the Agents, who have agreed to use
reasonable efforts to solicit offers to purchase such Program Securities. The
Company will have the sole right to accept offers to purchase Program
Securities and may reject any offer in whole or in part. The Agents will have
the right to reject any offer to purchase Program Securities solicited by them
in whole or in part. Payment of the purchase price of the Program Securities
will be required to be made in immediately available funds. Unless otherwise
specified in the applicable Pricing Supplement, the Company will pay an Agent,
in connection with sales of Program Securities resulting from a solicitation
made or an offer to purchase received by such Agent, a commission ranging from
.125% to .750% of the initial offering price of the Program Securities to be
sold, depending upon the maturity of the Program Securities; provided,
however, that commissions with respect to Program Securities having a maturity
of 30 years or greater will be negotiated.
The Company may also sell Program Securities to an Agent as
principal for its own account at discounts to be agreed upon at the time of
sale. Such Program Securities may be resold to investors and other purchasers
at a fixed offering price or at prevailing market prices, or prices related
thereto at the time of such resale or otherwise, as determined by such Agent
and specified in the applicable Pricing Supplement. An Agent may offer the
Program Securities it has purchased as principal to other dealers. Such Agent
may sell the Program Securities to any dealer at a discount and, unless
otherwise specified in the applicable Pricing Supplement, such discount
allowed to any dealer will not be in excess of the discount to be received by
such Agent from the Company. After the initial public offering of Program
Securities that are to be resold by an Agent to investors and other purchasers
on a fixed public offering price basis, the public offering price, concession
and discount may be changed.
In compliance with United States federal income tax laws and
regulations, the Company and each Agent has agreed that it will not, in
connection with the original issuance of any Bearer Notes either alone or as
part of a Unit or during the Restricted Period (as defined above in
"Description of Notes -- Forms, Denominations, Exchange and Transfer"), offer,
sell, resell or deliver, directly or indirectly, any Bearer Notes either alone
or as part of a Unit in the United States or its possessions or to United
States persons (other than as permitted by the applicable Treasury
Regulations). In addition, each Agent has represented and agreed that it will
have in effect procedures reasonably designed to ensure that its employees or
agents who are directly engaged in selling Bearer Notes are aware of the above
restrictions on the offering, sale, resale or delivery of Bearer Notes.
With respect to Program Securities to be offered or sold in the
United Kingdom, each Agent, underwriter, dealer, other agent and remarketing
firm participating in the distribution of such Program Securities has
represented and agreed, or will represent and agree, that: (i) in relation to
Program Securities which have a maturity of one year or more and in respect of
which admission to such listing in accordance with Part IV of the Financial
Services Act 1986 (the "Act") is to be sought, it has not offered or sold and
will not offer or sell any such Program Securities to persons in the United
Kingdom prior to admission of such Program Securities to such listing except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995 or the Act; (ii)
in relation to Program Securities which have a maturity of one year or more and
in respect of which admission to such listing is not to be sought, it has not
offered or sold and, prior to the expiry of the period of six months from the
date of issue of such Program Securities, will not offer or sell any such
Program Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing
of investments (as principal or agent) for the purposes of their businesses
or otherwise in circumstances which have not resulted and will not result in
an offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (iii) it has complied and will comply
with all applicable provisions of the Act with respect to anything done by it
in relation to such Program Securities in, from or otherwise involving the
United Kingdom; and (iv) it has only issued or passed on and will only issue
or pass on in the United Kingdom any document received by it in connection
with the issue of such Program Securities, other than any document which
consists of or any part of listing particulars, supplementary listing
particulars or any other document required or permitted to be published by the
listing rules under Part IV of the Act, to a person who is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document
may otherwise lawfully be issued or passed on.
The Program Securities have not been, and will not be,
registered under the Securities and Exchange Law of Japan. Accordingly, the
Program Securities may not be offered or sold, directly or indirectly, in
Japan or to, or for the benefit of, any resident of Japan (which term as used
herein means any person resident in Japan including any corporation or other
entity organized under the laws of Japan) or to others for the reoffering or
resale, directly or indirectly, in Japan or to a resident of Japan except
pursuant to an exemption from the registration requirements of, and otherwise
in compliance with, the Securities and Exchange Law of Japan and other
relevant laws and regulations of Japan.
Program Securities denominated or payable in Deutsche Marks may
only be offered and sold from time to time by the Company through Morgan
Stanley Bank AG, acting as agent for the Company or as lead manager in a
syndicated transaction. The issuance of Program Securities denominated or
payable in Deutsche Marks will take place in compliance with the guidelines of
the German Central Bank, as amended from time to time, regarding the issue of
debt securities denominated in Deutsche Marks. The Program Securities may not
be offered or sold in the Federal Republic of Germany other than in compliance
with the provisions of the German Sales Prospectus Act
(Wertpapier-Verkaufsprospektgesetz) of December 13, 1990, as amended, and of
any other laws applicable in the Federal Republic of Germany governing the
issue, offering and sale of securities.
Program Securities denominated or payable in or indexed to
Swiss francs may only be offered and sold from time to time by the Company
through Bank Morgan Stanley AG, acting as agent for the Company or as lead
manager in a syndicated transaction. The issuance of Program Securities
denominated or payable in or indexed to Swiss francs will take place in
compliance with Swiss law and the relevant regulations of the Swiss National
Bank in effect from time to time.
Morgan Stanley S.A. has represented and agreed, and any dealers
for French Franc Notes or French Franc Units will represent and agree, that
French Franc Notes and French Franc Units will be issued outside the Republic
of France and that, in connection with their initial distribution, Morgan
Stanley S.A. and such dealers will not offer or sell, directly or indirectly,
any French Franc Notes or French Franc Units to the public in the Republic of
France, and will not distribute or cause to be distributed to the public in
the Republic of France this Prospectus Supplement, the accompanying Prospectus
or any other offering material relating to French Franc Notes or French Franc
Units. The Company has also undertaken that it will not offer, directly or
indirectly, any Notes or Units to the public in the Republic of France. At
the date of this Prospectus Supplement only a credit establishment or
investment institution incorporated in a member state of the European Union
which is authorized to lead-manage euro-bond issues by the competent authority
of its home state may (i) act as a dealer in respect of private placements of
French Franc Notes or French Franc Units or (ii) act as lead manager of public
offers (within the meaning of the French EuroFranc Regulations) of French
Franc Notes or French Franc Units issued on a syndicated basis.
Each of the Agents may be deemed to be an "underwriter" within
the meaning of the Securities Act of 1933 (the "Securities Act"). The Company
and the Agents have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments made in respect thereof. The Company has also agreed to reimburse
the Agents for certain expenses.
Morgan Stanley & Co. International Limited, Bank Morgan Stanley
AG, Morgan Stanley S.A., Morgan Stanley Bank AG and Dean Witter International
Ltd. are each an affiliate of the Company. The Company has been advised by
the Agents that they intend to make a market in the Program Securities, as
permitted by applicable laws and regulations. The Agents are not obligated to
do so, however, and the Agents may discontinue making a market at any time
without notice. No assurance can be given as to the liquidity of any trading
market for the Program Securities.
In order to facilitate the offering of the Program Securities,
the Agents may engage in transactions that stabilize, maintain or otherwise
affect the price of the Program Securities or any other securities the prices
of which may be used to determine payments on such Program Securities.
Specifically, the Agents may overallot in connection with any offering of
Program Securities, creating a short position in the Program Securities for
their own accounts. In addition, to cover overallotments or to stabilize the
price of the Program Securities or of any such other securities, the Agents
may bid for, and purchase, the Program Securities or any such other securities
in the open market. Finally, in any offering of the Program Securities
through a syndicate of underwriters, the underwriting syndicate may reclaim
selling concessions allied to an underwriter or a dealer for distributing the
Program Securities in the offering if the syndicate repurchases previously
distributed Program Securities in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Program Securities above
independent market levels. The Agents are not required to engage in these
activities, and may end any of these activities at any time.
Concurrently with the offering of Program Securities through
the Agents as described herein, the Company may issue other Debt Securities
pursuant to the Indentures referred to herein. Such Debt Securities may
include medium-term notes ("Global Medium-Term Notes, Series C") that may have
terms substantially similar to the terms of the Notes offered hereby and that
may be offered, alone or as units containing warrants, purchase contracts or
any combination thereof ("Global Units, Series C"), concurrently with the
offering of the Program Securities, on a continuing basis in the United States
by the Company pursuant to a distribution agreement (the "U.S. Distribution
Agreement") with MS & Co. and DWR, affiliates of the Company, as agents for
the Company, the terms of which are substantially similar to the terms of the
distribution agreement (the "Euro Distribution Agreement") with the Agents,
except for certain selling restrictions specified in the Euro Distribution
Agreement. Any Global Medium-Term Notes, Series C or any Global Units, Series
C sold pursuant to such U.S. Distribution Agreement, and any Debt Securities,
Debt Warrants or pre-paid purchase contracts issued by the Company pursuant
to the Indentures or any preferred stock, warrants or purchase contacts issued
by the Company, will reduce the aggregate offering price of Program Securities
that may be offered by this Prospectus Supplement, any Pricing Supplement
hereto and the Prospectus.
LEGAL MATTERS
The validity of the Notes, Units, Universal Warrants and
Purchase Contracts will be passed upon for the Company by Brown & Wood LLP, or
other counsel who is satisfactory to the Agents and who may be an officer of
the Company. Certain legal matters relating to the Notes, Units, Universal
Warrants and Purchase Contracts will be passed upon for the Agents by Davis
Polk & Wardwell. Davis Polk & Wardwell has in the past represented Morgan
Stanley Group Inc., a predecessor of the Company, and continues to represent
the Company on a regular basis and in a variety of matters, including in
connection with its merchant banking and leveraged capital activities.
CAPITALIZATION
The following table sets forth the unaudited consolidated
capitalization at the end of the Company's first 1997 fiscal quarter. The
Company's unaudited supplemental consolidated statement of financial condition
at the end of the first 1997 fiscal quarter (the "First 1997 Fiscal Quarter
End"), from which the following information was derived, combines (i) the
historical unaudited consolidated balance sheet of Dean Witter, Discover & Co.
("Dean Witter Discover") at March 31, 1997 prior to the merger of Morgan
Stanley Group Inc. ("Morgan Stanley") with and into Dean Witter Discover,
which, as the surviving corporation was renamed Morgan Stanley, Dean Witter,
Discover & Co. and (ii) the historical unaudited consolidated statement of
financial condition of Morgan Stanley at February 28, 1997. As of the date
hereof and except as disclosed in the Prospectus and in the footnotes to the
following table, there has been no material change in the capitalization of
the Company since February 28, 1997.
The following information should be read in conjunction with
the Company's audited supplemental consolidated financial statements for its
1996, 1995 and 1994 fiscal years and the Company's unaudited supplemental
consolidated financial statements for its 1997 and 1996 first fiscal quarters
(the components of which are each further described in the third paragraph
under "General Information" below), the related notes thereto, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, all as contained in the Company's Current Report on Form 8-K dated
May 31, 1997 and incorporated herein by reference.
<TABLE>
First 1997 Fiscal Quarter End
(In millions, except share data)
<S> <C> <C>
Short-term borrowings............................................................ U.S.$ 26,622
------
Current portion of long-term borrowings.......................................... 4,306
Total........................................................................ U.S.$ 30,928
======
Long-term borrowings (1)......................................................... U.S.$ 19,854
Capital Units.................................................................... 999
Stockholders' equity:
Preferred stock, par value $0.01 per share; authorized 30,000,000 shares (2):
ESOP Convertible Preferred Stock, liquidation preference U.S.$35.875;
outstanding 3,687,031 shares................................................. 132
8-3/4% Cumulative Preferred Stock, stated value U.S.$200; outstanding
750,000 shares (3)........................................................... 150
7-3/8% Cumulative Preferred Stock, stated value U.S.$200; outstanding
1,000,000 shares............................................................. 200
7-3/4% Cumulative Preferred Stock, stated value U.S.$200; outstanding
1,000,000 shares............................................................. 200
Series A Fixed/Adjustable Rate Cumulative Preferred Stock,
stated value U.S.$200; outstanding 1,725,000 shares.......................... 345
Common stock, U.S.$0.01 par value; authorized 1,750,000,000 shares; issued
612,278,459 shares; outstanding 585,549,370 shares (2)........................ 6
Paid-in capital................................................................. 3,766
Retained earnings............................................................... 7,971
Cumulative translation adjustments.............................................. (14)
------
Subtotal..................................................................... 12,756
Note receivable related to sale of preferred stock to ESOP.................... (76)
Common stock held in treasury, at cost 26,729,089 shares (4).................. (716)
Stock compensation related adjustments........................................ (8)
Total stockholders' equity........................................ 11,956
Total capitalization.............................................. U.S.$ 32,809
======
</TABLE>
- ----------
(footnotes are located on the following page)
(1) Subsequent to the Company's first 1997 fiscal quarter end, additional
senior notes aggregating U.S. $2,000,000,000 were issued. The Company
currently has effective (1) registration statements pursuant to which
it may issue up to an aggregate of $3,220,000,000 of debt securities
and (2) a registration statement pursuant to which it may issue up to
U.S. $7,000,000,000 of debt securities, warrants, preferred stock,
depositary shares, purchase contracts and units.
(2) Issued and outstanding common shares data represents the combination of
Dean Witter Discover share data and Morgan Stanley common share data
adjusted for the exchange of 1.65 Dean Witter Discover common shares
for each Morgan Stanley common share. The number of authorized
preferred shares and authorized common shares are as of the
consummation of the merger of Morgan Stanley with and into Dean Witter
Discover on May 31, 1997 (the "Effective Time").
(3) All 750,000 shares of the 8-3/4% Cumulative Preferred Stock were called
for redemption on April 30, 1997 and were redeemed on May 30, 1997.
(4) Shares held in treasury by Morgan Stanley were retired at the Effective
Time. At the end of the first 1997 fiscal quarter, Morgan Stanley held
in treasury 9,564,884 shares (adjusted for the exchange of 1.65 Dean
Witter Discover common shares for each Morgan Stanley common share)
with an aggregate cost of $264 million.
BOARD OF DIRECTORS
The current Directors of the Company and their principal
occupations are listed below. The business address of each director is 1585
Broadway, New York, New York 10036.
Philip J. Purcell ..... Chairman of the Board, Chief Executive Officer and
Director
John J. Mack ........... President, Chief Operating Officer and Director
Thomas C. Schneider..... Executive Vice President, Chief Strategic and
Administrative Officer and Director
Richard B. Fisher ...... Director and Chairman of the Executive Committee
Robert P. Bauman ....... Director
Edward A. Brennan ...... Director
Daniel B. Burke......... Director
C. Robert Kidder........ Director
Miles L. Marsh ......... Director
Michael A. Miles ....... Director
Allen E. Murray ........ Director
Paul J. Rizzo........... Director
Clarence B. Rogers, Jr.. Director
Laura D'Andrea Tyson.... Director
GENERAL INFORMATION
The listing of the Series D Notes on the London Stock Exchange
will be expressed as a percentage of their principal amount excluding accrued
interest. Listing of the Series D Notes offered hereby is expected to be
granted by the London Stock Exchange on or about June 18, 1997 subject only to
issuance of Series D Notes (including temporary global notes). The listing
agent with respect to the application for the listing of the Series D Notes on
the London Stock Exchange is Morgan Stanley & Co. International Limited.
The French Franc arranger, any dealers for French Franc Notes
and French Franc Units and the Company will comply with the French EuroFranc
Regulations.
Deloitte & Touche LLP, independent auditors, have audited the
supplemental consolidated statements of financial condition of the Company as
of the fiscal year end 1996 and 1995 and the related supplemental
consolidated statements of income, cash flows and changes in shareholders'
equity for the fiscal years 1996, 1995 and 1994 and an unqualified opinion has
been reported thereon (which makes reference to the audit of Morgan Stanley by
other auditors). The fiscal year information combines the historical
information of Dean Witter Discover for the fiscal years ended December 31,
1996, 1995 and 1994 with the historical information of Morgan Stanley for the
fiscal years ended November 30, 1996, 1995 and 1994.
Deloitte & Touche LLP, independent auditors, have audited the
consolidated balance sheets of Dean Witter Discover as of December 31, 1996,
December 31, 1995 and December 31, 1994 and the related consolidated
statements of income, cash flows and changes in shareholders' equity for the
fiscal years ended December 31, 1996, December 31, 1995 and December 31, 1994
and unqualified opinions have been reported thereon.
Ernst & Young LLP, independent auditors, have audited the
consolidated statement of financial condition of Morgan Stanley as of November
30, 1996, November 30, 1995, January 31, 1995 and January 31, 1994 and the
related consolidated statements of income, cash flows and changes in
shareholders' equity for the fiscal year ended November 30, 1996, the fiscal
year ended November 30, 1995, and the fiscal years ended January 31, 1995 and
January 31, 1994 and unqualified opinions have been reported thereon.
Brown & Wood LLP has given and not withdrawn its written
consent to the inclusion in this Prospectus Supplement of its opinion under
"United States Federal Taxation" and has authorized the contents of that part
of the listing particulars for the purposes of Section 152(1)(e) of the
Financial Services Act 1986.
The obligation of a prospective purchaser (including the
Agents) to pay for any Notes or Units it has agreed to purchase is subject to
the satisfaction of certain conditions which, if not satisfied or waived,
would result in such purchaser having no obligation to pay for any such Notes
or Units.
The issuance of the Notes, the Units, the Universal Warrants
and the Purchase Contracts was authorized pursuant to resolutions adopted by
unanimous written consent of the Board of Directors of the Company dated May
31, 1997.
The Company is incorporated in Delaware, U.S.A., and its
registered office is located at The Corporation Trust Center, 1209 Orange
Street in the City of Wilmington, County of New Castle.
Except as disclosed herein and in the Prospectus, since
February 28, 1997, the date of the earliest component of the latest published
combined unaudited financial statements, there has been no material change in
the financial or business position of the Company and its consolidated
subsidiaries, taken as a whole; and, except as disclosed herein and in the
Prospectus, there has been no material adverse change in the financial
position of the Company and its consolidated subsidiaries, taken as a whole,
since November 30, 1996, the date of the earliest component of the latest
published combined audited annual financial statements.
As of the date hereof, there are no legal, arbitration or
administrative proceedings including any pending or, to the Company's
knowledge, threatened involving the Company or any of its consolidated
subsidiaries which may have or have had during the previous 12 months a
material effect on the Company's consolidated financial condition.
The Notes and, subject to certain limitations, Units have been
accepted for clearance through the Euroclear Operator, Cedel Bank and (in the
case of (i) French Franc Notes, (ii) French Franc Units and (iii) Purchase
Contracts and Universal Warrants included in any French Franc Unit
(collectively, "French Franc Securities")) Sicovam. The appropriate code for
each issue allocated by the Euroclear Operator, Cedel Bank and (in the case
of French Franc Securities) Sicovam will be contained in the applicable
Pricing Supplement. Transactions will normally be effected for settlement not
earlier than two business days after the date of the transaction.
Copies of the Euro Distribution Agreement dated June 17, 1997
among the Company and the Agents, the U.S. Distribution Agreement dated June
2, 1997 among the Company, MS & Co. and DWR, each of the Indentures, the
opinion of Brown & Wood LLP referred to in the third paragraph of page S-38,
Dean Witter Discover's Annual Reports on Form 10-K for the fiscal period ended
December 31, 1996 and for the fiscal years ended December 31, 1995 and
December 31, 1994, Quarterly Reports on Form 10-Q for 1994, 1995, 1996 and
1997 (each excluding exhibits) and Current Report on Form 8-K dated May 31,
1997, Morgan Stanley's Annual Reports on Form 10-K for the fiscal period ended
November 30, 1996 and for the fiscal years ended November 30, 1995, January
31, 1995 and January 31, 1994 and Quarterly Reports on Form 10-Q for 1994,
1995, 1996 and 1997 (each excluding exhibits), the Company's listing
particulars, the Amended and Restated Agreement and Plan of Merger between
Morgan Stanley and Dean Witter Discover dated as of April 10, 1997, all of the
Company's future Annual, Quarterly and Current Reports, supplementary listing
particulars and Pricing Supplements and the Company's Certificate of
Incorporation and Amended and Restated By-laws, will, from the date hereof and
so long as any Note, Unit, Universal Warrant or Purchase Contract is
outstanding and throughout the term of the medium-term note program (the
"Program"), be available for inspection during business hours at the corporate
trust office of each of the Trustees in The City of New York, the office of
each Paying Agent and the principal executive offices of the Company specified
in the accompanying Prospectus. The Company's Quarterly Reports on Form 10-Q
contain unaudited quarterly financial statements.
Documents incorporated by reference herein and any part of the
Registration Statement not included herein do not form part of the listing
particulars.
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus Supplement (but not the listing
particulars) to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus Supplement.
The Banking Act 1987 (Exempt Transactions) Regulations 1997
The Company is not an authorized institution as defined in the
Banking Act 1987 or a European authorised institution as defined by regulation
3 of the Banking Coordination (Second Council Directive) Regulations 1992.
Repayment of the principal and payment of any interest or premium in
connection with the Sterling Notes has not been guaranteed. In relation to
any Sterling Notes which are to be exempt transactions under regulation 13(3)
of the Regulations where such Notes would fall within regulation 13(4)(a) or
(b) of the Regulations: (a) the Company confirms that as at the date hereof,
it has complied with its obligations under the relevant rules (as defined in
the Regulations) in relation to the admission to and continuing listing of the
Programme and of any previous issues made under it and listed on the same
exchange as the Programme; (b) the Company will confirm in the applicable
Pricing Supplement relating to such Notes that it has complied with its
obligations under the relevant rules in relation to the admission to listing
of the debt securities falling within regulation 13(4)(a) or (b) of the
Regulations or, where such Notes have not yet been admitted to listing, will
have complied with such obligations by the time when such Notes are so
admitted; and (c) the Company confirms that as at the date hereof, it has not,
since the last publication, if any, in compliance with the relevant rules of
information about the Program, any previous issues made under it and listed on
the same exchange as the Program, or any debt securities falling within
regulation 13(4)(a) or (b) of the Regulations, having made all reasonable
enquiries, become aware of any change in circumstances which could reasonably
be regarded as significantly and adversely affecting its ability to meet its
obligations as issuer in respect of the debt securities falling within
regulation 13(4)(a) or (b) of the Regulations as they fall due.
PARIS LISTING INFORMATION
The French EuroFranc Regulations recommend the listing of
French Franc Notes and French Franc Units on the Paris Bourse where (i) such
French Franc Notes and French Franc Units are, or are intended to be, listed
on any other stock exchange or (ii) such French Franc Notes and French Franc
Units are, or are intended to be, distributed as a public offer (within the
meaning of the French EuroFranc Regulations).
At the date of this Prospectus Supplement, only a credit
establishment or investment institution incorporated in a member state of the
European Union which is authorized to lead-manage euro-bond issues by the
competent authority of its home state may (i) act as a dealer in respect of
private placements of French Franc Notes and French Franc Units and (ii) act
as lead manager of public offers (within the meaning of the French Eurofranc
Regulations) of French Franc Notes and French Franc Units issued on a
syndicated basis. The minimum aggregate principal amount of Series D French
Franc Notes and Series D French Franc Units listed on the Paris Bourse and
distributed in a public offer shall be 300,000,000 French Francs. In
addition, Series D French Franc Notes and Series D French Franc Units which
are listed on the Paris Bourse will be issued subject to the requirements of
the Paris Bourse. Under the current regulations, "private placements" shall
be construed as issuances of Series D French Franc Notes and Series D French
Franc Units placed on a firm basis with a small number of predetermined
nonresident investors. Index-linked Series D French Franc Notes and Series D
French Franc Units which are to be listed on the Paris Bourse will be issued
in compliance with the regulations of the COB and the CBV published on July
26, 1996 in Decisions et Avis No. 96-2580 published by the SBF, as amended as
of the date of such issuance.
Commission des Operations de Bourse ("COB")
Prior to listing of any Series D Notes and Series D Units on
the Paris Bourse, the COB is required to approve this Prospectus Supplement
and the accompanying Prospectus. In addition, the Pricing Supplement
applicable to each issue of Series D Notes and Series D Units to be listed on
the Paris Bourse is currently required to be approved at the time of the
relevant issue. The relevant approval in relation to the Program and each
such issue will each be evidenced by the issue of a visa by the COB. The visa
numbers will be disclosed in the Pricing Supplement applicable to the relevant
Series D Notes and Series D Units.
Societe des Bourses Francaises ("SBF")
The listing of Series D Notes and Series D Units on the Paris
Bourse is subject to approval by the SBF. Such approval will be evidenced by
publication in the Bulletin de la SBF Paris Bourse.
Bulletin des Annonces Legales Obligatoires ("BALO")
Series D Notes and Series D Units to be listed on the Paris
Bourse may not be offered in France and the publication of the Pricing
Supplement applicable thereto must not be made before such listing becomes
effective and details of the relevant Series D Notes and Series D Units (in
the form of a notice legale) have been published in the BALO.
Documents available for inspection
In the case of Series D Notes and Series D Units listed on the
Paris Bourse, the applicable Pricing Supplement will specify the additional
places in Paris at which documents incorporated by reference herein (or
otherwise required to be made available for inspection) may be inspected
during normal business hours. The Company has undertaken to make such
documents available as so required.
PARIS BOURSE RESPONSIBILITY STATEMENT
PERSONNES QUI ASSUMENT
LA RESPONSABILITE DU "PROSPECTUS" ET DU "PROSPECTUS SUPPLEMENT"
EN CE QUI CONCERNE LES INSTRUMENTS QUI SERONT NEGOCES AU COMPARTIMENT
INTERNATIONAL DU PREMIER MARCHE DE LA BOURSE DE PARIS
AU NOM DE L'EMETTEUR ET DE LA BANQUE PRESENTATRICE
A la connaissance de l'emetteur et de la banque presentatrice, les donnees des
presents documents denommes "Prospectus" et "Prospectus Supplement" sont
conformes a la realite et ne comportent pas d'omission de nature a en alterer
la portee.
- ---------------------------- ----------------------------
Alice Bonardi Robert G. Scott
Attorney-in-fact Chief Financial Officer
Morgan Stanley S.A. Morgan Stanley, Dean Witter,
Discover & Co.
LA COMMISSION DES OPERATIONS DE BOURSE
En vue de la cotation a Paris des titres eventuellement emis
dans le cadre de ce present Programme, et par application des articles 6 et 7
de l'ordonnance No. 67-833 du 28 septembre 1967 telle que modifiee, la
Commission des Operations de Bourse a enregistre les documents denommes
"Prospectus" et "Prospectus Supplement" sous le No. P 97-198 du 13 juin 1997.
PRINCIPAL EXECUTIVE OFFICES REGISTERED OFFICE OF THE
OF THE COMPANY COMPANY IN DELAWARE
1585 Broadway The Corporation Trust Center
New York, New York 10036 1209 Orange Street
U.S.A. Wilmington, Delaware 19801
U.S.A.
TRUSTEES
(Senior Notes) (Subordinated Notes)
The Chase Manhattan Bank The First National Bank of Chicago
450 West 33rd Street One First National Plaza
New York, New York 10001 Chicago, Illinois 60670
U.S.A. U.S.A.
PRINCIPAL PAYING AGENT, EXCHANGE AGENT AND
TRANSFER AGENT FOR BEARER NOTES AND REGISTERED NOTES
UNIT AGENT AND COLLATERAL AGENT FOR UNITS
WARRANT AGENT FOR UNIVERSAL WARRANTS
The Chase Manhattan Bank
Trinity Tower
9 Thomas More Street
London E19YT
England
Attention: Global Trust Services
OTHER PAYING AGENT AND TRANSFER
AGENT FOR REGISTERED NOTES
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
U.S.A.
LEGAL ADVISORS TO THE COMPANY LEGAL ADVISORS TO THE AGENTS
Brown & Wood LLP Davis Polk & Wardwell
One World Trade Center 450 Lexington Avenue
New York, New York 10048 New York, New York 10017
U.S.A. U.S.A.
LISTING AGENT
Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
PARIS LISTING AGENT
Morgan Stanley S.A.
25, rue Balzac
75008 Paris
France
AUDITORS OF THE COMPANY
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
U.S.A.
