<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1996
REGISTRATION NO. 333-2984
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
UNION PACIFIC RESOURCES GROUP INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
UTAH 13-2647483
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
------------------------
801 CHERRY STREET
FORT WORTH, TEXAS 76102
(817) 877-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
Copies to:
JOSEPH A. LASALA, JR. JOHN T. GAFFNEY
VICE PRESIDENT AND GENERAL COUNSEL CRAVATH, SWAINE & MOORE
UNION PACIFIC RESOURCES GROUP INC. WORLDWIDE PLAZA
801 CHERRY STREET 825 EIGHTH AVENUE
FORT WORTH, TEXAS 76102 NEW YORK, NEW YORK 10019
(817) 877-6000 (212) 474-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier registration
statement for the same offering. / / ____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE(1) REGISTRATION FEE
------------------------------ ------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Debt Securities and Debt
Warrants to Purchase Debt
Securities(2)............... $700,000,000(3) $700,000,000 $241,380(3)
</TABLE>
(1) In United States dollars or the equivalent thereof in one or more foreign
currencies, foreign currency units or composite currencies.
(2) Warrants to purchase Debt Securities may be issued. The amount of Debt
Securities to be registered is the maximum aggregate principal amount of
Debt Securities to be issued with or without Debt Warrants and includes all
Debt Securities deliverable upon the exercise of such Debt Warrants.
(3) The aggregate offering price per unit has been omitted pursuant to
Securities Act Release No. 6964. The registration fee has been calculated in
accordance with Rule 457(o) under the Securities Act of 1993. The aggregate
amount to be registered reflects the offering price rather than the
principal amount of any Debt Securities issued at a discount.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MAY 20, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus Dated, , 1996)
[LOGO] UNION PACIFIC RESOURCES GROUP INC.
$400,000,000 MEDIUM-TERM NOTES
------------------
Union Pacific Resources Group Inc. (the 'Company') may offer from time to
time its Medium-Term Notes, Series A (the 'Notes'), in an aggregate principal
face amount of up to $400,000,000 (or (i) the equivalent thereof in other
currencies or currency units or (ii) such greater amount if Notes are issued at
an original issue discount, as shall result in aggregate proceeds of
$400,000,000), subject to reduction under certain circumstances as a result of
the sale of other Offered Securities (as defined in the accompanying
Prospectus). The Notes will be offered at varying maturities of nine months or
more from the date of issue as selected by the purchaser and agreed to by the
Company, and may be subject to redemption at the option of the Company or
repayment at the option of the holder thereof prior to the Stated Maturity
thereof (as defined below). The Notes offered by this Prospectus Supplement will
constitute unsecured unsubordinated indebtedness of the Company and will rank
pari passu with all other unsecured indebtedness of the Company. Each Note will
be denominated in U.S. dollars or in other currencies or currency units (the
'Specified Currency'), including European Currency Units ('ECU'), as set forth
in a pricing supplement (the 'Pricing Supplement') to this Prospectus
Supplement. See 'Important Currency Exchange Information' and 'Foreign Currency
Risks.'
(Continued on following page)
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
[CAPTION]
<TABLE>
<S> <C> <C> <C>
PRICE TO AGENT'S COMMISSION PROCEEDS TO
PUBLIC(1)(2) OR DISCOUNT(2)(3) COMPANY(1)(4)
------------ ------------------ -------------
<S> <C> <C> <C>
Per Note.... 100% .125%-.750% 99.875%-99.250%
Total....... $400,000,000 $500,000-$3,000,000 $399,500,000-$397,000,000
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes will
be issued at 100% of the principal amount thereof.
(2) Or the equivalent thereof in the Specified Currency.
(3) The Company will pay a commission to Smith Barney Inc., CS First Boston
Corporation, Goldman, Sachs & Co., and Petrie Parkman & Co., Inc. (the
'Agents'), in the form of a discount, ranging from 0.125% to 0.750% of the
principal amount of a Note, depending on its Stated Maturity, sold through
the Agents. The Company may also sell Notes to the Agents for resale to
investors or other purchasers at varying prices related to prevailing market
prices at the time of resale to be determined by the Agents or, if so
agreed, at a fixed public offering price. Unless otherwise specified in the
applicable Pricing Supplement, any Note sold to an Agent as principal will
be purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency
sale of a Note of identical maturity, and may be resold by such Agent. The
Company may also sell Notes directly to investors on its own behalf, in
which case no commission will be payable. The Company has agreed to
indemnify the Agents against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended.
(4) Before deducting expenses payable by the Company estimated at $100,000,
including fees and disbursements of counsel for the Agents.
------------------
SMITH BARNEY INC.
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
PETRIE PARKMAN & CO.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS , 1996.
<PAGE>
(Continued from previous page)
Each Note will bear interest (i) at a fixed rate (a 'Fixed Rate Note'),
which may be zero in the case of certain Notes issued at a price representing a
substantial discount from the principal amount payable at Stated Maturity, (ii)
at a floating rate (a 'Floating Rate Note') or (iii) at a combination of fixed
and floating rates. A Fixed Rate Note may pay both interest and principal
amortized over the life of the Note (an 'Amortizing Note'). See 'Description of
Notes--Fixed Rate Notes,' 'Description of Notes--Floating Rate Notes' and
'Description of Notes--Floating/Fixed Rate Notes.' The principal amount payable
at Maturity (as defined below) and/or the interest (or premium, if any) on each
Note may be determined by reference to the relationship between two or more
currencies, to the price of one or more specified securities or commodities or
to one or more securities or commodities exchange indices or other indices or by
other similar methods (an 'Indexed Note'), as described in the applicable
Pricing Supplement. An Indexed Note whose principal amount payable at Maturity
and/or the interest rate of which is determined by reference to the relationship
between two currencies, two composite currencies or a currency and a composite
currency is referred to herein as a 'Currency Indexed Note.' See 'Description of
Notes--Currency Indexed Notes' and 'Description of Notes--Other Indexed Notes
and Certain Terms Applicable to All Indexed Notes.'
Unless otherwise specified in the applicable Pricing Supplement, the dates,
if any, on which interest will be payable for each Fixed Rate Note (other than
an Amortizing Note) will be February 15 and August 15 of each year and at
Maturity. The dates on which interest will be payable for each Floating Rate
Note will be established on the date of issue of such Note and will be set forth
in the applicable Pricing Supplement. Amortizing Notes will pay principal and
interest semi-annually each February 15 and August 15, or quarterly each
February 15, May 15, August 15 and November 15, and at Maturity, or otherwise,
as specified in the applicable Pricing Supplement. See 'Description of
Notes--Payment of Principal and Interest.' Interest rates and interest rate
formulae are subject to change by the Company, but no change will affect any
Note already issued or as to which an offer to purchase has been accepted by the
Company.
Each Note will be issued in fully registered form and will be represented
by either a global security (a 'Global Security') registered in the name of a
nominee of The Depository Trust Company ('DTC') or other depositary (DTC or such
other depositary as is specified in the applicable Pricing Supplement is herein
referred to as the 'Depositary'), or a certificate issued in definitive form, as
specified in the applicable Pricing Supplement. An interest in a Global Security
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary or its participants. A beneficial interest in a
Global Security will be exchanged for Notes in definitive form only under the
limited circumstances described herein. See 'Description of Notes--Book-Entry
Notes.' Unless otherwise specified in the applicable Pricing Supplement, Notes
will be issued only in registered form in minimum denominations of $1,000 and
any amount in excess thereof that is an integral multiple of $1,000 or, in the
case of Notes denominated in a Specified Currency other than U.S. dollars, the
authorized denominations set forth in the applicable Pricing Supplement. See
'Description of Notes--General.'
The Specified Currency, any applicable interest rate or formula, the Issue
Price (as defined below), the Stated Maturity, any Interest Payment Dates (as
defined below), any principal payment dates, any redemption or repayment
provisions, the extent to which such Note is a Fixed Rate Note, a Floating Rate
Note, an Amortizing Note or an Indexed Note, whether such Note will be
represented by a Global Security and any other terms applicable to each Note and
established at the time of offering will be set forth in the applicable Pricing
Supplement.
The Notes are being offered on a continuing basis by the Company through
the Agents, which have agreed to use reasonable efforts to solicit offers to
purchase the Notes. The Company has reserved the right to sell Notes directly on
its own behalf or to the Agents acting as principal for resale to investors and
other purchasers or through other agents (provided that any other agent will
execute an agreement with the Company which contains substantially the same
terms and conditions as its agreement with the Agents). Unless otherwise
specified in an applicable Pricing Supplement, the Notes will not be listed on
any securities exchange, and there can be no assurance that the Notes offered by
this Prospectus Supplement will be sold or that there will be a secondary market
for the Notes. The Company reserves the right to withdraw, cancel or modify the
offer made hereby without notice. The Company or the Agents may reject any offer
in whole or in part. See 'Plan of Distribution.'
This Prospectus Supplement and the accompanying Prospectus, together with
an appropriate Pricing Supplement, may be used by the Agents, in connection with
offers and sales of the Notes in market-making transactions at negotiated prices
related to prevailing market prices at the time of sale. The Agents may act as
principal or agent in such transactions.
S-2
<PAGE>
DESCRIPTION OF NOTES
The following description of the terms of the Notes offered hereby
(referred to in the accompanying Prospectus as the 'Debt Securities')
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth under the
heading 'Description of Debt Securities' in the accompanying Prospectus, to
which description reference is hereby made. The following summary of the Notes
is qualified by reference thereto and to the Indenture referred to therein.
Capitalized terms not otherwise defined in this Prospectus Supplement or the
accompanying Prospectus shall have the meanings given to them in the Indenture.
The provisions of the Notes summarized herein apply to the Notes unless
otherwise specified in the applicable Pricing Supplement and the applicable
Note.
GENERAL
The Notes offered by this Prospectus Supplement are limited to $400,000,000
aggregate principal face amount (or (i) the equivalent thereof in one or more
currencies or (ii) such greater amount if Notes are issued at an original issue
discount, as shall result in aggregate proceeds of $400,000,000), subject to
reduction under certain circumstances as a result of the sale of other Offered
Securities covered by the Registration Statement of which the Prospectus
accompanying this Prospectus Supplement is a part. The Notes will be issued
under the Indenture which is described under the heading 'Description of Debt
Securities' in the accompanying Prospectus. The U.S. dollar equivalent of Notes
denominated in a currency or currency unit other than U.S. dollars will be
determined upon issuance by the Exchange Rate Agent (as defined below), on the
basis of the Market Exchange Rate (as defined below) for such other currency on
the applicable trade dates. The Notes will be subject to defeasance and covenant
defeasance as described in the accompanying Prospectus under the heading
'Description of Debt Securities--Defeasance.' The statements herein concerning
the Notes and the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, the Indenture, including
the definitions therein of certain terms. Whenever particular defined terms not
otherwise defined herein are referred to, such defined terms are incorporated
herein by reference.
The Notes constitute one series of Securities (as defined in the
Indenture), unlimited as to principal amount, established by the Company
pursuant to the Indenture.
Notes will be offered on a continuing basis and will mature nine months or
more from the date of issue, as selected by the purchaser and agreed to by the
Company, and may be subject to redemption at the option of the Company or
repayment at the option of the holder prior to Stated Maturity as set forth
below under 'Redemption and Repayment.' Each Note will bear interest from the
Issue Date (as defined below) or from such other date as may be specified in the
applicable Pricing Supplement at (i) a fixed rate, which may be zero in the case
of a Note issued at an Issue Price representing a substantial discount from the
principal amount payable at Stated Maturity (a 'Zero-Coupon Note'), (ii) a
floating rate or rates determined by reference to a Base Rate, which may be
adjusted by a Spread and/or a Spread Multiplier (each as defined below), or
(iii) a combination of fixed and floating rates.
Each Note will be issued in fully registered form without coupons and will
be represented by either a Global Security registered in the name of a nominee
of the Depositary or a certificate issued in definitive form, in each case as
specified in the applicable Pricing Supplement. All Notes issued on the same day
and having the same terms, including, but not limited to, the same designation,
Specified Currency, Interest Payment Dates, rate of interest, Stated Maturity
and redemption or repayment provisions may be represented by a single Global
Security. An interest in a Global Security will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary or
its participants. Payments of principal and interest on Notes represented by a
Global Security will be made by the Company or its paying agent to the
Depositary or its nominee. See 'Description of Notes--Book-Entry Notes.'
Unless otherwise specified in the applicable Pricing Supplement, the
authorized denominations of Notes (other than Global Securities) denominated in
U.S. dollars will be $1,000 and any amount in excess thereof that is an integral
multiple of $1,000. The authorized denominations of Notes denominated in a
Specified Currency other than U.S. dollars will be as set forth in the
applicable Pricing Supplement.
S-3
<PAGE>
The Notes will constitute unsecured indebtedness of the Company and will
rank pari passu with all other unsecured unsubordinated indebtedness of the
Company. The Pricing Supplement will indicate whether the Notes will be
redeemable at the option of the Company, or repayable at the option of the
holder, or both, on or after a specified date prior to their Stated Maturity.
Unless otherwise specified in the applicable Pricing Supplement, the Notes,
other than Amortizing Notes, will not be subject to any sinking fund. See
'Description of Notes--Redemption and Repayment.'
The amount of any Discount Note (as defined below) payable in the event of
redemption by the Company, repayment at the option of the holder or acceleration
of its Stated Maturity, in lieu of the stated principal amount due at the Stated
Maturity, shall be the Amortized Face Amount (as defined below) of such Discount
Note as of the date of such redemption, repayment or acceleration. For the
purpose of determining whether holders of the requisite amount of Securities
outstanding under the Indenture have made a demand or given a notice or waiver
or taken any other action, the outstanding principal amount will be deemed to be
the amount of the principal thereof that would be due and payable as of the date
of the taking of such action upon a declaration of the acceleration of the
Maturity thereof. A 'Discount Note' means a Note, including any Zero-Coupon
Note, issued with more than a de minimis amount of original issue discount (as
determined under United States Federal income tax rules applicable to original
issue discount instruments). The 'Amortized Face Amount' of a Discount Note
shall be the amount equal to (i) the Issue Price of such Discount Note set forth
in the applicable Pricing Supplement plus (ii) the portion of the difference
between the Issue Price and the principal amount of such Discount Note that has
accrued at the yield to maturity set forth in the Pricing Supplement (computed
in accordance with generally accepted United States bond yield computation
principles) at the date as of which the Amortized Face Amount is calculated, but
in no event shall the Amortized Face Amount of such Discount Note exceed its
stated principal amount. See 'Certain Federal Income Tax Considerations--U.S.
Holders--Discount Notes.'
The Pricing Supplement relating to each Note will describe the following
terms, as applicable: (1) the Specified Currency with respect to such Note (and,
if such Specified Currency is other than U.S. dollars, certain other terms
relating to such Note); (2) the extent to which such Note is a Fixed Rate Note,
an Amortizing Note, a Floating Rate Note, a Discount Note or a Zero-Coupon Note;
(3) whether such Note is a Currency Indexed Note or other Indexed Note and, if
so, the specific terms thereof; (4) the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Note will be issued (the
'Issue Price'); (5) the date on which such Note will be issued (the 'Issue
Date') and the date from which interest shall accrue (if different from the
Issue Date); (6) the date on which such Note will mature (the 'Stated Maturity')
and whether the Stated Maturity may be extended by the Company and, if so, the
Extension Periods and the Final Maturity Date (each as defined below); (7) if
such Note is a Fixed Rate Note, the rate per annum at which such Note will bear
interest, if any (the 'Interest Rate'), the Interest Payment Date or Dates and,
if so specified in the applicable Pricing Supplement, that such rate may be
changed by the Company prior to the Stated Maturity and, if so, the basis or
formula for such change, if any; (8) if such Note is a Floating Rate Note, the
Base Rate, the Initial Interest Rate or formula for determining such, the
Interest Reset Period, the Interest Reset Date or Dates, the Interest Payment
Date or Dates, the Index Maturity, the Maximum Interest Rate and/or the Minimum
Interest Rate, if any, and the Spread and/or Spread Multiplier, if any (all as
defined below), and any other terms relating to the particular method of
calculating the Interest Rate for such Note and, if so specified in the
applicable Pricing Supplement, that any such Spread and/or Spread Multiplier may
be changed by the Company prior to the Stated Maturity and, if so, the basis or
formula for such change, if any; (9) if such Note is an Amortizing Note, whether
payments of principal thereof and interest thereon will be made quarterly or
semi-annually, and the repayment information in respect thereof; (10) whether
the interest rate on such Note may be reset upon the occurrence of certain
events or at the option of the Company; (11) whether such Note may be redeemed
at the option of the Company, or repaid at the option of the holder, prior to
the Stated Maturity, and, if so, the provisions relating to such redemption or
repayment; (12) whether such Note will be represented by a Global Security or a
certificate issued in definitive form; (13) certain special Federal income tax
consequences of the purchase, ownership and disposition of certain Notes, if
any; (14) whether such Note is a Renewable Note (as defined below), and, if so,
the specific terms thereof; (15) the use of proceeds, if such use materially
differs from that disclosed in the accompanying Prospectus; and (16) any other
terms of such Note not inconsistent with the provisions of the Indenture.
S-4
<PAGE>
PAYMENT CURRENCY
Unless otherwise specified in the applicable Pricing Supplement, and except
as otherwise described herein with respect to Currency Indexed Notes, principal
(and premium, if any) and interest, if any, on each Note will be paid by the
Company in U.S. dollars in the manner described in the following paragraphs,
even if such Note is denominated in a Specified Currency other than U.S.
dollars; provided that, if the applicable Pricing Supplement and the Note so
indicate, the holder of a Note denominated in a Specified Currency other than
U.S. dollars may elect to receive all such payments in respect of such Note in
such Specified Currency, subject to certain conditions described in the
following paragraphs, by delivery of a written election to the Company's paying
agent (the 'Paying Agent') in The City of New York. Except as otherwise provided
herein with respect to Global Securities, any such election must be received by
the Paying Agent on or prior to the applicable Regular Record Date (as defined
below) or at least 15 calendar days prior to Maturity, as the case may be, and
no such change of election may be made with respect to payments on any Note with
respect to which (i) an Event of Default has occurred, (ii) the Company has
exercised any of its defeasance or covenant defeasance options, or (iii) the
Company has given notice of redemption. Such election shall remain in effect
unless and until changed by written notice to the Paying Agent, received on or
prior to the applicable Regular Record Date or at least 15 calendar days prior
to Maturity, as the case may be. Until the Notes are paid or payment thereof is
provided for, the Company will, at all times, maintain a Paying Agent in The
City of New York capable of performing the duties described herein to be
performed by the Paying Agent and, to the extent permitted by the Indenture, the
Company may be the Paying Agent. The Company has initially appointed Chemical
Bank, New York, New York as Paying Agent under the Indenture. The Company will
notify the holders of the Notes in accordance with the Indenture of any change
in the Paying Agent or its address. Except as may otherwise be provided in a
Pricing Supplement with respect to Currency Indexed Notes, all currency exchange
costs related to a Note, if any, will be borne by the holder of such Note by
deductions from payments otherwise due such holder. For the purpose of
determining whether the holders of the requisite amount of Securities
outstanding under the Indenture have made a demand or given a notice or waiver
or taken any other action, the outstanding principal amount will be deemed to be
that amount of U.S. dollars that could be obtained for such principal amount on
the basis of the spot rate of exchange into U.S. dollars for the Specified
Currency as of the date the taking of such action by the holders of such
requisite principal amount is evidenced to the Trustee in accordance with the
Indenture.
Unless otherwise specified in the applicable Pricing Supplement, in the
case of a Note denominated in a Specified Currency other than U.S. dollars, the
amount of U.S. dollar payments in respect of such Note will be determined by an
agent for the Company specified in the applicable Pricing Supplement (the
'Exchange Rate Agent'), based on the indicative quotation in The City of New
York selected by such Exchange Rate Agent at approximately 11:00 a.m., New York
City time, on the second Business Day preceding the applicable payment date,
that yields the largest number of U.S. dollars upon conversion of the Specified
Currency. Except with respect to LIBOR Notes and LIBID Notes (each as defined
below), 'Business Day' means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close and, with respect
to Notes denominated in or indexed to a Specified Currency other than U.S.
dollars or ECU, each Monday, Tuesday, Wednesday, Thursday or Friday which is not
a day on which banking institutions in the principal financial center of the
country issuing the Specified Currency are authorized or required by law or
regulation to close and a day on which banking institutions in such principal
financial center are carrying out transactions in such Specified Currency and,
with respect to Notes denominated in or indexed to ECU, each day which is not a
day that banking institutions in Luxembourg are authorized or required by law or
regulation to close and which is an ECU clearing day, as determined by the ECU
Banking Association in Paris. If the Notes are LIBOR Notes or LIBID Notes,
'Business Day' shall mean each day as determined pursuant to the preceding
sentence which is also a London business day (as defined below). Unless
otherwise specified in the applicable Pricing Supplement, such selection shall
be made from among the quotations of at least three banks agreed to by the
Company and the Exchange Rate Agent appearing on the bank composite or
multi-contributor pages of the Reuters Monitor Foreign Exchange Service, or if
not available, the Telerate Monitor Foreign Exchange Service (the 'Exchange
Rate'). If such quotations are unavailable from either such foreign exchange
service, such selection shall be made as specified in the applicable Pricing
Supplement. If a payment is to be made in a Specified Currency and such
Specified Currency is unavailable due to the imposition of exchange controls or
to other circumstances beyond the Company's control, or is no longer used by the
government of the country issuing such Specified Currency or for the settlement
of
S-5
<PAGE>
transactions by public institutions of or within the international banking
community, the Company will be entitled to make payments in U.S. dollars on the
basis of the noon buying rate in The City of New York for cable transfers in the
Specified Currency as certified for customs purposes by the Federal Reserve Bank
of New York (the 'Market Exchange Rate') for such Specified Currency on the
second Business Day prior to such payment date, or on such other basis as shall
be specified in the applicable Pricing Supplement. In the event such Market
Exchange Rate is not then available, the Company will be entitled to make
payments in U.S. dollars (i) if such Specified Currency is not a composite
currency, on the basis of the most recently available Market Exchange Rate for
such Specified Currency or (ii) if such Specified Currency is a composite
currency, including, without limitation, ECU, in an amount determined by the
Exchange Rate Agent to be the sum of the results obtained by multiplying the
number of units of each component currency of such composite currency, as of the
most recent date on which such composite currency was used, by the Market
Exchange Rate for such component currency on the second Business Day prior to
such payment date (or if such Market Exchange Rate is not then available, by the
most recently available Market Exchange Rate for such component currency, or as
otherwise specified in the applicable Pricing Supplement). Unless otherwise
provided in the applicable Pricing Supplement, the Trustee will be the Exchange
Rate Agent with respect to the Notes.
Unless otherwise specified in the applicable Pricing Supplement, if a
holder of a Note denominated in a Specified Currency other than U.S. dollars or
ECU shall have elected to receive payments of principal (and premium, if any)
and interest, if any, on such Note in such Specified Currency as described
above, or if the Denominated Currency (as defined herein) of a Currency Indexed
Note is a foreign currency (other than ECU), and such Specified Currency or
Denominated Currency is unavailable as of the due date for any payment thereon
because of the imposition of exchange controls or other circumstances beyond the
Company's control, or is no longer used by the government of the country issuing
such Specified Currency or Denominated Currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments due on such due date with respect to such Note
shall be made in U.S. dollars. The amount so payable on any date in such
Specified Currency or Denominated Currency shall be converted into U.S. dollars
at a rate determined by the Exchange Rate Agent on the basis of the most
recently available Market Exchange Rate, or as otherwise specified in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, if a
holder of a Note denominated in ECU shall have elected to receive payments of
principal (and premium, if any) and interest, if any, on such Note in ECU as
described above, or if the Denominated Currency of a Currency Indexed Note is
ECU, and ECU are unavailable as of the due date for any payment thereon because
of the imposition of exchange controls or other circumstances beyond the
Company's control, or are no longer used in the European Monetary System, all
payments due on that due date with respect to such Note shall be made in U.S.
dollars. The amount so payable on any date in ECU shall be converted into U.S.
dollars at a rate determined by the Exchange Rate Agent as of the second
Business Day prior to the date on which such payment is due on the following
basis: The component currencies of ECU for this purpose shall be the currency
amounts that were components of the ECU as of the last date on which ECU were
used in the European Monetary System. The equivalent of ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of such component
currencies. The U.S. dollar equivalent of each of such component currencies
shall be determined by the Exchange Rate Agent on the basis of the most recently
available Market Exchange Rate, or as otherwise specified in the applicable
Pricing Supplement.
If the official unit of any component currency of a composite currency is
altered by way of combination or subdivision, the number of units of that
currency as a component shall be divided or multiplied in the same proportion.
If two or more component currencies are consolidated into a single currency, the
amounts of those currencies as components shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a component
shall be replaced by amounts of such two or more currencies having an aggregate
value on the date of division equal to the amount of the former component
currency immediately before such division.
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and, in the absence of manifest error, shall be
conclusive for all purposes and binding on holders of the Notes, and the
Exchange Rate Agent shall have no liability therefor.
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Each Note will provide that, in the event of an official redenomination of
the Specified Currency thereof (including, without limitation, an official
redenomination of any such Specified Currency that is a composite currency), the
obligations of the Company with respect to payments on Notes denominated in such
Specified Currency shall, in all cases, be deemed immediately following such
redenomination to provide for the payment of that amount of redenominated
currency representing the amount of such obligations immediately before such
redenomination. Except to the extent Currency Indexed Notes provide for the
adjustment of the principal amount payable at Maturity thereof pursuant to
application of the formulae described under 'Description of Notes-- Currency
Indexed Notes--Payments of Principal and Interest,' or any other formulae
provided for in the applicable Pricing Supplement, Notes will not provide for
any adjustment to any amount payable under such Notes as a result of (i) any
change in the value of the Specified Currency thereof relative to any other
currency due solely to fluctuations in exchange rates or (ii) any redenomination
of any component currency of any composite currency (unless such composite
currency is itself officially redenominated).
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks do
not generally offer non-U.S. dollar-denominated checking or savings account
facilities in the United States. Accordingly, payments on Notes made in a
currency other than U.S. dollars will be made from an account at a bank located
outside the United States unless otherwise specified in the applicable Pricing
Supplement.
PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise specified in the applicable Pricing Supplement, interest
on certificated Notes, and principal of Amortizing Notes (in each case other
than interest or, in the case of Amortizing Notes, principal, payable at
Maturity), will be paid by mailing a check (unless otherwise specified in the
applicable Pricing Supplement, from an account at a bank located outside the
United States if such check is payable in a currency other than U.S. dollars) to
the holder at the address of such holder appearing on the security register of
the Company on the applicable Regular Record Date (which in the case of a Global
Security, will be the Depositary or its nominee); provided that in the case of a
Note issued between a Regular Record Date and the Interest Payment Date relating
to such Regular Record Date, interest for the period beginning on the Issue Date
or the date on which such Note otherwise begins to accrue interest (if different
from the Issue Date) and ending on such Interest Payment Date shall be paid on
the Interest Payment Date following the succeeding Regular Record Date to the
registered holder on such succeeding Regular Record Date. Notwithstanding the
foregoing, a holder of U.S. $10,000,000 or more in aggregate principal amount of
certificated Notes of like tenor and term (or a holder of the equivalent thereof
in a Specified Currency other than U.S. dollars) shall be entitled to receive
such interest and, in the case of Amortizing Notes, principal payments in
immediately available funds, but only if complete and appropriate instructions
have been received in writing by the Paying Agent on or prior to the applicable
Regular Record Date. Owners of beneficial interests in a Global Security will be
paid in accordance with the Depositary's and the participant's procedures in
effect from time to time as described under 'Description of Notes--Book-Entry
Notes.' Simultaneously with the election by any holder of a Note to receive
payments in a Specified Currency other than U.S. dollars (as provided above),
such holder may, if so entitled as described above, elect to receive such
payments in immediately available funds by providing complete and appropriate
instructions to the Paying Agent, and all payments in respect of principal or
premium, if any, of, or interest, if any, on, such Note will be made in
immediately available funds to an account maintained by the payee with a bank
located outside the United States or as otherwise provided in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, payments of principal (and premium, if any) and interest at Maturity
will be made in immediately available funds (unless otherwise specified in the
applicable Pricing Supplement, payable to an account maintained by the payee
with a bank located outside the United States if payable in a Specified Currency
other than U.S. dollars) upon surrender of the Note at the office of the Paying
Agent, provided that the Note is presented to the Paying Agent in time for the
Paying Agent to make such payments in such funds in accordance with its normal
procedures. See 'Important Currency Exchange Information.' Unless otherwise
specified in the applicable Pricing Supplement, principal, premium, if any, and
interest, if any, payable at Maturity of a Global Security will be paid by the
Paying Agent by wire transfer in immediately available funds to an account
specified by the Depositary. Unless otherwise specified in the applicable
Pricing Supplement, payments of interest on a Global Security, and principal of
Amortizing Notes in global form (in each case, other than at Maturity), will be
made in same-day funds in accordance with existing arrangements between the
Paying Agent and the Depositary.
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The Company will pay any administrative costs imposed by banks in connection
with making payments in immediately available funds, but any tax, assessment or
governmental charge imposed upon payments, including, without limitation, any
withholding tax, will be borne by the holders of the Notes in respect of which
such payments are made.
INTEREST AND INTEREST RATES
Each Note other than a Zero-Coupon Note will bear interest from its Issue
Date (or such other date on which such Note otherwise begins to accrue interest
if different from the Issue Date) or from the most recent Interest Payment Date
to which interest on such Note has been paid or duly provided for at a fixed
rate or rates per annum, or at a rate or rates per annum determined pursuant to
a Base Rate stated therein and in the applicable Pricing Supplement that may be
adjusted by a Spread and/or Spread Multiplier, until the principal thereof is
paid or made available for payment. Interest will be payable on each Interest
Payment Date and at Maturity. 'Maturity' means the date on which the principal
of a Note or an installment of principal becomes due and payable in full in
accordance with its terms and the terms of the Indenture, whether at Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
Interest will be payable to the holder at the close of business on the Regular
Record Date next preceding such Interest Payment Date; provided, however, that
interest payable at Maturity will be payable to the person to whom principal
shall be payable. The first payment of interest on any Note originally issued
between a Regular Record Date for such Note and the succeeding Interest Payment
Date will be made on the Interest Payment Date following the next succeeding
Regular Record Date for such Note to the Holder on such next Regular Record
Date.
Interest rates and interest rate formulae are subject to change by the
Company, but no such change will affect any Note already issued or as to which
an offer to purchase has been accepted by the Company. The Interest Payment
Dates and the Regular Record Dates for each Fixed Rate Note shall be as
described below under 'Fixed Rate Notes.' The Interest Payment Dates for each
Floating Rate Note shall be as described below under 'Floating Rate Notes' and
in the applicable Pricing Supplement, and the Regular Record Dates for a
Floating Rate Note will be the fifteenth day (whether or not a Business Day)
next preceding each Interest Payment Date.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Issue Date or such other
date on which such Note otherwise begins to accrue interest (if different from
the Issue Date) at the rate per annum set forth thereon and in the applicable
Pricing Supplement until the principal amount thereof is paid, or made available
for payment, in full, except as described below under 'Description of
Notes--Subsequent Interest Periods' and 'Description of Notes--Extension of
Maturity.' Unless otherwise specified in the applicable Pricing Supplement,
interest on each Fixed Rate Note (other than a Zero-Coupon Note or an Amortizing
Note) will be payable semi-annually each February 15 and August 15 and the
Regular Record Dates will be each January 31 and July 31. Unless otherwise
specified in the applicable Pricing Supplement, principal of and interest on
each Amortizing Note will be payable either quarterly on each February 15, May
15, August 15 and November 15, or semi-annually on each February 15 and August
15 as set forth in the applicable Pricing Supplement, and at Maturity. Unless
otherwise specified in the applicable Pricing Supplement, the Regular Record
Dates will be each January 31, April 30, July 31 and October 31 for each
Amortizing Note that is payable quarterly and each January 31 and July 31 for
each Amortizing Note that is payable semi-annually. 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 included
in the applicable Pricing Supplement and set forth on such Notes. Each payment
of interest on a Fixed Rate Note shall include interest accrued through the day
before the Interest Payment Date or date of Maturity, as the case may be. Any
payment of principal (and premium, if any) or interest required to be made on a
Fixed Rate Note on a day that is not a Business Day need not be made on such
day, but may be made on the next succeeding Business Day with the same force and
effect as if made on such day, and no additional interest shall accrue as a
result of such delayed payment. Unless otherwise specified in the applicable
Pricing Supplement, interest on Fixed Rate Notes, if any, will be computed on
the basis of a 360-day year of twelve 30-day months.
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FLOATING RATE NOTES
Except for the period from the Issue Date (or the date on which such Note
otherwise begins to accrue interest (if different from the Issue Date)) to the
first Interest Reset Date set forth in the applicable Pricing Supplement, each
Floating Rate Note will bear interest at a rate determined by reference to an
interest rate base (the 'Base Rate'), which may be adjusted by a Spread and/or a
Spread Multiplier. The applicable Pricing Supplement will designate one or more
of the following Base Rates as applicable to a Floating Rate Note: (a) the CD
Rate (a 'CD Rate Note'), (b) the Commercial Paper Rate (a 'Commercial Paper Rate
Note'), (c) LIBID (a 'LIBID Note'), (d) LIBOR (a 'LIBOR Note'), (e) the Treasury
Rate (a 'Treasury Rate Note'), (f) the Federal Funds Rate (a 'Federal Funds Rate
Note'), (g) the Prime Rate (a 'Prime Rate Note'), (h) the J.J. Kenny Rate (a
'J.J. Kenny Rate Note'), (i) the Eleventh District Cost of Funds Rate (an
'Eleventh District Cost of Funds Rate Note'), (j) the CMT Rate (a 'CMT Rate
Note') or (k) such other Base Rate or 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 to maturity (as specified in the applicable Pricing
Supplement) of the instrument or obligation from which the Base Rate is
calculated.
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 at which interest may accrue during any interest period ('Maximum
Interest Rate'); and/or (ii) a minimum limitation, or floor, on the rate at
which interest 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 applicable
law (including, without limitation, New York law, which is stated to govern the
Notes and the Indenture), as the same may be modified by United States law of
general application. Under present New York law, the maximum rate of interest,
with certain exceptions, is 25% per annum on a simple interest basis. This limit
may not apply to Notes in which $2,500,000 or more has been invested, including
Notes purchased by the Agent in such aggregate principal amount or more for
resale to investors.
Unless otherwise specified herein or in the applicable Pricing Supplement,
all percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded upward, if necessary, to the nearest one
hundred-thousandth of a percent (.0000001), with five one-millionths of a
percentage point being rounded upward, and all currency amounts used in or
resulting from such calculation on Floating Rate Notes will be rounded to the
nearest one-hundredth of a unit (with five one-thousandths of a unit being
rounded upwards).
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (the 'Interest Reset
Period'), as or unless otherwise specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the date or
dates on which interest will be reset (each an 'Interest Reset Date') will be,
in the case of Floating Rate Notes that reset daily, each Business Day; in the
case of Floating Rate Notes (other than Treasury Rate Notes) that reset weekly,
the Wednesday of each week; in the case of Treasury Rate Notes that reset
weekly, the Tuesday of each week (except as provided below); in the case of
Floating Rate Notes that reset monthly, the third Wednesday of each month (with
the exception of monthly reset Eleventh District Cost of Funds Rate Notes, which
reset on the first calendar day of each month); in the case of Floating Rate
Notes that reset quarterly, the third Wednesday of each March, June, September
and December; in the case of Floating Rate Notes that reset semi-annually, the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and in the case of Floating Rate Notes that reset annually,
the third Wednesday of the month of each year specified in the applicable
Pricing Supplement; provided that the interest rate in effect from the Issue
Date (or the date on which such Notes otherwise begin to accrue interest (if
different from the Issue Date)) to the first Interest Reset Date will be the
Initial Interest Rate (as defined below). 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 the succeeding Business Day, except that, in the
case of a LIBID Note or a LIBOR Note, if such Business Day is in the succeeding
calendar month, such Interest Reset Date shall be the next preceding Business
Day. If an auction of direct obligations of the United States ('Treasury bills')
falls on a day that is an Interest Reset Date for Treasury Rate Notes, the
Interest Reset Date shall be the next succeeding Business Day. The interest rate
or the formula for establishing the interest rate in effect with respect to a
Floating Rate Note from the Issue Date (or the date on which such Note otherwise
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begins to accrue interest (if different from the Issue Date)) to the first
Interest Reset Date (the 'Initial Interest Rate') 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 basis point equals one-hundredth of a percentage point) to be added to or
subtracted from the related Base Rate applicable to such Floating Rate Note, and
the 'Spread Multiplier' is the percentage of the related Base Rate applicable to
such Floating Rate Note by which said Base Rate is to be multiplied to determine
the applicable interest rate on such Floating Rate Note. Each Floating Rate Note
and the applicable Pricing Supplement will specify the Spread and/or Spread
Multiplier, if any, applicable to each such Floating Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, the
interest payable on each Interest Payment Date or at Maturity for Floating Rate
Notes will be the amount of interest accrued from and including the Issue Date
(or the date on which such Notes otherwise begin to accrue interest (if
different from the Issue Date)) or from and including the last Interest Payment
Date to which interest has been paid to, but excluding, such Interest Payment
Date or date of Maturity, as the case may be (an 'Interest Period'); provided
that in the case of a Floating Rate Note on which interest is reset daily or
weekly, interest payable on each Interest Payment Date will be the amount of
interest accrued from and including the Issue Date (or the date on which such
Notes otherwise begin to accrue interest (if different from the Issue Date)) or
from and excluding the last date to which interest has been paid, as the case
may be, to, and including, the Regular Record Date immediately preceding such
Interest Payment Date, except that at Maturity the interest payable will include
interest accrued to, but excluding, the date of Maturity.
With respect to a Floating Rate Note, unless otherwise specified in the
applicable Pricing Supplement, accrued interest will be calculated by
multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Unless otherwise specified in the applicable Pricing
Supplement, such accrued interest factor will be computed by adding the interest
factors calculated for each day in the Interest Period for which accrued
interest is being calculated. Unless otherwise specified in the applicable
Pricing Supplement, the interest factor for each such day is computed by
dividing the interest rate applicable on such day by 360, in the cases of CD
Rate Notes, Commercial Paper Rate Notes, LIBID Notes, LIBOR Notes, Federal Funds
Rate Notes, Prime Rate Notes, J.J. Kenny Rate Notes or Eleventh District Cost of
Funds Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes and CMT Rate Notes. The interest rate applicable to any day
that is an Interest Reset Date is the interest rate as determined, in accordance
with the procedures hereinafter set forth, with respect to the Interest
Determination Date (as defined below) pertaining to such Interest Reset Date.
The interest rate applicable to any other day is the interest rate for the
immediately preceding Interest Reset Date (or, if none, the Initial Interest
Rate).
Unless otherwise specified in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes that reset daily or weekly
or monthly (other than Eleventh District Cost of Funds Rate Notes), on the third
Wednesday of each month or on the third Wednesday of March, June, September and
December of each year, as specified in the applicable Pricing Supplement, or, in
the case of Eleventh District Cost of Funds Rate Notes, on the first calendar
day of each month or the first calendar day of each March, June, September and
December, as specified in the applicable Pricing Supplement; in the case of
Floating Rate Notes that reset quarterly, on the third Wednesday of March, June,
September and December of each year; in the case of Floating Rate Notes that
reset semi-annually, on the third Wednesday of the two months of each year
specified in the applicable Pricing Supplement; and in the case of Floating Rate
Notes that reset annually, on the third Wednesday of the month of each year
specified in the applicable Pricing Supplement, and in each case at Maturity
(each such day being an 'Interest Payment Date'). Unless otherwise specified in
the applicable Pricing Supplement, if an Interest Payment Date (other than at
Maturity) with respect to any Floating Rate Note would otherwise be a day that
is not a Business Day, such Interest Payment Date shall be the succeeding
Business Day, except, in the case of a LIBID Note or a LIBOR Note, if such day
would fall in the succeeding calendar month, such Interest Payment Date will be
the preceding Business Day. Any payment of principal (and premium, if any) and
interest required to be made on a Floating Rate Note on a date of Maturity that
is not a Business Day will be made on the succeeding Business Day, except, in
the case of a LIBID Note or a LIBOR Note, if such Business Day would fall in the
succeeding calendar month, such payment will be made on the preceding Business
Day (in
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each case with the same force and effect as if made on such date of Maturity and
no additional interest shall accrue as a result of any such delayed payment).
Unless otherwise specified in the applicable Pricing Supplement, the
'Interest Determination Date' pertaining to an Interest Reset Date for CD Rate
Notes (the 'CD Interest Determination Date'), Commercial Paper Rate Notes (the
'Commercial Paper Interest Determination Date'), Federal Funds Rate Notes (the
'Federal Funds Interest Determination Date'), Prime Rate Notes (the 'Prime Rate
Interest Determination Date'), J.J. Kenny Rate Notes (the 'J.J. Kenny Interest
Determination Date') and CMT Rate Notes (the 'CMT Interest Determination Date')
will be the second Business Day preceding such Interest Reset Date. Unless
otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date pertaining to an Interest Reset Date for LIBID Notes (the
'LIBID Interest Determination Date') and LIBOR Notes (the 'LIBOR Interest
Determination Date') will be the second London Business Day (as defined below)
preceding such Interest Reset Date. Unless otherwise specified in the applicable
Pricing Supplement, the Interest Determination Date pertaining to an Interest
Reset Date for a Treasury Rate Note (the 'Treasury Interest Determination Date')
will be the day of the week in which such Interest Reset Date falls on which
Treasury bills of the applicable Index Maturity are 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,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Interest Determination Date pertaining to the Interest
Reset Date occurring in the succeeding week. Unless otherwise specified in the
applicable Pricing Supplement, the Interest Determination Date pertaining to an
Interest Reset Date for an Eleventh District Cost of Funds Rate Note (the
'Eleventh District Cost of Funds Interest Determination Date') will be the last
working day of the month immediately preceding such Interest Reset Date on which
the Federal Home Loan Bank of San Francisco (the 'FHLB of San Francisco')
publishes the monthly Eleventh District Cost of Funds Index (as defined below).
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 any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or date of Maturity, as the case may be.
The Company will appoint, and enter into an agreement with, an agent (the
'Calculation Agent') to calculate interest on the Floating Rate Notes. Unless
otherwise specified in the applicable Pricing Supplement, Texas Commerce Bank
National Association will be the calculation agent with respect to Floating Rate
Notes. Upon the request of the holder of any Floating Rate Note, the Calculation
Agent will advise such holder of 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. All determinations to be
made by the Calculation Agent shall be at its sole discretion and, in the
absence of manifest error, shall be conclusive for all purposes and binding on
holders of the Notes, and the Calculation Agent shall have no liability
therefor.
CD RATE NOTES
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, 'CD Rate'
means, with respect to any CD Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as made available and subsequently 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).' In the event that such rate is not made available prior to
3:00 P.M., New York City time, on the Calculation Date pertaining to such CD
Interest Determination Date, then the CD Rate will be the rate on such CD
Interest Determination Date for negotiable certificates of deposit having the
specified Index Maturity as made available and subsequently 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' or any successor
publication ('Composite Quotations') under the heading 'Certificates of
Deposit.' If by 3:00 P.M., New York
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City time, on the Calculation Date pertaining to such CD Interest Determination
Date the rate for such CD Interest Determination Date has not yet been made
available in either H.15(519) or Composite Quotations, then the CD Rate for such
CD 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 CD Interest Determination Date of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for negotiable certificates
of deposit of major United States money center banks of the highest credit
standing (in the market for negotiable certificates of deposit) having a
remaining maturity closest to the specified Index Maturity in a denomination of
$5,000,000; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the CD Rate
with respect to such CD Interest Determination Date will be the CD Rate in
effect on such CD Interest Determination Date.
CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified in the Commercial Paper Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
'Commercial Paper Rate' means, with respect to any Commercial Paper Interest
Determination Date, the Money Market Yield (calculated as described below) on
such date of the rate for commercial paper having the Index Maturity designated
in the applicable Pricing Supplement as made available and subsequently
published in H.15(519) under the heading 'Commercial Paper.' In the event that
such rate is not made available by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate
on that Commercial Paper Interest Determination Date for commercial paper having
the Index Maturity designated in the applicable Pricing Supplement as made
available and subsequently 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 has not yet been made available in either H.15(519) or Composite
Quotations, the Commercial Paper Rate for such Commercial Paper Interest
Determination Date shall be calculated by the Calculation Agent and shall be the
Money Market Yield of the arithmetic mean of the offered rates as of 11:00 A.M.,
New York City time, on such Commercial Paper Interest Determination Date of
three leading dealers of commercial paper in The City of New York selected by
the Calculation Agent for commercial paper having the Index Maturity designated
in the applicable Pricing Supplement placed for an industrial issuer whose
senior unsecured bond rating is 'AA,' or the equivalent, from a nationally
recognized securities rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate with respect to such Commercial Paper
Interest Determination Date will be the Commercial Paper Rate in effect on such
Commercial Paper Interest Determination Date.
'Money Market Yield' shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
D X 360
Money Market Yield = --------------- X 100
360 - (D X M)
where 'D' refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal; and 'M' refers to the actual
number of days in the interest period for which interest is being calculated.
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LIBID NOTES
LIBID Notes will bear interest at the interest rates (calculated by
reference to LIBID and the Spread and/or Spread Multiplier, if any) specified in
the LIBID Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBID will
be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBID Interest Determination Date, LIBID will be
as specified in the applicable Pricing Supplement, either LIBID Reuters (as
defined below) or LIBID Telerate (as defined below), subject to the last
sentence of this paragraph. 'LIBID Reuters' means the arithmetic mean of
the bid rates for deposits in the Designated Deposit Currency (as defined
below) having the Index Maturity designated in the applicable Pricing
Supplement, commencing on the second day on which dealings in deposits in
the Designated Deposit Currency are transacted in the London interbank
market ('London Business Day') immediately following such LIBID Interest
Determination Date, that appear on the display designated as page 'LIBO' on
the Reuters Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service for the purpose of displaying London
interbank bid and offered rates of major banks) (the 'Reuters Screen LIBO
Page') as of 11:00 A.M., London time, on such LIBID Interest Determination
Date, if at least two such bid rates appear on the Reuters Screen LIBO
Page. 'LIBID Telerate' means the rate for deposits in the Designated
Deposit Currency having the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following that LIBID Interest Determination Date, that appears
on the display designated as page '3750' on the Telerate Service (or such
other page as may replace the 3750 page on that service or such other
service or services as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank bid and offered rates for
deposits in the Designated Deposit Currency) (the 'Telerate Page 3750') as
of 11:00 A.M., London time, on such LIBID Interest Determination Date. If
neither LIBID Reuters nor LIBID Telerate is specified in the applicable
Pricing Supplement, LIBID will be determined as if LIBID Telerate had been
specified. If fewer than two bid rates appear on the Reuters Screen LIBO
Page, or if no rate appears on the Telerate Page 3750, as applicable, LIBID
in respect of such LIBID Interest Determination Date will be determined as
if the parties had specified the rate described in (ii) below.
(ii) With respect to a LIBID Interest Determination Date on which
fewer than two bid rates appear on the Reuters Screen LIBO Page, or on
which no rate appears on Telerate Page 3750, as applicable, LIBID will be
determined on the basis of the bid rates at which deposits in the
Designated Deposit Currency, having the Index Maturity designated in the
applicable Pricing Supplement, are quoted at approximately 11:00 A.M.,
London time, on such LIBID Interest Determination Date to prime banks in
the London interbank market by four major banks in the London interbank
market selected by the Calculation Agent (the 'LIBID Reference Banks')
commencing on the second London Business Day immediately following such
LIBID Interest Determination Date and in a principal amount equal to an
amount of not less than U.S. $1,000,000 (or the equivalent in the
Designated Deposit Currency) that is representative for a single
transaction in such market at such time. The Calculation Agent will request
the principal London office of each of such LIBID Reference Banks to
provide a quotation of its rate. If at least two such quotations are
provided, LIBID in respect of such LIBID Interest Determination Date will
be the arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBID in respect of such LIBID Interest Determination Date will
be the arithmetic mean of the rates quoted in the applicable Principal
Financial Center (as defined below), on such LIBID Interest Determination
Date by three major banks in such Principal Financial Center selected by
the Calculation Agent for loans in the Designated Deposit Currency to
leading banks, having the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following the LIBID Interest Determination Date and in a
principal amount equal to an amount of not less than U.S. $1,000,000 (or
the equivalent in the Designated Deposit Currency) that is representative
for a single transaction in such market at such time; provided, however,
that if the banks selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, LIBID with respect to such LIBID
Interest Determination Date will be LIBID in effect on such LIBID Interest
Determination Date.
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LIBOR NOTES
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will be
as specified in the applicable Pricing Supplement, either LIBOR Reuters (as
defined below) or LIBOR Telerate (as defined below), subject to the last
sentence of this paragraph. 'LIBOR Reuters' means the arithmetic mean of
the offered rates for deposits in the Designated Deposit Currency having
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date, that appear on the Reuters Screen LIBO
Page as of 11:00 A.M., London time, on such LIBOR Interest Determination
Date, if at least two such offered rates appear on the Reuters Screen LIBO
Page. 'LIBOR Telerate' means the rate for deposits in the Designated
Deposit Currency having the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date, that appears
on Telerate Page 3750 as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date. If neither LIBOR Reuters nor LIBOR Telerate is
specified in the applicable Pricing Supplement, LIBOR will be determined as
if LIBOR Telerate had been specified. If fewer than two offered rates
appear on the Reuters Screen LIBO Page, or if no rate appears on the
Telerate Page 3750, as applicable, LIBOR in respect of such LIBOR Interest
Determination Date will be determined as if the parties had specified the
rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Reuters Screen LIBO Page, or on
which no rate appears on Telerate Page 3750, as applicable, LIBOR will be
determined on the basis of the rates at which deposits in the Designated
Deposit Currency, having the Index Maturity designated in the applicable
Pricing Supplement, are offered at approximately 11:00 A.M., London time,
on such LIBOR Interest Determination Date by four major banks in the London
interbank market selected by the Calculation Agent (the 'LIBOR Reference
Banks') to prime banks in the London interbank market commencing on the
second London Business Day immediately following such LIBOR Interest
Determination Date and in a principal amount equal to an amount of not less
than U.S. $1,000,000 (or the equivalent in the Designated Deposit Currency)
that is representative for a single transaction in such market at such
time. The Calculation Agent will request the principal London office of
each of such LIBOR Reference Banks to provide a quotation of its rate. If
at least two such quotations are provided, LIBOR in respect of such LIBOR
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR in respect of such LIBOR
Interest Determination Date will be the arithmetic mean of the rates quoted
in the applicable Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks in such Principal Financial Center
selected by the Calculation Agent for loans in the Designated Deposit
Currency to leading banks, having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second London Business Day
immediately following the LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than U.S. $1,000,000 (or
the equivalent in the Designated Deposit Currency) that is representative
for a single transaction in such market at such time; provided, however,
that if the banks selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, LIBOR with respect to such LIBOR
Interest Determination Date will be LIBOR in effect on such LIBOR Interest
Determination Date.
'Designated Deposit Currency' means, with respect to any LIBID Note or
LIBOR Note, the currency (including a composite currency), if any, designated in
the applicable LIBID Note or LIBOR Note as the Designated Deposit Currency. If
no such currency is designated in the applicable LIBID Note or LIBOR Note, the
Designated Deposit Currency shall be U.S. dollars. 'Principal Financial Center'
means, with respect to any LIBID Note or LIBOR Note, unless otherwise specified
in the applicable Pricing Supplement, the capital city of the country that
issues as its legal tender the Designated Deposit Currency of such LIBID Note or
LIBOR Note, except that with respect to U.S. dollars, Deutsche marks and ECUs,
the Principal Financial Center shall be the City of New York, Frankfurt and
Luxembourg, respectively.
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TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any) specified in the Treasury Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, 'Treasury
Rate' means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction of Treasury bills having the Index Maturity
designated in the applicable Pricing Supplement as made available and
subsequently published in H.15(519) under the heading 'U.S. Government
Securities--Treasury bills-auction average (investment)' or, if not so made
available by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Treasury Interest Determination Date, the auction average rate
(expressed as a bond equivalent, rounded to the nearest one hundredth of a
percent, with five one thousandths of a percent rounded upward, on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) for such
auction or as otherwise announced by the United States Department of the
Treasury. In the event that the results of the auction of Treasury bills having
the Index Maturity designated in the applicable Pricing Supplement are not
otherwise made available or published or reported as provided above by 3:00
P.M., New York City time, on such Calculation Date, or if no such auction is
held in a particular week, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, rounded to the nearest one-hundredth of a percent, with five one-
thousandths of a percent rounded upward, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Interest Determination Date of three leading primary United
States government securities dealers selected by the Calculation Agent for the
issue of Treasury bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting bid rates
as mentioned in this sentence, the Treasury Rate with respect to such Treasury
Interest Determination Date will be the Treasury Rate in effect on such Treasury
Interest Determination Date.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in the Federal Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, 'Federal
Funds Rate' means, with respect to any Federal Funds Interest Determination
Date, the rate on such date for Federal Funds as made available and subsequently
published in H.15(519) under the heading 'Federal Funds (Effective).' In the
event that such rate has not been made available by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Federal Funds Interest
Determination Date, the Federal Funds Rate will be the rate on such Federal
Funds Interest Determination Date as made available and subsequently published
in Composite Quotations under the heading 'Federal Funds/Effective Rate.' If
such rate is not made available in H.15(519) or in Composite Quotations by 3:00
P.M., New York City time, on such Calculation Date, then the Federal Funds Rate
for such Federal Funds Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates as of 9:00 A.M.,
New York City time, on such Federal Funds Interest Determination Date for the
last transaction in overnight Federal Funds 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 mentioned in this sentence, the Federal
Funds Rate with respect to such Federal Funds Interest Determination Date will
be the Federal Funds Rate in effect on such Federal Funds Interest Determination
Date.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, 'Prime
Rate' means, with respect to any Prime Interest Determination Date, the rate
made available and subsequently published on such date in H.15(519) under the
heading 'Bank Prime Loan.' In the event that such rate has not been made
available prior to 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Prime Interest Determination Date, the Prime Rate will be
calculated by the Calculation Agent and will be the arithmetic mean of the rates
of interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 Page (as defined below) as such bank's prime rate or base lending rate
as in effect for such Prime Interest Determination Date. If fewer than four such
rates but more than one such rate appear on the Reuters Screen USPRIME1 Page for
the Prime 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 Prime Interest Determination
Date by four major money center banks in The City of New York selected by the
Calculation Agent. If fewer than two such rates appear on the Reuters Screen
USPRIME1 Page, the Prime Rate will be calculated by the Calculation Agent and
will be the arithmetic mean of the prime rates quoted in The City of New York on
such Prime Interest Determination Date by at least three substitute banks or
trust companies organized and doing business under the laws of the United
States, or any State thereof, having total equity capital of at least U.S.
$500,000,000 and being subject to supervision or examination by Federal or State
authority, selected by the Calculation Agent to provide such rate or rates;
provided, however, that if the banks or trust companies selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the Prime
Rate with respect to such Prime Interest Determination Date will be the Prime
Rate in effect on such Prime Interest Determination Date. '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).
J.J. KENNY RATE NOTES
J.J. Kenny Rate Notes will bear interest at the interest rates (calculated
by reference to the J.J. Kenny Rate and the Spread and/or Spread Multiplier, if
any) specified in the J.J. Kenny Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, 'J.J. Kenny
Rate' means, with respect to any J.J. Kenny Interest Determination Date, the per
annum rate on such date equal to the index made available and subsequently
published by Kenny Information Systems or its successor, based upon 30-day yield
evaluations at par of bonds, the interest on which is excludable from gross
income for Federal income tax purposes under the Internal Revenue Code of 1986,
as amended (the 'Code'), of not less than five 'high grade' component issuers
selected from time to time by Kenny Information Systems, including without
limitation, issuers of general obligation bonds; provided, however, that the
bonds on which the index is based shall not include any bonds the interest on
which is subject to an 'alternate minimum tax' or similar tax under the Code,
unless all tax-exempt bonds are subject to such tax. If such rate is not made
available by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such J.J. Kenny Interest Determination Date, the J.J. Kenny Rate shall be the
rate quoted by a successor indexing agent selected by the Company equaling the
prevailing rate for bonds rated in the highest short-term rating category by
Moody's Investors Service, Inc. and Standard & Poor's Corporation in respect of
issuers selected by such successor indexing agent most closely resembling the
'high grade' component issuers selected by Kenny Information Systems that are
subject to tender by the holders thereof for purchase on not more than seven
days notice and the interest on which is (A) variable on a weekly basis, (B)
excludable from gross income for Federal income tax purposes under the Code, and
(C) not subject to an 'alternate minimum tax' or similar tax under the Code,
unless all tax-exempt bonds are subject to such tax; provided, however, that if
a successor indexing agent is not available, the J.J. Kenny Rate with respect to
such J.J. Kenny Interest Determination Date will be the J.J. Kenny Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the Initial Interest Rate).
ELEVENTH DISTRICT COST OF FUNDS RATE NOTES
Eleventh District Cost of Funds Rate Notes will bear interest at the
interest rates (calculated by reference to the Eleventh District Cost of Funds
Rate and the Spread and/or Spread Multiplier, if any) specified in the Eleventh
District Cost of Funds Rate Notes and in the applicable Pricing Supplement.
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Unless otherwise indicated in an applicable Pricing Supplement, 'Eleventh
District Cost of Funds Rate' means, with respect to any Eleventh District Cost
of Funds Interest Determination Date, the rate equal to the monthly weighted
average cost of funds for the calendar month preceding such Eleventh District
Cost of Funds Interest Determination Date as set forth under the caption
'Eleventh District' on Telerate Page 7058 as of 11:00 A.M., San Francisco time,
on such Eleventh District Cost of Funds Interest Determination Date. If such
rate does not appear on Telerate Page 7058 on any related Eleventh District Cost
of Funds Interest Determination Date, the Eleventh District Cost of Funds Rate
for such Eleventh District Cost of Funds Interest Determination Date shall be
the monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
'Eleventh District Cost of Funds Rate Index') by the FHLB of San Francisco as
such cost of funds for the calendar month preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for the
calendar month next preceding such Eleventh District Cost of Funds Interest
Determination Date, then the Eleventh District Cost of Funds Rate for such
Eleventh District Cost of Funds Interest Determination Date will be the Eleventh
District Cost of Funds Rate in effect on such Eleventh District Cost of Funds
Interest Determination Date.
CMT RATE NOTES
CMT Rate Notes will bear interest at the interest rates (calculated by
reference to the CMT Rate and the Spread and/or Spread Multiplier, 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 CMT Interest Determination Date, the rate displayed
on the Designated CMT Telerate Page (as defined below) under the caption '. . .
Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . .
Mondays Approximately 3:45 p.m.' under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page
7055, the rate on such CMT Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the rate for the week, or the month, as
applicable, ended immediately preceding the week in which such CMT 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 Calculation
Date pertaining to such CMT Interest Determination Date, then the CMT Rate for
such CMT 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 Calculation Date pertaining to such CMT
Interest Determination Date, then the CMT Rate for such CMT 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 such CMT Interest Determination Date as may
then be published by either the Federal Reserve Board 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 Calculation Date pertaining to such CMT
Interest Determination Date, then the CMT Rate for such CMT 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 such CMT
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 one or more of
the Agents) as selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent and 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 approximately equal to the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year and in an amount of at least
$100 million. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such CMT 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 such CMT Interest Determination Date of three
Reference Dealers in The City of New York (from five such Reference Dealers
selected by the Calculation Agent and 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,
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one of the lowest)), for Treasury Notes with an original maturity of the number
of years that is the next highest to the Designated CMT Maturity Index and a
remaining term to maturity closest to the Designated CMT Maturity Index and in
an amount of at least $100 million. If three or four (and not five) of such
Reference Dealers selected by the Calculation Agent are quoting as described
above, then CMT Rate will be based on the arithmetic mean of the offer prices
obtained and neither the highest nor 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 will be the CMT
Rate in effect on such CMT Interest Determination Date. If two Treasury Notes
with an original maturity as described in the third 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' means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on the 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, the Designated CMT Telerate Page shall be 7052 for the most
recent week.
'Designated CMT Maturity Index' means the original period to maturity of
the Treasury Notes (either 1, 2, 3, 5, 7, or 10 years) specified under Index
Maturity in the applicable Pricing Supplement with respect to which the CMT Rate
will be calculated. If no such maturity under Index Maturity is specified, the
Designated CMT Maturity Index shall be 2 years.
INVERSE FLOATING RATE NOTES
Any Floating Rate Note may be designated in the applicable Pricing
Supplement as an 'Inverse Floating Rate Note,' in which event, unless otherwise
specified in the applicable Pricing Supplement, the interest rate on such
Floating Rate Note will be equal to (i) in the case of the period, if any,
commencing on the Issue Date (or the date on which such Note otherwise begins to
accrue interest (if different from the Issue Date)) up to the first Interest
Reset Date, a fixed rate of interest established by the Company as described in
the applicable Pricing Supplement and (ii) in the case of each period commencing
on an Interest Reset Date, a fixed rate of interest specified in the Pricing
Supplement minus the interest rate determined by reference to the Base Rate as
adjusted by the Spread and/or Spread Multiplier, if any; provided, however, that
(x) the interest rate thereon will not be less than zero and (y) the interest
rate in effect for the ten days immediately prior to the date of Maturity of
such Inverse Floating Rate Note will be that in effect on the tenth day
preceding such date.
FLOATING RATE/FIXED RATE NOTES
The applicable Pricing Supplement may provide that a Note will be a
Floating Rate Note for a specified portion of its term and a Fixed Rate Note for
the remainder of its term, in which event the interest rate on such Note will be
determined as herein provided as if it were a Floating Rate Note and a Fixed
Rate Note hereunder for each such respective period, all as specified in such
applicable Pricing Supplement.
CURRENCY INDEXED NOTES
General
The Company may from time to time offer Notes, the principal amount payable
at Maturity and/or the interest rate of which is determined by reference to the
rate of exchange between the currency or composite currency in which such Notes
are denominated (the 'Denominated Currency') and the other currency or composite
currency specified as the Indexed Currency (the 'Indexed Currency') in the
applicable Pricing Supplement, or as determined in such other manner as may be
specified in the applicable Pricing Supplement ('Currency Indexed Notes').
Unless otherwise specified in the applicable Pricing Supplement, holders of
Currency Indexed Notes will be entitled to receive (i) an amount in respect of
such Currency Indexed Notes exceeding the amount designated as the face amount
of the principal (the 'Face Amount') of, and/or interest calculated at the
designated rate of interest on, such Currency Indexed Notes in the applicable
Pricing Supplement if, on the date of Maturity or upon the relevant Interest
Payment Date, as the case may be, the rate at
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which the Denominated Currency can be exchanged for the Indexed Currency is
greater than the rate of such exchange designated as the Base Exchange Rate,
expressed in units of the Indexed Currency per one unit of the Denominated
Currency, in the applicable Pricing Supplement (the 'Base Exchange Rate'), or
(ii) an amount in respect of such Currency Indexed Notes less than the Face
Amount and/or interest calculated at such designated interest rate of such
Currency Indexed Notes if, at Maturity or upon the relevant Interest Payment
Date, as the case may be, the rate at which the Denominated Currency can be
exchanged for the Indexed Currency is less than such Base Exchange Rate, in each
case determined as described below under 'Payment of Principal and Interest.'
Information as to the relative historical value (which information is not
necessarily indicative of relative future value) of the applicable Denominated
Currency against the applicable Indexed Currency, any exchange controls
applicable to such Denominated Currency or Indexed Currency and the United
States Federal income tax consequences of the purchase, ownership and
disposition of Currency Indexed Notes will be set forth in the applicable
Pricing Supplement. See 'Foreign Currency Risks.'
Unless otherwise specified in the applicable Pricing Supplement, the term
'Exchange Rate Day' shall mean any day which is a Business Day in The City of
New York, and if the Denominated Currency or Indexed Currency is any currency or
composite currency other than the U.S. dollar, in the principal financial center
of the country of such Denominated Currency or Indexed Currency.
Payment of Principal and Interest
Unless otherwise specified in the applicable Pricing Supplement, the
payment of principal at Maturity and interest on Currency Indexed Notes on each
Interest Payment Date (until principal thereof is paid or made available for
payment) will be payable in the Denominated Currency (except in the
circumstances of the unavailability of such currency, as otherwise described
under 'Payment Currency' above) in amounts calculated in the manner described
below.
Unless otherwise specified in the applicable Pricing Supplement, principal
at Maturity, if indexed, will be payable in an amount equal to the Face Amount
of the Currency Indexed Note, plus or minus an amount of the Denominated
Currency determined by the determination agent specified in the applicable
Pricing Supplement (the 'Determination Agent') by reference to the difference
between the Base Exchange Rate and the rate at which the Denominated Currency
can be exchanged for the Indexed Currency on the second Exchange Rate Day (the
'Determination Date') prior to the date of Maturity of such Currency Indexed
Note. Such rate of exchange shall be the highest bid of the open market spot
offer quotations for the Indexed Currency (spot bid quotations for the
Denominated Currency) obtained by the Determination Agent from the Reference
Dealers (as defined below) in The City of New York at 11:00 A.M., New York City
time, on the Determination Date, for an amount of Indexed Currency equal to the
Face Amount of such Currency Indexed Note multiplied by the Base Exchange Rate,
with settlement on the date of Maturity to be in the Denominated Currency (such
rate of exchange, as so determined and expressed in units of the Indexed
Currency per one unit of the Denominated Currency, is hereafter referred to as
the 'Spot Rate'). If such quotations from the Reference Dealers are not
available on the Determination Date due to circumstances beyond the control of
the Company or the Determination Agent, the Spot Rate will be determined on the
basis of the most recently available quotations from the Reference Dealers. As
used herein, the term 'Reference Dealers' shall mean the three banks or firms
specified as such in the applicable Pricing Supplement, or if any of them shall
be unwilling or unable to provide the requested quotations, such other major
money center bank or banks in The City of New York selected by the Determination
Agent to act as Reference Dealer or Dealers in replacement therefor. In the
absence of manifest error, the determination by the Determination Agent of the
Spot Rate and the principal amount of and interest on the Currency Indexed Notes
payable at Maturity thereof shall be final and binding on the Company and the
holders of such Currency Indexed Notes.
Unless otherwise specified in the applicable Pricing Supplement, on the
basis of the aforesaid determination by the Determination Agent and the formulae
and limitations set forth below, (i) if the Base Exchange Rate equals the Spot
Rate for any Currency Indexed Note, then the principal amount of such Currency
Indexed Note payable at Maturity would be equal to the Face Amount of such
Currency Indexed Note; (ii) if the Spot Rate exceeds the Base Exchange Rate
(i.e., the Denominated Currency has appreciated against the Indexed Currency
during the term of the Currency Indexed Note), then the principal amount so
payable would be greater than the Face Amount of such Currency Indexed Note up
to an amount equal to twice the Face Amount of such Currency
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Indexed Note; (iii) if the Spot Rate is less than the Base Exchange Rate (i.e.,
the Denominated Currency has depreciated against the Indexed Currency during the
term of the Currency Indexed Note) but is greater than one-half of the Base
Exchange Rate, then the principal amount so payable would be less than the Face
Amount of such Currency Indexed Note; and (iv) if the Spot Rate is less than or
equal to one-half of the Base Exchange Rate, then the Spot Rate will be deemed
to be one-half of the Base Exchange Rate and no principal amount of the Currency
Indexed Note would be payable at Maturity.
With respect to the payment of interest on each Interest Payment Date, if
indexed, the amount will be the Face Amount multiplied by the relevant interest
rate, indexed as specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
formulae to be used by the Determination Agent to determine the principal amount
of a Currency Indexed Note payable at Maturity will be as follows:
As to principal, if the Spot Rate exceeds or equals the Base Exchange Rate,
the principal amount of a Currency Indexed Note payable at Maturity shall equal:
Spot Rate - Base Exchange Rate
Face Amount + (Face Amount X ------------------------------)
Spot Rate
and if the Base Exchange Rate exceeds the Spot Rate, the principal amount of a
Currency Indexed Note payable at Maturity (which shall, in no event, be less
than zero) shall equal:
Base Exchange Rate - Spot Rate
Face Amount - (Face Amount X ------------------------------)
Spot Rate
Unless otherwise specified in the applicable Pricing Supplement, if the
formulae set forth above are applicable to a Currency Indexed Note, the maximum
principal amount payable at Maturity in respect of such a Currency Indexed Note
would be an amount equal to twice the Face Amount and the minimum principal
amount payable would be zero.
OTHER INDEXED NOTES AND CERTAIN TERMS APPLICABLE TO ALL INDEXED NOTES
The Notes may be issued as Indexed Notes, other than Currency Indexed
Notes, the principal amount of which payable at Maturity or the interest (or
premium, if any) thereon, or both, may be determined by reference to the
relationship between two or more currencies, to the price of one or more
specified securities or commodities, to one or more securities or commodities
exchange indices or other indices or by other similar methods or formulae. The
Pricing Supplement relating to such an Indexed Note will describe, as
applicable, the method by which the amount of interest payable on any Interest
Payment Date and the amount of principal payable at Maturity in respect of such
Indexed Note will be determined, the U.S. Federal income tax consequences of the
purchase, ownership and disposition of such Notes, certain risks associated with
an investment in such Notes and other information relating to such Notes. See
'Foreign Currency Risks.'
Unless otherwise specified in the applicable Pricing Supplement, the
maximum principal amount payable at Maturity in respect of any Indexed Note will
be an amount equal to twice the Face Amount of such Note and the minimum
principal amount so payable will be zero.
Unless otherwise specified in the applicable Pricing Supplement, (i) for
the purpose of determining whether holders of the requisite principal amount of
Securities outstanding under the Indenture have made a demand or given a notice
or waiver or taken any other action, the outstanding principal amount of Indexed
Notes will be deemed to be the Face Amount thereof, and (ii) in the event of an
acceleration of the Stated Maturity of an Indexed Note, the principal amount
payable to the holder of such Note upon acceleration will be the principal
amount determined by reference to the formula by which the principal amount of
such Note would be determined on the Stated Maturity thereof, as if the date of
acceleration were the Stated Maturity.
An investment in Indexed Notes entails significant risks, including wide
fluctuations in market value as well as in the amounts of payments due
thereunder, that are not associated with a similar investment in a conventional
debt security. Such risks depend on a number of factors including supply and
demand for the particular commodity and economic and political events over which
the Company has no control. Fluctuations in the price
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of any particular security or commodity, in the rates of exchange between
particular currencies or in particular indices that have occurred in the past
are not necessarily indicative, however, of fluctuations in the price or rates
of exchange that may occur during the term of any Indexed Notes. Accordingly,
prospective investors should consult their own financial and legal advisors as
to the risks entailed by an investment in Indexed Notes. Indexed Notes are not
an appropriate investment for investors who are unsophisticated with respect to
securities, commodities and/or foreign currency transactions.
DUAL CURRENCY NOTES
The Company may from time to time offer Notes (the 'Dual Currency Notes')
as to which the Company has a one time option, exercisable on any one of the
dates specified in the applicable Pricing Supplement (each an 'Option Election
Date') in whole, but not in part, with respect to all Dual Currency Notes issued
on the same day and having the same terms (a 'Tranche'), of thereafter making
all payments of principal, premium, if any, and interest (which payments would
otherwise be made in the Specified Currency of such Notes) in the optional
currency specified in the applicable Pricing Supplement (the 'Optional Payment
Currency'). Information as to the relative value of the Specified Currency
compared to the Optional Payment Currency will be set forth in the applicable
Pricing Supplement.
The Pricing Supplement for each issuance of Dual Currency Notes will
specify, among other things, the Specified Currency and Optional Payment
Currency of such issuance and the Designated Exchange Rate for such issuance,
which will be a fixed exchange rate used for converting amounts denominated in
the Specified Currency into amounts denominated in the Optional Payment Currency
(the 'Designated Exchange Rate'). The Pricing Supplement will also specify the
Option Election Dates and Interest Payment Dates for the related issuance of
Dual Currency Notes. Each Option Election Date will be a certain number of days
before an Interest Payment Date or the Maturity Date, as set forth in the
applicable Pricing Supplement, and will be the date on which the Company may
select whether to make all scheduled payments due thereafter in the Optional
Payment Currency rather than in the Specified Currency.
If the Company makes such an election, the amount payable in the Optional
Payment Currency shall be determined using the Designated Exchange Rate
specified in the applicable Pricing Supplement. If such election is made, notice
of such election shall be mailed in accordance with the terms of the applicable
Tranche of Dual Currency Notes within two Business Days of the Option Election
Date and shall state (i) the first date, whether an Interest Payment Date and/or
the Maturity Date, on which scheduled payments in the Optional Payment Currency
will be made and (ii) the Designated Exchange Rate. Any such notice by the
Company, once given, may not be withdrawn. The equivalent value in the Specified
Currency of payments made after such an election may be less, at the then
current exchange rate, than if the Company had made such payment in the
Specified Currency.
For Federal income tax purposes, holders of Dual Currency Notes may be
subject to rules which differ from the general rules applicable to holders of
other types of Notes offered hereby. The U.S. Federal income tax consequences of
the purchase, ownership and disposition of Dual Currency Notes will be set forth
in the applicable Pricing Supplement.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each Note will indicate whether the
Company has the option with respect to such Note to reset the interest rate, in
the case of a Fixed Rate Note, or to reset the Spread and/or Spread Multiplier,
in the case of a Floating Rate Note, and, if so, the date or dates on which such
interest rate or such Spread and/or Spread Multiplier, as the case may be, may
be reset (each an 'Optional Reset Date'). If the Company has such option with
respect to any Note, the following procedures shall apply, unless modified as
set forth in the applicable Pricing Supplement.
The Company may exercise such option with respect to a Note by notifying
the Trustee of such exercise at least 45 but not more than 60 days prior to an
Optional Reset Date for such Note. Not later than 40 days prior to such Optional
Reset Date, the Trustee will mail to the holder of such Note a notice (the
'Reset Notice') setting forth (i) the election of the Company to reset the
interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, (ii) such new interest rate or
such new Spread and/or Spread Multiplier, as the case may be, and (iii) the
provisions, if any, for redemption during the period
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from such Optional Reset Date to the next Optional Reset Date or, if there is no
such next Optional Reset Date, to the Stated Maturity of such Note (each such
period a 'Subsequent Interest Period'), including the date or dates on which or
the period or periods during which and the price or prices at which such
redemption may occur during such Subsequent Interest Period. Upon the
transmittal by the Trustee of a Reset Notice to the holder of a Note, such new
interest rate or such new Spread and/or Spread Multiplier, as the case may be,
shall take effect automatically, and, except as modified by the Reset Notice and
as described in the next paragraph, such Note will have the same terms as prior
to the transmittal of such Reset Notice.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, the Company may, at its option, revoke the interest rate,
in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the
case of a Floating Rate Note, provided for in the Reset Notice and establish an
interest rate, in the case of a Fixed Rate Note, or a Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, that is higher than the
interest rate or Spread and/or Spread Multiplier, as the case may be, provided
for in the Reset Notice, for the Subsequent Interest Period commencing on such
Optional Reset Date by causing the Trustee to transmit notice of such higher
interest rate or higher Spread and/or Spread Multiplier, as the case may be, to
the holder of such Note. Such notice shall be irrevocable. All Notes with
respect to which the interest rate or Spread and/or Spread Multiplier is reset
on an Optional Reset Date and with respect to which the holders of such Notes
have not tendered such Notes for repayment (or have validly revoked any such
tender) pursuant to the next succeeding paragraph will bear such higher interest
rate, in the case of a Fixed Rate Note, or higher Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, for the Subsequent Interest
Period.
If the Company elects to reset the interest rate or the Spread and/or
Spread Multiplier of a Note as described above, the holder of such Note will
have the option to elect repayment of such Note by the Company on any Optional
Reset Date at a price equal to the aggregate principal amount thereof
outstanding on, plus any interest accrued to, such Optional Reset Date. In order
for a Note to be so repaid on an Optional Reset Date, the holder thereof must
follow the procedures set forth below under 'Redemption and Repayment' for
optional repayment, except that the period for delivery of such Note or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date and except that a holder who has tendered a Note for
repayment pursuant to a Reset Notice may, by written notice to the Trustee,
revoke any such tender for repayment until the close of business on the tenth
day prior to such Optional Reset Date.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note (other than an Amortizing
Note) will indicate whether the Company has the option to extend the Stated
Maturity of such Note for one or more periods (each an 'Extension Period') up to
but not beyond the date (the 'Final Maturity Date') set forth in such Pricing
Supplement. If the Company has such option with respect to any Note (other than
an Amortizing Note), the following procedures shall apply, unless modified as
set forth in the applicable Pricing Supplement.
The Company may exercise such option with respect to a Note (other than an
Amortizing Note) by notifying the Trustee of such exercise at least 50 but not
more than 60 days prior to the Stated Maturity of such Note in effect prior to
the exercise of such option (the 'Original Stated Maturity'). No later than 40
days prior to the Original Stated Maturity, the Trustee will mail to the holder
of such Note a notice (the 'Extension Notice') relating to such Extension
Period, setting forth (i) the election of the Company to extend the Original
Stated Maturity, (ii) the new Stated Maturity, (iii) in the case of a Fixed Rate
Note, the interest rate applicable to the Extension Period or, in the case of a
Floating Rate Note, the Spread and/or Spread Multiplier applicable to the
Extension Period and (iv) the provisions, if any, for redemption during the
Extension Period, including the date or dates on which or the period or periods
during which and the price or prices at which such redemption may occur during
the Extension Period. Upon the transmittal by the Trustee of an Extension Notice
to the holder of a Note, the Original Stated Maturity shall be extended
automatically, and, except as modified by the Extension Notice and as described
in the next paragraph, such Note will have the same terms as prior to the
transmittal of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity for a Note, the Company may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier,
in the case of a Floating Rate Note, provided for in the Extension Notice and
establish an
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interest rate, in the case of a Fixed Rate Note, or a Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, that is higher than the
interest rate or Spread and/or Spread Multiplier, as the case may be, provided
for in the Extension Notice, for the Extension Period by causing the Trustee to
transmit notice of such higher interest rate or higher Spread and/or Spread
Multiplier, as the case may be, to the holder of such Note. Such notice shall be
irrevocable. All Notes with respect to which the Stated Maturity is extended and
with respect to which the holders of such Notes have not tendered such Notes for
repayment (or have validly revoked any such tender) pursuant to the next
succeeding paragraph will bear such higher interest rate, in the case of a Fixed
Rate Note, or higher Spread and/or Spread Multiplier, in the case of a Floating
Rate Note, for the Extension Period.
If the Company elects to extend the Stated Maturity of a Note, the holder
of such Note will have the option to elect repayment of such Note by the Company
on the Original Stated Maturity at a price equal to the aggregate principal
amount thereof outstanding plus any accrued interest to such date. In order for
a Note to be so repaid on the Original Stated Maturity, the holder thereof must
follow the procedures set forth below under 'Redemption and Repayment' for
optional repayment, except that the period for delivery of such Note or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to the Original Stated Maturity and except that a holder who has tendered a Note
for repayment pursuant to an Extension Notice may, by written notice to the
Trustee, revoke any such tender for repayment until the close of business on the
tenth day prior to the Original Stated Maturity.
RENEWABLE NOTES
The Company may from time to time offer Notes which will mature on an
Interest Payment Date specified in the applicable Pricing Supplement occurring
in or prior to the twelfth month following the original Issue Date of such Notes
(the 'Initial Maturity Date') unless the term of all or any portion of any such
Note (a 'Renewable Note') is renewed in accordance with the procedures described
below.
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the 'Special Election Interval') is specified in the
applicable Pricing Supplement) prior to the Initial Maturity Date of a Renewable
Note (the 'Initial Renewal Date') and on the Interest Payment Date occurring in
each sixth month (or in the last month of each Special Election Interval) after
such Initial Renewal Date (each, together with the Initial Renewal Date, a
'Renewal Date'), the term of such Renewable Note may be extended to the Interest
Payment Date occurring in the twelfth month (or, if a Special Election Interval
is specified in the applicable Pricing Supplement, the last month in a period
equal to twice the Special Election Interval) after such Renewal Date, if the
holder of such Renewable Note elects to extend the term of such Renewable Note
or any portion thereof as described below. If a holder does not elect to extend
the term of any portion of the principal amount of a Renewable Note during the
specified period prior to any Renewal Date, such portion will become due and
payable on the Interest Payment Date occurring in the sixth month (or the last
month in the Special Election Interval) after such Renewal Date (the 'New
Maturity Date').
A holder of a Renewable Note may elect to renew the term of such Renewable
Note, or if so specified in the applicable Pricing Supplement, any portion
thereof, by delivering a notice to such effect to the Trustee (or any duly
appointed paying agent) at the Corporate Trust Office not less than 15 nor more
than 30 days prior to such Renewal Date (unless another period is specified in
the applicable Pricing Supplement as the 'Special Election Period'). Such
election will be irrevocable and will be binding upon each subsequent holder of
such Renewable Note. An election to renew the term of a Renewable Note may be
exercised with respect to less than the entire principal amount of such
Renewable Note only if so specified in the applicable Pricing Supplement and
only in such principal amount, or any integral multiple in excess thereof, as is
specified in the applicable Pricing Supplement. Notwithstanding the foregoing,
the term of the Renewable Notes may not be extended beyond the Stated Maturity
specified for such Renewable Notes in the applicable Pricing Supplement.
If the holder does not elect to renew the term, such Renewable Note must be
presented to the Trustee (or any duly appointed paying agent) and, with respect
to a Renewable Note that is a certificate issued in definitive form, as soon as
practicable following receipt of such Renewable Note the Trustee (or any duly
appointed paying agent) shall issue in exchange therefor in the name of such
holder (i) a Note, in a principal amount equal to the principal amount of such
exchanged Renewable Note for which no election to renew the term thereof was
exercised, with terms identical to those specified on such Renewable Note
(except that such Note shall have a fixed, nonrenewable Stated Maturity on the
New Maturity Date) and (ii) if an election to renew is made with
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respect to less than the full principal amount of such holder's Renewable Note,
a replacement Renewable Note, in a principal amount equal to the principal
amount of such exchanged Renewable Note for which the election to renew was
made, with terms identical to such exchanged Renewable Notes.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under 'Subsequent Interest Periods,' 'Extension of Maturity' and
'Renewable Notes.'
REDEMPTION AND REPAYMENT
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to its Stated Maturity or that such Note will be
redeemable, in whole or in part, at the option of the Company on a date or dates
specified prior to such Stated Maturity at a price or prices, set forth in the
applicable Pricing Supplement, together with accrued interest to the date of
redemption. Unless otherwise specified in the applicable Pricing Supplement, the
Notes, other than Amortizing Notes, will not be subject to any sinking fund. The
Company may redeem any of the Notes that are redeemable and remain outstanding,
either in whole or from time to time in part, upon not less than 30 nor more
than 60 days' notice. Unless otherwise specified in the applicable Pricing
Supplement, if less than all of the Notes with like tenor and terms are to be
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate.
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be repaid at the option of the holder prior to its Stated Maturity
or that such Note will be repayable at the option of the holder thereof on a
date or dates specified prior to its Stated Maturity at a price or prices set
forth in the applicable Pricing Supplement, together with accrued interest to
the date of repayment.
Unless otherwise specified in the applicable Pricing Supplement, in order
for a Note to be repaid at the option of the holder thereof, the Company must
receive at least 30 days but not more than 45 days prior to the repayment date
the Note with the form entitled 'Option to Elect Repayment' on the reverse of or
otherwise accompanying the Note duly completed. Exercise of the repayment option
by the holder of a Note shall be irrevocable, except as otherwise described
above under 'Description of Notes--Subsequent Interest Periods' and 'Description
of Notes--Extension of Maturity.' The repayment option may be exercised by the
holder of a Note for less than the aggregate principal amount of the Note then
outstanding provided that the principal amount of the Note remaining outstanding
after repayment is an authorized denomination.
With respect to a Global Security, the Depositary's nominee will be the
holder of such Global Security and therefore will be the only entity that can
exercise a right to repayment. See 'Description of Notes--Book-Entry Notes'
below. In order to ensure that the Depositary's nominee will timely exercise a
right to repayment with respect to a particular beneficial interest in a Global
Security, the beneficial owner of such interest must instruct the broker or
other direct or indirect participant through which it holds a beneficial
interest in such Global Security to notify the Depositary of its desire to
exercise a right to repayment. Different firms have different cut-off times 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 Global Security in order to ascertain the
cut-off time by which such an instruction must be given in order for timely
notice to be delivered to the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note is a
Discount Note, the amount payable on such Note in the event of redemption or
repayment prior to its Stated Maturity will be the Amortized Face Amount of such
Note, as specified in the applicable Pricing Supplement, as of the date of
redemption or repayment, as the case may be.
REPURCHASE
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held or resold or may be surrendered to the
Trustee for cancellation.
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OTHER PROVISIONS
Any provisions with respect to the determination of an interest rate basis,
the specification of an interest rate basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the terms
as specified under 'Other Provisions' on the face of such Note, or in an
addendum relating thereto if so specified on the face thereof, and in the
applicable Pricing Supplement.
BOOK-ENTRY NOTES
Global Securities will be deposited with, or on behalf of, the Depositary
and registered in the name of the Depositary's nominee. Except as set forth
below, a Global Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor of the Depositary or a nominee of such successor.
Unless otherwise specified in the applicable Pricing Supplement, DTC will be the
Depositary.
Principal and interest payments on the Notes represented by one or more
Global Securities will be made by the Company to the Depositary or its nominee,
as the case may be, as the registered owner of the related Global Security or
Securities. The Company expects that the Depositary or its nominee, upon receipt
of any payment of principal or interest in respect of Global Securities, will
credit immediately the accounts of the related participants with payment in
amounts proportionate to their respective holdings in principal amount of
beneficial interests in such Global Securities as shown on the records of the
Depositary. Neither the Company nor the Trustee or any Paying Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of Global Securities,
or for maintaining, supervising or reviewing any records relating to such
beneficial interests. The Company also expects that payments by participants to
owners of beneficial interests in Global Securities held through such
participants will be governed by standing customer instructions and customary
practices, as is the case with securities registered in 'street name.' Such
instructions will be the responsibility of such participants.
If an issue of Notes is denominated in a currency other than the U.S.
dollar, the Company will make payments of principal and any interest in the
currency in which the Notes are denominated (the 'foreign currency') or in U.S.
dollars. DTC has elected to have all such payments of principal and interest in
U.S. dollars unless notified by any of its participants through which an
interest in the Notes is held that it elects, in accordance with and to the
extent permitted by the applicable Pricing Supplement and the Note, to receive
such payment of principal or interest in the foreign currency. On or prior to
the third Business Day after the record date for payment of interest and twelve
days prior to the date for payment of principal, such participant shall notify
DTC of (i) its election to receive all, or the specified portion, of such
payment in the foreign currency and (ii) its instructions for wire transfer of
such payment to a foreign currency account.
DTC will notify the Paying Agent on or prior to the fifth Business Day
after the record date for payment of interest and ten days prior to the date for
payment of principal of the portion of such payment to be received in the
foreign currency and the applicable wire transfer instructions, and the Paying
Agent shall use such instructions to pay the participants directly. If DTC does
not so notify the Paying Agent, it is understood that only U.S. dollar payments
are to be made. The Paying Agent shall notify DTC on or prior to the second
Business Day prior to the payment date of the conversion rate to be used and the
resulting U.S. dollar amount to be paid per $1,000 face amount. In the event
that the Paying Agent's quotation to convert the foreign currency into U.S.
dollars is not available, the Paying Agent shall notify DTC's Dividend
Department that the entire payment is to be made in the foreign currency. In
such event, DTC will ask its participants for payment instructions and forward
such instructions to the Paying Agent and the Paying Agent shall use such
instructions to pay the participants directly.
A further description of the Depositary's procedures with respect to Global
Securities is set forth in the accompanying Prospectus under 'Description of
Securities--Global Securities.'
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IMPORTANT CURRENCY EXCHANGE INFORMATION
Each purchaser of a Note is required to pay for such Note in the Specified
Currency thereof. Currently, there are limited facilities in the United States
for conversion of U.S. dollars into foreign currencies and vice versa, and banks
do not generally offer non-U.S. dollar checking or savings account facilities in
the United States. However, if requested by a prospective purchaser of Notes
denominated in a Specified Currency other than U.S. dollars, the Agent will
arrange for the conversion of U.S. dollars into such Specified Currency to
enable the purchaser to pay for such Notes. Such request must be made on or
before the fifth Business Day preceding the date of delivery of the Notes, or by
such other date as is determined by the Agent. Each such conversion will be made
by the Agent on such terms and subject to such conditions, limitations and
charges as the Agent may from time to time establish in accordance with its
regular foreign exchange practice. All costs of any such exchange will be borne
by the purchasers of the Notes requesting such conversion.
FOREIGN CURRENCY RISKS
GOVERNING LAW AND JUDGMENTS
The Notes will state that they will be governed by and construed in
accordance with the laws of the State of New York. Courts in the United States
have not customarily rendered judgments for money damages denominated in any
currency other than the U.S. dollar. The Judiciary Law of the State of New York
provides, however, that judgment rendered in an action based upon an obligation
denominated in a currency other than U.S. dollars will be rendered in the
foreign currency of the underlying obligation and converted into U.S. dollars at
a rate of exchange prevailing on the date of the entry of the judgment or
decree.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in a Specified Currency other
than U.S. dollars ('Foreign Currency Notes') entails significant risks that are
not associated with a similar investment in a security denominated in U.S.
dollars. Similarly, an investment in a Currency Indexed Note entails significant
risks that are not associated with a similar investment in non-Indexed Notes.
Such risks include, without limitation, the possibility of significant market
changes in rates of exchange between U.S. dollars and such Specified Currency
(or, in the case of each Currency Indexed Note, the rate of exchange between the
Denominated Currency and the Indexed Currency for such Currency Indexed Note),
the possibility of significant changes in rates of exchange between U.S. dollars
and such Specified Currency (or, in the case of each Currency Indexed Note,
changes in rates of exchange between the Denominated Currency and the Indexed
Currency for such Currency Indexed Note) resulting from official redenomination
with respect to such Specified Currency (or, in the case of each Currency
Indexed Note, with respect to the Denominated Currency or the Indexed Currency
therefor) and the possibility of the imposition or modification of foreign
exchange controls by either the United States or foreign governments. Such risks
generally depend on factors over which the Company has no control, such as
economic and political events, and on the supply of and demand for the relevant
currencies. In recent years, rates of exchange between the U.S. dollar and
certain foreign currencies, and between certain foreign currencies and other
foreign currencies, have been volatile, and such volatility may be expected in
the future. Fluctuations that have occurred in any particular exchange rate in
the past are not necessarily indicative, however, of fluctuations that may occur
in the rate during the term of any Foreign Currency Note or any Currency Indexed
Note. Depreciation of the Specified Currency of a Foreign Currency Note against
U.S. dollars would result in a decrease in the effective yield of such Foreign
Currency Note below its coupon rate and, in certain circumstances, could result
in a loss to the investor on a U.S. dollar basis. Similarly, depreciation of the
Denominated Currency with respect to a Currency Indexed Note against the
applicable Indexed Currency would result in the principal amount payable with
respect to such Currency Indexed Note at the date of Maturity being less than
the Face Amount of such Currency Indexed Note which, in turn, would decrease the
effective yield of such Currency Indexed Note below its stated interest rate and
could also result in a loss to the investor. See 'Description of Notes--Currency
Indexed Notes.'
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 Currency (other than U.S. dollars) at the time of
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payment of principal of, or premium, if any, or interest on, a Foreign Currency
Note. There can be no assurance that exchange controls will not restrict or
prohibit payments of principal (and premium, if any) or interest in any such
Specified Currency. Even if there are no actual exchange controls, it is
possible that such Specified Currency would not be available to the Company when
payments on such Note are due because of circumstances beyond the control of the
Company. In any such event, the Company will make required payments in U.S.
dollars on the basis described herein. See 'Description of Notes--Payment
Currency' and 'Description of Notes--Currency Indexed Notes--Payment of
Principal and Interest.'
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT, AND ANY
PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES
DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, A CURRENCY
OR COMPOSITE CURRENCY OTHER THAN U.S. DOLLARS, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE INVESTORS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN SUCH NOTES. SUCH NOTES ARE
NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT
TO FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise specified in the applicable Pricing Supplement, no Foreign
Currency Note will be sold in or to residents of the country issuing the
Specified Currency of such Foreign Currency Note. The information set forth in
this Prospectus Supplement is directed to prospective purchasers who are United
States residents, and the Company disclaims any responsibility to advise
prospective purchasers who are residents of countries other than the United
States with respect to any matters that may affect the purchase, holding or
receipt of payments of principal (and premium, if any) or interest on such
Foreign Currency Notes. Such persons should consult their own counsel with
regard to such matters.
Pricing Supplements relating to Foreign Currency Notes or Currency Indexed
Notes will contain information concerning historical exchange rates for the
applicable Specified Currency or Denominated Currency against the U.S. dollar or
other relevant currency (including, in the case of Currency Indexed Notes, the
applicable Indexed Currency), a description of such currency or currencies and
any exchange controls affecting such currency or currencies. The information
therein concerning exchange rates is furnished as a matter of information only
and should not be regarded as indicative of the range of or trends in
fluctuations in currency exchange rates that may occur in the future.
CERTAIN FEDERAL TAX CONSEQUENCES
The following is a summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes as of the
date hereof. It deals only with Notes held as capital assets and does not deal
with persons in special tax situations, such as financial institutions,
insurance companies, tax-exempt organizations, dealers in securities or
currencies, persons holding Notes as a hedge against currency risks or as a
position in a 'straddle' for tax purposes, or persons whose functional currency
is not the U.S. dollar. It also does not deal with state, local or foreign tax
consequences or with holders other than original purchasers. This summary is
based upon the provisions of the Code and regulations, rulings and judicial
decisions thereunder as of the date hereof, which authorities may be repealed,
revoked or modified, possibly with retroactive effect, so as to result in
Federal income tax consequences different from those discussed below.
Persons considering the purchase of the Notes should consult their tax
advisors concerning the application of United States Federal income tax laws to
their particular situations as well as any consequences arising under the laws
of any state, local or foreign taxing jurisdiction. The material Federal income
tax consequences of Indexed Notes, Currency Indexed Notes, Dual Currency Notes,
or Notes containing terms that result in consequences other than those described
below will be addressed in the applicable pricing supplement.
As used herein, the term 'U.S. Holder' means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, or (iii) an
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estate or trust the income of which is subject to United States Federal income
taxation regardless of its source. As used herein, the term 'non-U.S. Holder'
means a holder of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest on the Notes
Interest paid on a Note (whether in U.S. dollars or in other than U.S.
dollars) that is not a Discount Note (as defined below) will generally be
taxable to a U.S. Holder as ordinary interest income at the time it accrues or
is received, in accordance with the U.S. Holder's method of accounting for
Federal income tax purposes.
Discount Notes
The following discussion is a summary of the principal United States
Federal income tax consequences of the ownership and disposition of Discount
Notes (as defined below) by U.S. Holders, which is based upon certain Treasury
regulations issued on January 27, 1994 (the 'OID Regulations'). Additional rules
applicable to Discount Notes that are denominated in a Specified Currency (as
defined below) other than the U.S. dollar, or have payments of interest or
principal determined by reference to the value of one or more currencies or
currency units other than the U.S. dollar, are described under 'Foreign Currency
Notes' below.
Under the OID Regulations, a Note with an 'issue price' that is less than
its 'stated redemption price at maturity' generally will carry original issue
discount ('OID') for United States Federal income tax purposes (a 'Discount
Note'), unless such difference is less than a specified de minimis amount. In
general, the stated redemption price at maturity of a Discount Note is the total
of all payments required to be made under the Discount Note other than
'qualified stated interest' payments. 'Qualified stated interest' is stated
interest that is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually at a single fixed rate of interest.
In addition, qualified stated interest includes stated interest with respect to
a variable rate debt instrument that is unconditionally payable at least
annually at a single qualified floating rate or a rate that is determined using
a single fixed formula based on one or more qualified floating rates.
A U.S. Holder of Discount Notes is required to include qualified stated
interest in income at the time it is received or accrued, in accordance with
such holder's method of accounting. In addition, U.S. Holders of Discount Notes
that mature more than one year from the date of issuance will be required to
include OID in income for United States Federal income tax purposes as it
accrues, in accordance with a constant yield method, before the receipt of cash
payments attributable to such income, but such holders will not be required to
include separately in income cash payments received on such Notes, even if
denominated as interest, to the extent they do not constitute qualified stated
interest.
All stated interest on a Note that matures one year or less from its date
of issuance (a 'short-term Discount Note') is included in its stated redemption
price at maturity. In general, a U.S. Holder who uses the cash method of tax
accounting is not required to accrue OID on a short-term Discount Note unless
such holder elects to do so. U.S. Holders who report income on the accrual
method, cash method U.S. Holders who elect to include OID on short-term Discount
Notes in income, and certain other holders, including banks and dealers in
securities, are required to include OID (or, alternatively, acquisition
discount) on such short-term Discount Notes on a straight-line basis, unless an
election is made to accrue the OID according to a constant yield method. In the
case of a U.S. Holder who is not required, and does not elect, to include OID in
income currently, (i) any gain realized on the sale, exchange or retirement of a
short-term Discount Note will be ordinary interest income to the extent of the
OID accrued on a straight-line basis (or, alternatively, upon election, under
the constant yield method) through the date of sale, exchange or retirement and
(ii) such U.S. Holder will be required to defer the deduction of all or a
portion of any interest paid on indebtedness incurred to purchase short-term
Discount Notes until a corresponding amount of OID is included in such holder's
income.
U.S. Holders are permitted to elect to include all interest on a Note,
including stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium, under a constant yield method.
U.S. Holders considering such an election should consult their tax advisor.
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Market Discount and Acquisition Premium
A Note (other than a Discount Note) purchased for an amount that is less
than its stated redemption price at maturity or, in the case of a Discount Note,
its adjusted issue price, will have 'market discount' equal to such difference,
which generally will be taxable as ordinary income upon disposition of such Note
(unless such difference is less than a specified de minimis amount). A Discount
Note purchased for an amount that is greater than its adjusted issue price, but
less than or equal to the sum of all amounts payable on the Note after the
purchase date (other than qualified stated interest), will have 'acquisition
premium' equal to such excess, which reduces the OID with respect to such Note
for any taxable year by a certain fraction.
Amortizable Bond Premium
A Note purchased for an amount greater than its stated redemption price at
maturity will have 'amortizable bond premium' equal to such excess, which a U.S.
Holder may elect to amortize, using a constant yield method. However, if the
Note may be optionally redeemed at a price in excess of its stated redemption
price at maturity, special rules would apply which could result in a deferral of
the amortization of some bond premium until later in the term of the Note.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a Note, a U.S. Holder generally
will recognize taxable gain or loss equal to the difference between the amount
realized and such holder's adjusted tax basis in the Note, except to the extent
attributable to accrued interest. A U.S. Holder's adjusted tax basis in a Note
generally will equal the cost of the Note to such holder, increased by the
amounts of any market discount, OID and de minimis OID previously included in
income by the holder with respect to such Note and reduced by any amortized bond
premium and any principal payments received by the U.S. Holder and, in the case
of a Discount Note, by the amounts of any other payments that do not constitute
qualified stated interest.
Foreign Currency Notes
The following discussion summarizes the principal United States Federal
income tax consequences to a U.S. Holder of the ownership and disposition of
certain Notes (other than Indexed Notes, Currency Indexed Notes and Dual
Currency Notes) that are denominated in a Specified Currency other than the U.S.
dollar or the payments of interest or principal on which are payable in one or
more currencies or currency units other than the U.S. dollar (a 'Foreign
Currency Note'). Such Foreign Currency Notes also may be subject to the rules
discussed above regarding original issue discount, market discount, acquisition
premium, etc. The summary generally is based upon certain Treasury regulations
issued pursuant to Section 988 of the Code on March 16, 1992 (the 'Section 988
Regulations').
Payments of Interest on Foreign Currency Notes
Cash Method. A U.S. Holder who uses the cash method of accounting for
Federal income tax purposes and who receives a payment of qualified stated
interest on a Foreign Currency Note will be required to include in income the
U.S. dollar value of the foreign currency payment (determined at the spot rate
on the date such payment is received or paid) regardless of whether the payment
is in fact converted to U.S. dollars at that time, and such U.S. dollar value
will be the U.S. Holder's tax basis in such foreign currency. No exchange gain
or loss will be recognized with respect to the receipt of such payment.
Accrual Method. A U.S. Holder who uses the accrual method of accounting
for Federal income tax purposes, or who otherwise is required to accrue interest
prior to receipt (e.g., under the OID rules), will be required to include in
income the U.S. dollar value of the amount of interest income (including OID (as
adjusted for acquisition premium, if any) or market discount and reduced by
amortizable bond premium to the extent applicable) that has accrued and is
otherwise required to be taken into account with respect to a Foreign Currency
Note during an accrual period. The U.S. dollar value of such accrued income will
be determined by translating such income at the average rate of exchange for the
accrual period or, with respect to an accrual period that spans two taxable
years, at the average rate for the partial period within the taxable year. A
U.S. Holder may elect, however, to translate such accrued interest income using
the rate of exchange on the last day of the accrual period
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<PAGE>
or, with respect to an accrual period that spans two taxable years, using the
rate of exchange on the last day of the taxable year. A U.S. Holder will
recognize exchange gain or loss (which will be treated as ordinary income or
loss) with respect to accrued interest income on the date such income is
received equal to the difference, if any, between the U.S. dollar value of the
foreign currency received (determined on the date payment is received) in
respect of such accrual period and the U.S. dollar value of interest income that
has accrued during such accrual period (as determined above).
Rules similar to those described above apply in the case of OID, market
discount and amortizable bond premium.
Sale, Exchange or Retirement of Foreign Currency Notes
A U.S. Holder will have a tax basis in any foreign currency received on the
sale, exchange or retirement of a Foreign Currency Note equal to the U.S. dollar
value of such foreign currency, determined at the time of such sale, exchange or
retirement. Any gain or loss realized by a U.S. Holder on a sale or other
disposition of foreign currency (including its exchange for U.S. dollars or its
use to purchase Foreign Currency Notes) will be ordinary income or loss.
A U.S. Holder's tax basis in, and amount realized on the sale of, a Foreign
Currency Note, and the amount of any subsequent adjustment to the holder's tax
basis, will be the U.S. dollar value of the foreign currency amount paid for
such Foreign Currency Note, or of the foreign currency amount of the adjustment,
determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Foreign
Currency Note will be ordinary income or loss to the extent it is attributable
to fluctuations in currency exchange rates.
Backup Withholding and Information Reporting
Under current Federal income tax law, information reporting and a 31%
backup withholding tax are required with respect to certain interest and
principal payments made to, and the proceeds of sales before maturity by,
certain holders (other than corporations) if such persons fail to supply
taxpayer identification numbers and other information. Amounts withheld under
the backup withholding rules would be allowed as a refund or a credit against
the U.S. Holder's Federal income tax provided that the required information is
furnished to the Internal Revenue Service (the 'Service').
NON-U.S. HOLDERS
A non-U.S. Holder will generally not be subject to United States Federal
income taxes, including withholding taxes, on payments of principal, premium, if
any, or interest (including OID, if any) on a Note or coupon, or any gain
arising from the sale or disposition of a Note or coupon, provided that (i) any
such income is not effectively connected with the conduct of a trade or business
within the U.S., (ii) such non-U.S. Holder is not a person who owns (directly or
by attribution) ten percent or more of the total combined voting power of all
classes of stock of the Company, (iii) with respect to any gain, such non-U.S.
Holder (if an individual) is not present in the U.S. 183 days or more during the
taxable year of the disposition and does not have a 'tax home' (as defined in
section 911(d)(3) of the Code) in the U.S. and (iv) required certification of
the non-U.S. status of the beneficial owner is provided to the Company or its
agents.
The 31% 'backup' withholding and information reporting requirements will
generally not apply to payments by the Company or its agents of principal,
premium, if any, and interest on a Note, and to proceeds of the sale or
redemption of a Note before maturity, with respect to a non-U.S. Holder that
provides the Company or its agent with the certification of non-U.S. status.
Non-U.S. Holders of Notes should consult their tax advisors regarding the
application of information reporting and backup withholding in their particular
situations, the availability of an exemption therefrom, and the procedure for
obtaining such an exemption, if available. Any amounts withheld from a payment
to a non-U.S. 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 Service.
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<PAGE>
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through
the Agents, each of which has agreed to use reasonable efforts to solicit
purchases of the Notes. The Company also may sell Notes to the Agents, as
principal. The Company also may sell Notes to any Agent or to a group of
underwriters for whom an Agent acts as representative, at a discount or premium
to be agreed at the time of sale for resale to one or more investors or
purchasers at a fixed offering price or at varying prices prevailing at the time
of resale, at prices related to such prevailing market prices at the time of
such resale or at negotiated prices. Unless otherwise indicated in the
applicable Pricing Supplement, a Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount thereof
less a percentage equal to the commission applicable to an agency sale of a note
of identical maturity. Such Notes may be resold to investors and other
purchasers from time to time at market prices prevailing at the time of sale, at
prices related to such prevailing prices, at a fixed price or prices, which may
be changed, or at negotiated prices. The Agents may sell Notes that they have
purchased as principal to other dealers and such Notes may be sold at a discount
which, unless otherwise specified in the applicable Pricing Supplement, will not
exceed the discount to be received by the Agents from the Company. The Company
reserves the right to sell Notes directly on its own behalf, by itself or
through an affiliate, in those jurisdictions where authorized to do so. Notes
also may be offered through other agents, which offerings will be on
substantially the same terms and conditions as those described above for
offerings through the Agents. In such case, the names of the other agents and
any terms of such agency which differ from those described herein will be set
forth in a Pricing Supplement. The Company will have the sole right to accept
offers to purchase Notes and may reject any proposed purchase of Notes in whole
or in part. Each Agent will have the right, in its discretion reasonably
exercised, to reject any proposed purchase of Notes through it in whole or in
part. The Company will pay the Agents a commission in the form of a discount
ranging from 0.125% to 0.750% of the principal amount of Notes sold through them
depending upon Note maturity. The commission payable by the Company to the
Agents with respect to Notes with maturities of 30 years or more will be
negotiated at the time the Company issues such Notes. No commission will be
payable on any sales made directly by the Company.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in New York City on the date of settlement.
The Agents may be deemed to be 'underwriters' within the meaning of the
Securities Act of 1933, as amended (the 'Securities Act'). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Securities Act, or to contribute to the payments the
Agents may be required to make in respect thereof, and will reimburse the Agents
for certain legal and other expenses incurred by them in connection with the
offer and sale of the Notes.
The Agents have advised the Company that they may make a market in the
Notes as permitted by applicable laws and regulations; however, the Agents are
not obligated to do so. There can be no assurance that there will be a secondary
market for the Notes.
Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Debt Securities pursuant to the Indenture
referred to in the Prospectus.
In the ordinary course of their respective businesses, the Agents and their
affiliates have in the past, and may in the future, provide investment banking,
commercial banking and other services to the Company and its affiliates.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Company by Joseph A. LaSala, Jr., Vice President and General Counsel of the
Company and for the Agents by Cravath, Swaine & Moore, New York, New York. Mr.
LaSala beneficially owns, or has rights to acquire under employee benefit plans,
an aggregate of less than 1% of the common stock of the Company. Cravath, Swaine
& Moore has from time to time acted as counsel for the Company and may do so in
the future.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MAY 20, 1996
[LOGO] UNION PACIFIC RESOURCES GROUP INC.
$700,000,000
DEBT SECURITIES
DEBT WARRANTS
------------------------
Union Pacific Resources Group Inc., a Utah Corporation (the 'Company'), may
issue from time to time, together or separately, (i) its debt securities (the
'Debt Securities') and (ii) warrants to purchase Debt Securities (the 'Debt
Warrants'), in amounts, at prices and on terms to be determined by market
conditions at the time of offering. The Debt Securities and Debt Warrants are
collectively referred to herein as the 'Offered Securities'.
The Offered Securities may be issued in one or more series or issuances and
will be limited to $700,000,000 in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt Securities
are issued for one or more foreign currencies or currency units). The Offered
Securities may be sold for U.S. dollars, or any foreign currency or currencies
or currency units, and the principal of, any premium on, and any interest on,
the Debt Securities may be payable in U.S. dollars, or any foreign currency or
currencies or currency units.
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the 'Prospectus Supplement'), including, where applicable, (i) in
the case of Debt Securities, the specific designation, aggregate principal
amount, authorized denomination, initial offering price, maturity (which may be
fixed or extendible), premium (if any), interest rate (which may be fixed or
floating), time of and method of calculating the payment of interest, if any,
the currency in which principal, premium, if any, and interest, if any, are
payable, any redemption or sinking fund terms and other specific terms; and (ii)
in the case of Debt Warrants, the duration, initial offering price, exercise
price and detachability thereof. The Prospectus Supplement will also contain
information, where applicable, about certain United States Federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by the Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Offered Securities will be sold directly, through agents, dealers or
underwriters as designated from time to time, or through a combination of such
methods. If any agents of the Company or any dealers or underwriters are
involved in the sale of the Offered Securities in respect of which this
Prospectus is being delivered, the names of such agents, dealers or underwriters
and any applicable agent's commission, dealer's purchase price or underwriter's
discount will be set forth in or may be calculated from the Prospectus
Supplement. The net proceeds to the Company from such sale will be the purchase
price less such commission in the case of an agent, the purchase price in the
case of a dealer, or the public offering price less such discount in the case of
an underwriter and less, in each case, other attributable issuance expenses. See
'Plan of Distribution'.
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the 'Commission') relating to its business, financial position,
results of operations and other matters. Such reports and other information can
be inspected and copied at the Public Reference Section maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at certain of its Regional Offices, located at Northwest Atrium Center
(Suite 1400), 500 West Madison Street, Chicago, Illinois 60661, and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Section of the Commission at
prescribed rates. Such material can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement (the
'Registration Statement') under the Securities Act of 1933, as amended (the
'Securities Act'), with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is made to the Registration Statement
and to the exhibits relating thereto for further information with respect to the
Company and the securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the year ended December
31, 1995; and
(b) the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering of the Offered Securities offered hereby shall be
deemed incorporated herein by reference, and such documents shall be deemed to
be a part hereof from the date of filing such documents. Any statement contained
herein, in a document incorporated or deemed to be incorporated by reference
herein, or in the accompanying Prospectus Supplement, shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein or in the accompanying Prospectus
Supplement 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.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the above documents incorporated or deemed to be
incorporated herein by reference (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the documents that
this Prospectus incorporates). Written or oral requests should be directed to:
Union Pacific Resources Group Inc., 801 Cherry Street, Fort Worth, Texas 76101,
Attention: Secretary (Telephone 817-877-6000).
2
<PAGE>
THE COMPANY
The Company is one of the largest independent energy companies in North
America and is engaged primarily in the exploration for and the development and
production of natural gas, natural gas liquids and crude oil in several major
producing basins in the United States and Canada. The Company emphasizes natural
gas in its exploration and production activities and also owns and operates
significant assets, in proximity to its principal producing properties,
dedicated to 'gas value chain' activities, which consist of the gathering,
processing, transportation and marketing of natural gas and natural gas liquids.
The Company, through its wholly owned subsidiary, Union Pacific Fuels, Inc. ('UP
Fuels'), markets a substantial portion of the Company's natural gas and
substantially all of its natural gas liquids and its crude oil, together with
significant volumes of natural gas, natural gas liquids and crude oil produced
by others. UP Fuels ranks among the largest natural gas and natural gas liquids
marketers in the United States. In addition, the Company engages in the hard
minerals business through non-operated joint venture and royalty interests in
several coal and trona (natural soda ash) mines.
The Company's oil and gas activities are concentrated in six core
geographic areas: (1) the Austin Chalk trend in Texas and Louisiana, (2) the
Rockies, consisting of the western portion of the Land Grant Area (as defined
below) in Wyoming and Utah, (3) Plains/Canada, consisting of the eastern portion
of the Land Grant Area in Wyoming and Colorado, with additional operations in
Kansas and western Canada, (4) the onshore and offshore Gulf Coast area, (5)
eastern and southern Texas and (6) western Texas. In each of these core areas,
the focus of the Company is on the exploration for and development of natural
gas and crude oil resources, and on efforts to increase margins through
reductions in drilling and operating costs and effective and efficient sales and
distribution networks. The Company's hard minerals activities are conducted in
areas within and adjacent to the Land Grant Area. The 'Land Grant Area' consists
of land granted by the Federal government to a predecessor of Union Pacific
Corporation ('UPC') in the mid-1800s and significant additional acreage in the
same geographic region. The Land Grant Area passes through the states of
Colorado and Wyoming and into Utah and intersects several highly productive oil
and gas basins. In the Land Grant Area, the Company has fee ownership of the
mineral rights under approximately 7.5 million acres and control of mineral
rights under approximately 700,000 additional acres.
In October 1995, 42.5 million shares (representing approximately 17%) of
the common stock of the Company was sold in an initial public offering. The
remaining 83% of the Company's common stock is owned by UPC. UPC has announced
that, subject to certain conditions, UPC intends to distribute pro rata to its
stockholders as a dividend its remaining shares of common stock of the Company
by means of a tax free distribution.
The address of the Company is: Union Pacific Resources Group Inc., P.O. Box
7, 801 Cherry Street, Fort Worth, Texas 76101. Telephone: (817) 877-6000.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
--------------- ------------------------------------
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.... 6.9 17.7 44.4 41.7 24.8 23.1
</TABLE>
The ratio of earnings to fixed charges has been computed on a total
enterprise basis. Earnings represent income before the cumulative effect of
accounting changes less equity in undistributed earnings of unconsolidated
affiliates, plus income taxes and fixed charges. Fixed charges represent
interest, amortization of debt discount and expense, and the estimated interest
portion of rental charges.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
from the sale of the Offered Securities offered hereby will be used for general
corporate purposes, including repayment of borrowings (including indebtedness
owing to UPC), working capital, capital expenditures, stock repurchase programs
and acquisitions. Additional information on the use of net proceeds from the
sale of the Offered Securities offered hereby may be set forth in the Prospectus
Supplement relating to such Offered Securities.
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<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities summarizes
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
and the extent, if any, to which such general provisions may apply to any series
of Debt Securities will be described in the Prospectus Supplement relating to
such series.
The Debt Securities are to be issued under an Indenture (the 'Indenture')
between the Company and Texas Commerce Bank National Association ('TCB'), as
trustee, or such other trustee as shall be named in a Prospectus Supplement (the
'Trustee'). The following statements are subject to the detailed provisions of
the Indenture, a copy of each indenture is filed as an exhibit to the
Registration Statement. Wherever any particular provisions of the Indenture or
terms defined therein are referred to, such provisions and terms are
incorporated by reference as a part of the statements made herein and such
statements are qualified by such references. References to particular sections
of the Indenture are noted below. Capitalized terms used herein but not defined
herein shall have the meanings ascribed to them in the Indenture.
GENERAL
The Debt Securities will be unsecured and will rank equally and ratably
with other unsecured and unsubordinated debt of the Company, unless the Company
shall be required to secure the Debt Securities as described below under
'Covenants--Limitation on Liens and Sale Leaseback Transactions.' The Indenture
does not limit the amount of Debt Securities that can be issued thereunder.
(Section 301) Debt Securities will be issued from time to time and offered on
terms determined by market conditions at the time of sale.
The Debt Securities may be issued in one or more series with the same or
various maturities, at par, at a premium or at a discount. Any Debt Securities
bearing no interest or interest at a rate which at the time of issuance is below
market rates will be sold at a discount (which may be substantial) from their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such substantially discounted Debt Securities
will be described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities offered hereby: (i) the designation, aggregate principal
amount and authorized denominations of such Debt Securities; (ii) the percentage
of their principal amount at which such Debt Securities will be issued; (iii)
the date or dates on which the Debt Securities will mature (which may be fixed
or extendible); (iv) the rate or rates (which may be fixed or floating) per
annum at which the Debt Securities will bear interest, if any, or the method of
determining such rate or rates; (v) the date or dates on which any such interest
will be payable, the date or dates on which payment of any such interest will
commence and the Regular Record Dates for such Interest Payment Dates; (vi) the
terms of any mandatory or optional redemption (including any provisions for any
sinking, purchase or other analogous fund) or repayment option; (vii) the
currency, currencies or currency units for which the Debt Securities may be
purchased and the currency, currencies or currency units in which the principal
thereof, any premium thereon and any interest thereon may be payable; (viii) if
the currency, currencies or currency units for which the Debt Securities may be
purchased or in which the principal thereof, any premium thereon and any
interest thereon may be payable is at the election of the Company or the
purchaser, the manner in which such election may be made; (ix) if the amount of
payments on the Debt Securities is determined with reference to an index based
on one or more currencies or currency units, changes in the price of one or more
securities or changes in the price of one or more commodities, the manner in
which such amounts may be determined; (x) the extent to which any of the Debt
Securities will be issuable in temporary or permanent global form, or the manner
in which any interest payable on a temporary or permanent Global Security will
be paid; (xi) the terms and conditions upon which conversion or exchange of the
Debt Securities into other Debt Securities will be effected, including the
conversion price or exchange ratio, the conversion or exchange period and any
other conversion or exchange provisions; (xii) information with respect to
book-entry procedures, if any; (xiii) a discussion of certain Federal income
tax, accounting and other special considerations, procedures and limitations
with respect to the Debt Securities; and (xiv) any other specific terms of the
Debt Securities not inconsistent with the Indenture.
If any of the Debt Securities are sold for one or more foreign currencies
or foreign currency units or if the principal of, premium, if any, or any
interest on any series of Debt Securities is payable in one or more foreign
currencies or foreign currency units, the restrictions, elections, Federal
income tax consequences, specific terms and other information with respect to
such issue of Debt Securities and such currencies or currency units will be set
forth in the Prospectus Supplement relating thereto.
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<PAGE>
Unless otherwise specified in the Prospectus Supplement, the principal of,
any premium on, and any interest on the Debt Securities will be payable, and the
Debt Securities will be transferable, at the Corporate Trust Office of the
Trustee in New York, New York, provided that payment of interest, if any, may be
made at the option of the Company by check mailed on or before the payment date,
first class mail, to the address of the person entitled thereto as it appears on
the registry books of the Company or its agent.
Unless otherwise specified in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form and in denominations of
$1,000 and any integral multiple thereof. (Sections 301 and 302) No service
charge will be made for any transfer or exchange of any Debt Securities, but the
Company may, except in certain specified cases not involving any transfer,
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Section 305)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the 'Depositary') identified in the Prospectus Supplement
relating to such series. Global Securities may be issued only in fully
registered form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for the individual Debt Securities represented
thereby, a Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee of such Depositary to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to persons that have
accounts with the applicable Depositary ('participants') or persons that may
hold interests through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to have any of the individual Debt Securities of
the series represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of any such Debt
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture governing such Debt Securities.
Payments of principal of, any premium on, and any interest on, individual
Debt Securities represented by a Global Security registered in the name of a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. Neither the Company, the Trustee for such Debt Securities, any
Paying Agent, nor the Security Registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown
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<PAGE>
on the records of such Depositary or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in 'street name'.
Such payments will be the responsibility of such participants.
If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series in exchange for the Global Security representing such
series of Debt Securities. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities, determine not to have any Debt
Securities of a series represented by one or more Global Securities and, in such
event, will issue individual Debt Securities of such series in exchange for the
Global Security or Securities representing such series of Debt Securities.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing Debt
Securities of such series may, on terms acceptable to the Company, the Trustee
and the Depositary for such Global Security, receive individual Debt Securities
of such series in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such Debt
Securities. In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery of individual Debt Securities of
the series represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name.
Individual Debt Securities of such series so issued will be issued in
denominations, unless otherwise specified by the Company, of $1,000 and integral
multiples thereof.
CERTAIN DEFINITIONS
Certain terms defined in Section 101 of the Indenture are summarized below.
'Debt' means indebtedness for money borrowed.
'Domestic Subsidiary' means a Subsidiary incorporated or conducting its
principal operations within the United States or any State thereof or off the
coast of the United States within an area over which the United States or any
State thereof has jurisdiction.
'Funded Debt' of any person means all indebtedness for borrowed money
created, incurred, assumed or guaranteed in any manner by such person, and all
indebtedness, contingent or otherwise, incurred or assumed by such person in
connection with the acquisition of any business, property or asset, which in
each case matures more than one year after, or which by its terms is renewable
or extendible or payable out of the proceeds of similar indebtedness incurred
pursuant to the terms of any revolving credit agreement or any similar agreement
at the option of such person for a period ending more than one year after the
date as of which Funded Debt is being determined; provided, however, that Funded
Debt shall not include (i) any indebtedness for the payment, redemption or
satisfaction of which money (or evidences or indebtedness, if permitted under
the instrument creating or evidencing such indebtedness) in the necessary amount
shall have been irrevocably deposited in trust with a trustee or proper
depository either on or before the maturity or redemption date thereof or (ii)
any indebtedness of such person to any of its Subsidiaries or of any Subsidiary
to such person or any other Subsidiary or (iii) any indebtedness incurred in
connection with the financing of operating, construction or acquisition
projects, provided that the recourse for such indebtedness is limited to the
assets of such projects.
'Mortgage' means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
'Principal Property' means (i) any property owned or leased by the Company
or any Subsidiary, or any interest of the Company or any Subsidiary in property,
located within the United States of America or any State thereof (including
property located off the coast of the United States of America held pursuant to
lease from any Federal, State or other governmental body) which is considered by
the Company to be capable of producing oil or gas or minerals in commercial
quantities and (ii) any refinery, smelter or processing or manufacturing plant
owned or leased by the Company or any Subsidiary and located within the United
States of America or any State thereof, except (a) facilities related thereto
employed in transportation, distribution or marketing or (b) any refinery,
smelter or processing or manufacturing plant, or portion thereof, which the
Board of Directors declares is not material to the business of the Company and
its subsidiaries taken as a whole.
'Restricted Subsidiary' means any Subsidiary which owns or leases (as
lessor or lessee) a Principal Property, but does not include any Subsidiary the
principal business of which is leasing machinery, equipment,
6
<PAGE>
vehicles or other properties none of which is a Principal Property, or financing
accounts receivable, or engaging in ownership and development of any real
property which is not a Principal Property.
'Subsidiary', when used with respect to the Company, means any corporation
of which a majority of the outstanding voting stock is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or both.
COVENANTS
The Indenture contains the covenants summarized below, which will be
applicable (unless waived or amended) so long as any of the Debt Securities are
outstanding, unless stated otherwise in the Prospectus Supplement.
Limitation on Liens and Sale Leaseback Transactions. (a) The Company will
not, nor will it permit any Subsidiary to, create, assume, incur or suffer to
exist any Mortgage upon any stock or indebtedness of any Domestic Subsidiary,
whether owned on the date of the Indenture or thereafter acquired, to secure any
Debt of the Company or any other person (other than the Debt Securities),
without in any such case making effective provision whereby all the outstanding
Debt Securities shall be directly secured equally and ratably with such Debt.
There will be excluded from this restriction any Mortgage upon stock or
indebtedness of a corporation existing at the time such corporation becomes a
Domestic Subsidiary or at the time stock or indebtedness of a Domestic
Subsidiary is acquired and any extension, renewal or replacement of any such
Mortgage.
(b) The Company will not, nor will it permit any Restricted Subsidiary to,
create, assume, incur or suffer to exist any Mortgage upon any Principal
Property, whether owned or leased on the date of the Indenture, or thereafter
acquired, to secure any Debt of the Company or any other person (other than the
Debt Securities), without in any such case making effective provision whereby
all the outstanding Debt Securities shall be directly secured equally and
ratably with such Debt. (Section 1006)
There will be excluded from the restriction referred to in the next
preceding paragraph the following Mortgages (the Mortgages set forth in the
following clauses (i) through (vi) the 'Permitted Mortgages') (i) any Mortgage
upon property owned or leased by a corporation existing at the time such
corporation becomes a Restricted Subsidiary, (ii) any Mortgage upon property
existing at the time of the acquisition thereof or to secure payment of any part
of the purchase price thereof or any Debt incurred to finance the purchase
thereof, (iii) any Mortgage upon property to secure any part of the cost of
exploration, drilling, development, construction, alteration, repair or
improvement of such property, or Debt incurred to finance such cost, (iv) any
Mortgage securing Debt of a Restricted Subsidiary owing to the Company or to
another Restricted Subsidiary, (v) any Mortgage existing on the date of the
Indenture, and (vi) any extension, renewal or replacement, in whole or in part,
of any Mortgage referred to in the foregoing clauses (i) through (v); provided
however, that the principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured at the time of such extension, renewal or
replacement; and provided further, that such Mortgage shall be limited to all or
such part of the property which secured the Mortgage so extended, renewed or
replaced.
Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, create, assume, incur or suffer to exist any Mortgage
upon any Principal Property without equally and ratably securing the Debt
Securities if the aggregate amount of all Debt then outstanding secured by such
Mortgage and all similar Mortgages does not exceed 10% of the total consolidated
stockholders' equity (including preferred stock) of the Company as shown on the
audited consolidated balance sheet contained in the latest annual report to
stockholders of the Company; provided that Debt secured by Permitted Mortgages
shall not be included in the amount of such secured Debt.
For the purpose of the restriction referred to in the third preceding
paragraph, no Mortgage to secure any Debt will be deemed created by (i) the sale
or other transfer of (A) any oil or gas or minerals in place for a period of
time until, or in an amount such that, the purchaser will realize therefrom a
specified amount of money (however determined) or a specified amount of such oil
or gas or minerals, or (B) any other interest commonly referred to as a
'production payment', and (ii) any Mortgage in favor of the United States (or
any State thereof), or any other country, or any political subdivision of any of
the foregoing, to secure partial, progress, advance or other payments pursuant
to any contract or statute, or any Mortgage upon property intended to be used
primarily for the purpose of or in connection with air or water pollution
control. (Section 1006)
(c) The Company will not, nor will it permit any Restricted Subsidiary to,
enter into any arrangement with any person providing for the leasing by the
Company or a Restricted Subsidiary as lessee of any Principal
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<PAGE>
Property (except for temporary leases for a term, including renewals, of not
more than five years), which property has been or is to be sold or transferred
by the Company or such Restricted Subsidiary to such person (herein referred to
as a 'Sale-Leaseback Transaction'), unless (i) such Sale-Leaseback Transaction
occurs within 120 days from the date of acquisition of such Principal Property
or the date of the completion of construction or commencement of full operations
on such Principal Property, whichever is later, or (ii) the Company, within 120
days after such Sale-Leaseback Transaction, applies or causes to be applied to
the retirement of Funded Debt of the Company or any Subsidiary (other than
Funded Debt of the Company which by its terms or the terms of the instrument
pursuant to which it was issued is subordinate in right of payment to the Debt
Securities) an amount not less than the net proceeds of the sale of such
Principal Property. (Section 1006)
Notwithstanding the foregoing provisions of this paragraph (c), the Company
may, and may permit any Restricted Subsidiary to, effect any Sale-Leaseback
Transaction involving any Principal Property, provided that the net sale
proceeds from such Sale-Leaseback Transaction, together with all Debt secured by
Mortgages other than Permitted Mortgages, does not exceed 10% of the total
consolidated stockholders' equity of the Company as shown on the audited
consolidated balance sheet contained in the latest annual report to stockholders
of the Company.
Limitation on Transfers of Principal Properties to Unrestricted
Subsidiaries. The Company will not, nor will it permit any Restricted
Subsidiary to, sell, transfer or otherwise dispose of any Principal Property to
any Subsidiary which is not a Restricted Subsidiary other than for cash or other
consideration which, in the opinion of the Company's Board of Directors,
constitutes fair value for such Principal Property. (Section 1007)
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that the Company may not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any person, unless (i) the successor corporation
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia, and shall expressly
assume by a supplemental indenture the due and punctual payment of the principal
of, any premium on, and any interest on, all the outstanding Debt Securities and
the performance of every covenant in the Indenture on the part of the Company to
be performed or observed; (ii) immediately after giving effect to such
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing; and (iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer and such supplemental indenture
comply with the foregoing provisions relating to such transaction. (Section 801)
In case of any such consolidation, merger, conveyance or transfer, such
successor corporation will succeed to and be substituted for the Company as
obligor on the Debt Securities, with the same effect as if it had been named in
the Indenture as the Company. (Section 802) Other than the restrictions on
Mortgages described above, the Indenture and the Debt Securities do not contain
any covenants or other provisions designed to protect holders of Debt Securities
in the event of a highly leveraged transaction involving the Company or any
Subsidiary.
EVENTS OF DEFAULT; WAIVER AND NOTICE THEREOF; DEBT SECURITIES IN FOREIGN
CURRENCIES
As to any series of Debt Securities, an Event of Default is defined in the
Indenture as (a) default for 30 days in payment of any interest on the Debt
Securities of such series; (b) default in payment of principal of or any premium
on the Debt Securities of such series at maturity; (c) default in payment of any
sinking or purchase fund or analogous obligation, if any, on the Debt Securities
of such series; (d) default by the Company in the performance of any other
covenant or warranty contained in the Indenture for the benefit of such series
which shall not have been remedied for a period of 90 days after notice is given
as specified in the Indenture; and (e) certain events of bankruptcy, insolvency
and reorganization of the Company. (Section 501)
A default under other indebtedness of the Company will not be a default
under the Indenture and a default under one series of Debt Securities will not
necessarily be a default under another series.
The Indenture provides that (i) if an Event of Default described in clause
(a), (b), (c) or (d) above (if the Event of Default under clause (d) is with
respect to less than all series of Debt Securities then outstanding) shall have
occurred and be continuing with respect to any series, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding (each such series acting as a
separate class) may declare the principal (or, in the case of Original Issue
Discount Securities, the portion thereof
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<PAGE>
specified in the terms thereof) of all outstanding Debt Securities of such
series and the interest accrued thereon, if any, to be due and payable
immediately and (ii) if an Event of Default described in clause (d) or (e) above
(if the Event of Default under clause (d) is with respect to all series of Debt
Securities then outstanding) shall have occurred and be continuing, either the
Trustee or the holders of at least 25% in aggregate principal amount of all Debt
Securities then outstanding (treated as one class) may declare the principal
(or, in the case of Original Issue Discount Securities, the portion thereof
specified in the terms thereof) of all Debt Securities then outstanding and the
interest accrued thereon, if any, to be due and payable immediately, but upon
certain conditions such declarations may be annulled and past defaults (except
for defaults in the payment of principal of, any premium on, or any interest on,
such Debt Securities and in compliance with certain covenants) may be waived by
the holders of a majority in aggregate principal amount of the Debt Securities
of such series then outstanding. (Sections 502 and 513)
Under the Indenture the Trustee must give to the holders of each series of
Debt Securities notice of all uncured defaults known to it with respect to such
series within 90 days after such a default occurs (the term default to include
the events specified above without notice or grace periods); provided that,
except in the case of default in the payment of principal of, any premium on, or
any interest on, any of the Debt Securities, or default in the payment of any
sinking or purchase fund installment or analogous obligations, the Trustee shall
be protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of the holders of the Debt
Securities of such series. (Section 602)
No holder of any Debt Securities of any series may institute any action
under the Indenture unless (a) such holder shall have given the Trustee written
notice of a continuing Event of Default with respect to such series, (b) the
holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding shall have requested the Trustee to
institute proceedings in respect of such Event of Default, (c) such holder or
holders shall have offered the Trustee such reasonable indemnity as the Trustee
may require, (d) the Trustee shall have failed to institute an action for 60
days thereafter and (e) no inconsistent direction shall have been given to the
Trustee during such 60-day period by the holders of a majority in aggregate
principal amount of Debt Securities of such series. (Section 507)
The holders of a majority in aggregate principal amount of the Debt
Securities of any series affected and then outstanding will have the right,
subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to such series of Debt
Securities. (Section 512) The Indenture provides that, in case an Event of
Default shall occur and be continuing, the Trustee, in exercising its rights and
powers under the Indenture, will be required to use the degree of care of a
prudent man in the conduct of his own affairs. (Section 601) The Indenture
further provides that the Trustee shall not be required to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties under the Indenture unless it has reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is reasonably assured to it. (Section 601)
The Company must furnish to the Trustee within 120 days after the end of
each fiscal year a statement signed by one of certain officers of the Company to
the effect that a review of the activities of the Company during such year and
of its performance under the Indenture and the terms of the Debt Securities has
been made, and, to the best of the knowledge of the signatories based on such
review, the Company has complied with all conditions and covenants of the
Indenture or, if the Company is in default, specifying such default. (Section
1004)
If any Debt Securities are denominated in a coin or currency other than
that of the United States, then for the purposes of determining whether the
holders of the requisite principal amount of Debt Securities have taken any
action as herein described, the principal amount of such Debt Securities shall
be deemed to be that amount of United States dollars that could be obtained for
such principal amount on the basis of the spot rate of exchange into United
States dollars for the currency in which such Debt Securities are denominated
(as evidenced to the Trustee by an Officers' Certificate) as of the date the
taking of such action by the holders of such requisite principal amount is
evidenced to the Trustee as provided in the Indenture. (Section 104)
If any Debt Securities are Original Issue Discount Securities, then for the
purposes of determining whether the holders of the requisite principal amount of
Debt Securities have taken any action herein described, the principal amount of
such Debt Securities shall be deemed to be the portion of such principal amount
that would
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be due and payable at the time of the taking of such action upon a declaration
of acceleration of maturity thereof. (Section 101)
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture or the rights of the holders of the
Debt Securities may be modified by the Company and the Trustee with the consent
of the holders of a majority in aggregate principal amount of the Debt
Securities of each series affected by such modification then outstanding, but no
such modification may be made without the consent of the holder of each
outstanding Debt Security affected thereby which would (i) change the maturity
of any payment of principal of, or any premium on, or any installment of
interest on any Debt Security, or reduce the principal amount thereof or the
interest or any premium thereon, or change the method of computing the amount of
principal thereof or interest thereon on any date or change any place of payment
where, or the coin or currency in which, any Debt Security or any premium or
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the maturity thereof (or, in the
case of redemption or repayment, on or after the redemption date or the
repayment date, as the case may be), or (ii) reduce the percentage in principal
amount of the outstanding Debt Securities of any series, the consent of whose
holders is required for any such modification, or the consent of whose holders
is required for any waiver of compliance with certain provisions of the
Indenture or certain defaults thereunder and their consequences provided for in
the Indenture, or (iii) modify any of the provisions of certain Sections of the
Indenture, including the provisions summarized in this paragraph, except to
increase any such percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of each
outstanding Debt Security affected thereby. (Section 902)
DEFEASANCE OF THE INDENTURE AND DEBT SECURITIES
If the terms of any series of Debt Securities so provide, the Company will
be deemed to have paid and discharged the entire indebtedness on all the
outstanding Debt Securities of such series by (a) depositing with the Trustee
(i) as trust funds in trust an amount sufficient to pay and discharge the entire
indebtedness on all Debt Securities of such series for principal, premium and
interest or (ii) as obligations in trust such amount of direct obligations of,
or obligations the principal of and interest on which are fully guaranteed by,
the government which issued the currency in which the Debt Securities are
denominated as will, together with the income to accrue thereon without
consideration of any reinvestment thereof, be sufficient to pay and discharge
the entire indebtedness on all such Debt Securities for principal, premium and
interest and (b) satisfying certain other conditions precedent specified in the
Indenture. (Section 403) In the event of any such defeasance, holders of such
Debt Securities would be able to look only to such trust fund for payment of
principal of, any premium on, and any interest on their Debt Securities.
Such defeasance is likely to be treated as a taxable exchange by holders of
the relevant Debt Securities for an issue consisting of either obligations of
the trust or a direct interest in the cash and securities held in the trust,
with the result that such holders would be required for tax purposes to
recognize gain or loss as if such obligations or the cash or securities
deposited, as the case may be, had actually been received by them in exchange
for their Debt Securities. In addition, if the holders are treated as the owners
of their proportionate share of the cash or securities held in trust, such
holders would then be required to include in their income for tax purposes any
income, gain or loss attributable thereto even though no cash was actually
received. Thus, such holders might be required to recognize income for tax
purposes in different amounts and at different times than would be recognized in
the absence of defeasance. Prospective investors are urged to consult their own
tax advisors as to the specific consequences of defeasance.
CONCERNING THE TRUSTEE
TCB and its affiliates provide customary commercial banking services to the
Company and certain of its subsidiaries and participate in various financing
agreements of the Company in the ordinary course of their business. TCB acts as
the administrative agent under the Revolving Credit Agreement dated as of
October 5, 1995 among the Company and TCB.
10
<PAGE>
DESCRIPTION OF DEBT WARRANTS
The Company may issue Debt Warrants for the purchase of Debt Securities.
Debt Warrants may be issued independently or together with any Debt Securities
offered by any Prospectus Supplement and may be attached to or separate from
such Debt Securities. The Debt Warrants are to be issued under Warrant
Agreements to be entered into between the Company and Texas Commerce Bank
National Association, as Warrant Agent, or such other bank or trust company as
is named in the Prospectus Supplement relating to the particular issue of Debt
Warrants (the 'Warrant Agent'). The Warrant Agent will act solely as an agent of
the Company in connection with the Debt Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders of Debt
Warrants or beneficial owners of Debt Warrants. The following summaries of
certain provisions of the form of Warrant Agreement and Debt Warrants do not
purport to be complete and are subject to, and are qualified by reference to,
all the provisions of the applicable Warrant Agreement and the Debt Warrants.
GENERAL
If Debt Warrants are offered, the Prospectus Supplement will describe the
terms of the Debt Warrants, including the following: (i) the offering price;
(ii) the currency, currencies or currency units for which Debt Warrants may be
purchased; (iii) the designation, aggregate principal amount, currency,
currencies or currency units and terms of the Debt Securities purchasable upon
exercise of the Warrants and the price at which such Debt Securities may be
purchased upon such exercise; (iv) if applicable, the designation and terms of
the Debt Securities with which the Debt Warrants are issued and the number of
Debt Warrants issued with each such Debt Security; (v) if applicable, the date
on and after which the Debt Warrants and the related Debt Securities will be
separately transferable; (vi) the date on which the right to exercise the Debt
Warrants shall commence and the date (the 'Expiration Date') on which such right
shall expire; (vii) whether the Debt Warrants will be issued in registered or
bearer form; (viii) a discussion of certain Federal income tax, accounting and
other special considerations, procedures and limitations relating to the Debt
Warrants; and (ix) any other terms of the Debt Warrants.
Debt Warrants may be exchanged for new Debt Warrants of different
denominations, may (if in registered form) be presented for registration of
transfer, and may be exercised at the corporate trust office of the Warrant
Agent or any other office indicated in the Prospectus Supplement. Before the
exercise of their Debt Warrants, holders of Debt Warrants will not have any of
the rights of holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of, any premium on, or any
interest on, the Debt Securities purchasable upon such exercise or to enforce
the covenants in the Indenture.
EXERCISE OF DEBT WARRANTS
Each Debt Warrant will entitle the holder to purchase such principal amount
of Debt Securities at such exercise price as shall in each case be set forth in,
or calculable from, the Prospectus Supplement relating to the Debt Warrant. Debt
Warrants may be exercised at such times as are set forth in the Prospectus
Supplement relating to such Debt Warrants. After the close of business on the
Expiration Date (or such later date to which such Expiration Date may be
extended by the Company), unexercised Debt Warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Debt Warrants may be
exercised by delivery to the Warrant Agent of the certificate evidencing such
Debt Warrants properly completed and duly executed and of payment as provided in
the Prospectus Supplement of the amount required to purchase the Debt Securities
purchasable upon such exercise. The exercise price will be the price applicable
on the date of payment in full, as set forth in the Prospectus Supplement
relating to the Debt Warrants. Upon receipt of such payment and the certificate
representing the Debt Warrants to be exercised properly completed and duly
executed at the corporate trust office of the Warrant Agent or any other office
indicated in the Prospectus Supplement, the Company will, as soon as
practicable, issue and deliver the Debt Securities purchasable upon such
exercise. If fewer than all of the Debt Warrants represented by such certificate
are exercised, a new certificate will be issued for the remaining amount of Debt
Warrants.
11
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities offered hereby (i) through
underwriters or dealers, (ii) through agents, (iii) directly to purchasers, or
(iv) through a combination of any such methods of sale. Any such underwriter,
dealer or agent may be deemed to be an underwriter within the meaning of the
Securities Act. The Prospectus Supplement relating to the Offered Securities
will set forth their offering terms, including the name or names of any
underwriters, dealers or agents, the purchase price of the Offered Securities
and the proceeds to the Company from such sale, any underwriting discounts,
commissions and other items constituting compensation to underwriters, dealers
or agents, any initial public offering price, any discounts or concessions
allowed or reallowed or paid by underwriters or dealers to other dealers, and
any securities exchanges on which the Offered Securities may be listed.
If underwriters or dealers are used in the sale, the Offered Securities
will be acquired by the underwriters or dealers for their own account and may be
resold from time to time in one or more transactions, at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, or at prices related to such prevailing market prices, or at negotiated
prices. The Offered Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more of such firms. Unless otherwise set forth in the
Prospectus Supplement, the obligations of underwriters or dealers to purchase
the Offered Securities will be subject to certain conditions precedent and the
underwriters or dealers will be obligated to purchase all the Offered Securities
if any are purchased. Any public offering price and any discounts or concessions
allowed or reallowed or paid by underwriters or dealers to other dealers may be
changed from time to time.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or agents to solicit offers by certain specified
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject to any conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts. The underwriters and
other persons soliciting such contracts will have no responsibility for the
validity or performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
by the Company to payments they may be required to make in respect thereof. The
terms and conditions of such indemnification will be described in an applicable
Prospectus Supplement. Underwriters, dealers and agents may be customers of,
engage in transactions with, or perform services for, the Company in the
ordinary course of business.
Each series of Offered Securities will be a new issue of securities with no
established trading market. Any underwriters to whom Offered Securities are sold
by the Company for public offering and sale may make a market in such Offered
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Offered Securities.
12
<PAGE>
LEGAL OPINIONS
The validity of the Offered Securities will be passed upon for the Company
by Joseph A. LaSala, Jr., Vice President and General Counsel of the Company, and
for the underwriters, dealers or agents, if any, by Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019. Mr. LaSala
beneficially owns, or has rights to acquire under employee benefit plans, an
aggregate of less than 1% of the common stock of the Company. Cravath, Swaine &
Moore has from time to time acted as counsel for the Company and may do so in
the future.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
as of December 31, 1995, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports which are incorporated herein by reference,
and have been so incorporated in reliance upon such reports given upon their
authority as experts in accounting and auditing.
13
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS
DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Description of Notes........................................ S-3
Important Currency Exchange Information..................... S-26
Foreign Currency Risks...................................... S-26
Certain Federal Tax Consequences............................ S-27
Plan of Distribution........................................ S-31
Legal Opinions.............................................. S-31
PROSPECTUS
Available information....................................... 2
Incorporation of Certain Documents by Reference............. 2
The Company................................................. 3
Use of Proceeds............................................. 3
Description of Debt Securities.............................. 4
Description of Debt Warrants................................ 11
Plan of Distribution........................................ 12
Legal Opinions.............................................. 13
Experts..................................................... 13
$400,000,000
MEDIUM-TERM NOTES
UNION PACIFIC RESOURCES GROUP INC.
[LOGO]
------------
PROSPECTUS SUPPLEMENT
, 1996
------------
SMITH BARNEY INC.
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
PETRIE PARKMAN & CO.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee 241,380
Trustee's Fees and Expenses........................ 10,000
Printing and Engraving Expenses.................... 30,000
Rating Agencies' Fees.............................. 100,000
Accountants' Fees and Expenses..................... 30,000
Blue Sky Fees and Expenses......................... 20,000
Miscellaneous...................................... 50,000
-------
Total......................................... 481,380
-------
-------
</TABLE>
------------------
* All amounts are estimated except for the registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is a Utah corporation. Section 16-10a-901 et. seq. of the
Revised Business Corporation Act of Utah grants to a corporation the power to
indemnify a person made a party to a lawsuit or other proceeding because such
person is or was a director or officer. A corporation is further empowered to
purchase insurance on behalf of any person who is or was a director or officer
against any liability asserted against or incurred by him or her in such
capacity or arising out of his or her status as a director or officer. The
Company's By-Laws provide for mandatory indemnification of its directors and
officers in certain circumstances. The Company maintains insurance on behalf of
directors and officers against liability asserted against them arising out of
their status as directors and officers.
The Company's Articles of Incorporation, incorporated herein as Exhibit 3.1
to this Registration Statement, eliminate in certain circumstances the personal
liability of directors of the Company for monetary damages for a breach of their
fiduciary duty as directors. This provision does not eliminate the liability of
a director for (i) the amount of a financial benefit received by a director to
which he is not entitled, (ii) an intentional infliction of harm on the
corporation or the shareholders, (iii) a violation of Section 16-10a-842 of the
Revised Business Corporation Act of Utah (relating to the liability of directors
for unlawful distributions) or (iv) an intentional violation of criminal law.
Reference is made to Section 6 of the form of Underwriting Agreement filed
as Exhibit 1.1 and Section 8 of the form of Distribution Agreement filed as
Exhibit 1.2 for additional indemnification provisions.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
**1.1 -- Form of Underwriting Agreement.
**1.2 -- Form of Distribution Agreement.
*3.1 -- Amended and Restated Articles of Incorporation of Union Pacific
Resources Group Inc. (incorporated herein by reference to Exhibit 3.1
to the Company's Registration Statement on Form S-1 (No.33-95398) filed
October 10, 1995)
*3.2 -- Amended and Restated By-laws of Union Pacific Resources Group Inc.
(incorporated herein by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (No.33-95398) filed October 10,
1995)
**4.1 -- Indenture, dated as of March 27, 1996.
*4.2 -- Form of Warrant Agreement.
**4.3 -- Form of Debt Security.
**4.4 -- Form of Fixed Rate Note.
4.5 -- Form of Floating Rate Note.
**5 -- Opinion and consent of Joseph A. LaSala, Jr.; Vice President and
General Counsel for the Company.
**12 -- Computation of Ratio of Earnings to Fixed Charges.
**23 -- Consent of Deloitte & Touche, LLP.
**24 -- Powers of Attorney.
**25 -- Statement on Form T-1 of the eligibility of Texas Commerce Bank
National Association, as trustee under the Indenture.
</TABLE>
------------------
* To be filed by amendment or incorporated herein by reference.
** Previously filed.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
'Calculation of Registration Fee' table in the effective registration
statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the Company pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the Company's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(5) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Company's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described under Item 15 above or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted against the Company by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Union Pacific
Resources Group Inc. certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Fort Worth, Texas, on this
20th day of May, 1996.
UNION PACIFIC RESOURCES GROUP INC.
By: /s/ V. RICHARD EALES
-------------------------------
V. Richard Eales,
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement on Form S-3 has been signed below on this 20th day
of May, 1996, by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
-------------------------------------- --------------------------------------
<S> <C>
/s/ JACK L. MESSMAN President, Chief Executive
------------------- Officer and Director
(Jack L. Messman) (Principal Executive Officer)
/s/ V. RICHARD EALES Executive Vice President
-------------------- and Chief Financial Officer
(V. Richard Eales) (Principal Financial Officer)
/s/ PATRICK D. HANLEY Vice President--Finance
--------------------- (Principal Accounting Officer)
(Patrick D. Hanley)
H. JESSE ARNELLE* Director
LYNNE V. CHENEY* Director
LAWRENCE M. JONES* Director
DREW LEWIS* Director
CLAUDINE B. MALONE* Director By: /s/ V. RICHARD EALES
L. WHITE MATTHEWS, III* Director --------------------
JOHN W. PODUSKA, SR., PH.D.* Director (V. Richard Eales)
GARY M. STUART* Director (*Attorney-in-Fact)
JUDY L. SWANTAK* Director
JAMES R. THOMPSON* Director
CARL W. VON BERNUTH* Director
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- ---------------------------------------------------------- ----------
<S> <C> <C>
**1.1 -- Form of Underwriting Agreement.
**1.2 -- Form of Distribution Agreement.
*3.1 -- Amended and Restated Articles of Incorporation of Union
Pacific Resources Group Inc. (incorporated herein by
reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (No.33-95398) filed October 10,
1995)
*3.2 -- Amended and Restated By-laws of Union Pacific Resources
Group Inc. (incorporated herein by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-1
(No.33-95398) filed October 10, 1995)
**4.1 -- Indenture, dated as of March 27, 1996.
*4.2 -- Form of Warrant Agreement.
**4.3 -- Form of Debt Security.
**4.4 -- Form of Fixed Rate Note.
4.5 -- Form of Floating Rate Note.
**5 -- Opinion and consent of Joseph A. LaSala, Jr.; Vice
President and General Counsel for the Company.
**12 -- Computation of Ratio of Earnings to Fixed Charges.
**23 -- Consent of Deloitte & Touche, LLP.
**24 -- Powers of Attorney.
**25 -- Statement on Form T-1 of the eligibility of Texas Commerce
Bank National Association, as trustee under the Indenture.
</TABLE>
------------------
* To be filed by amendment or incorporated herein by reference.
** Previously filed.
<PAGE>
Exhibit 4.5
CUSIP NO.
REGISTERED PRINCIPAL AMOUNT:
No.
FORM OF
UNION PACIFIC RESOURCES GROUP INC.
MEDIUM-TERM NOTE, SERIES A
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
(FLOATING RATE)
If this Security is a Global Security (as defined below) the
following is applicable:
This Security is in global form (a "Global Security") within
the meaning of the Indenture hereinafter referred to. Unless this certificate is
presented by an authorized representative of The Depository Trust Company (the
"Depositary") (55 Water Street, New York, New York) to the issuer or its agent
for registration of transfer, exchange or payment, and such certificate is
registered in the name of CEDE & CO., or such other name as requested by an
authorized representative of The Depository Trust Company, and unless any
payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, since the registered owner
hereof, CEDE & CO., has an interest herein.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
CERTIFICATED FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
<PAGE>
2
ISSUE PRICE:
MINIMUM INTEREST RATE:
OPTION TO ELECT REPAYMENT:
[ ] YES [ ] NO
ORIGINAL ISSUE DATE:
INTEREST RESET PERIOD:
OPTIONAL REPAYMENT DATE(S):
DATE ON WHICH INTEREST BEGINS TO ACCRUE (IF DIFFERENT FROM ORIGINAL ISSUE DATE):
INTEREST RESET DATES:
OPTIONAL REPAYMENT PRICE(S):
STATED MATURITY:
INTEREST PAYMENT PERIOD:
OPTIONAL INTEREST RATE RESET:
[ ] YES [ ] NO
INITIAL INTEREST RATE:
INTEREST PAYMENT DATES:
OPTIONAL RESET DATES:
BASE RATE:
REGULAR RECORD DATES (if other than the fifteenth day (whether or not a Business
Day) preceding each Interest Payment Date):
OPTIONAL EXTENSION OF MATURITY:
[ ] YES [ ] NO
INDEX MATURITY:
EXCHANGE RATE AGENT:
(if other than Chemical Bank)
LENGTH OF EXTENSION PERIOD:
SPREAD (PLUS OR MINUS):
OPTION TO RECEIVE PAYMENTS IN SPECIFIED CURRENCY OTHER THAN U.S. DOLLARS:
[ ] YES [ ] NO
NUMBER OF EXTENSION PERIODS:
DESIGNATED DEPOSIT CURRENCY (if other than U.S. dollars):
SINKING FUND:
FINAL MATURITY DATE:
SPREAD MULTIPLIER:
TOTAL AMOUNT OF OID:
DEPOSITORY (if other than The Depositary Trust Company):
SPECIFIED CURRENCY (if other than U.S. dollars):
YIELD TO MATURITY:
OPTIONAL REDEMPTION:
[ ] YES [ ] NO
AUTHORIZED DENOMINATIONS (if Specified Currency is U.S. dollars):
$1,000 and any integral multiple of $1,000 in excess thereof
(if Specified Currency is other than U.S. dollars):
INITIAL ACCRUAL PERIOD OID:
INITIAL REDEMPTION DATE:
RENEWAL TERMS:
(if any)
REDEMPTION PRICE:
[ ] % OF PRINCIPAL AMOUNT
[ ] AS SET FORTH BELOW
CALCULATION AGENT:
(if other than Chemical Bank)
INVERSE FLOATING RATE NOTE:
[ ] YES [ ] NO
MAXIMUM INTEREST RATE:
OTHER PROVISIONS:
<PAGE>
3
If applicable as specified above, the Redemption Price shall
initially be ___% of the principal amount of this Security payable at the Stated
Maturity thereof and shall decline at each anniversary (each such date, a
"Redemption Date") of the Initial Redemption Date by ___% of such principal
amount until the Redemption Price is 100% of such principal amount; provided,
that if this Security is a Discount Security, unless otherwise specified above,
the Redemption Price shall be the Amortized Face Amount, as described below. A
"Discount Security" is any Security that has been issued with more than a de
minimis amount of original issue discount (as determined under United States
Federal income tax rules applicable to original issue discount instruments).
"Maturity," when used herein, means the date on which the
principal of this Security or an installment of principal becomes due and
payable in full in accordance with the terms of this Security and of the
Indenture (as defined in Section 1 below), whether at the date specified above
as the Stated Maturity Date (the "Stated Maturity") or by declaration of
acceleration, call for redemption or otherwise.
UNION PACIFIC RESOURCES GROUP INC., a corporation duly
organized and existing under the laws of the State of Utah (herein called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the Principal Amount specified above on the Stated
Maturity specified above and to pay interest thereon at the Initial Interest
Rate specified above from the Original Issue Date specified above (or the date
on which interest otherwise begins to accrue (if different from the Original
Issue Date)) or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, until the first Interest Reset Date specified
above following the Original Issue Date (or the date on which interest otherwise
begins to accrue (if different from the Original Issue Date)) and thereafter at
the Base Rate specified above, plus or minus the Spread, if any, and/or
multiplied by the Spread Multiplier, if any, specified above, determined in
accordance with the provisions set forth below, until the principal hereof is
paid or made available for payment. Except as provided in the following
paragraph, the Company will pay interest on each Interest Payment Date specified
above, commencing with the first Interest Payment Date specified succeeding the
<PAGE>
4
Original Issue Date (or the date on which interest otherwise begins to accrue
(if different from the Original Issue Date)), and at Maturity, provided that
unless otherwise set forth above, if an Interest Payment Date would otherwise be
a day that is not a Business Day, such Interest Payment Date shall be the next
succeeding Business Day, except that, if the Base Rate specified above is LIBID
or LIBOR and such day would fall in the succeeding calendar month, such Interest
Payment Date will be the preceding Business Day; and provided further that any
payment of principal (and premium, if any) and interest required to be made on
this Security at Maturity on a day that is not a Business Day will be made on
the next succeeding Business Day (in each case with the same force and effect as
if made on such date of Maturity, and no additional interest shall accrue as a
result of any such delayed payment).
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close and, if this
Security is denominated in or indexed to a Specified Currency other than U.S.
dollars or ECU, each Monday, Tuesday, Wednesday, Thursday or Friday which is not
a day on which banking institutions in the principal financial center of the
country issuing the Specified Currency are authorized or required by law or
regulation to close and a day on which banking institutions in such principal
financial center are carrying out transactions in such Specified Currency and,
if this Security is denominated in or indexed to ECU, each day which is not a
day that banking institutions in Luxembourg are authorized or required by law or
regulation to close and which is an ECU clearing day, as determined by the ECU
Banking Association in Paris.
Unless otherwise specified above, the interest so payable on
any Interest Payment Date will, as provided in the Indenture, be paid to the
person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the fifteenth day (whether or not a
Business Day) preceding such Interest Payment Date (a "Regular Record Date");
provided that interest payable at Maturity shall be payable to the Person to
whom principal shall be payable; and provided further that in the case of a
Security issued between a Regular Record Date and the Interest Payment Date
relating to such Regular Record Date, interest for the period beginning on the
Original Issue Date (or the date on which interest
<PAGE>
5
otherwise begins to accrue (if different from the Original Issue Date)) and
ending on such Interest Payment Date shall be paid on the Interest Payment Date
following the next succeeding Regular Record Date to the registered Holder on
such next succeeding Regular Record Date.
Unless otherwise specified above, all payments in respect of
this Security will be made in U.S. dollars even if this Security is denominated
in a Specified Currency other than U.S. dollars, as specified above, unless the
Holder hereof makes the election described below. If this Security is
denominated in a Specified Currency other than U.S. dollars, unless otherwise
provided above, the Exchange Rate Agent of the Company will determine the amount
of U.S. dollar payments in respect of this Security in the manner described
below; provided that the Holder hereof may, if so indicated above, elect to
receive all payments in such Specified Currency by delivery of a written
election with signature guarantees to the Company's payment agent in The City of
New York (the "Paying Agent"). Any such election must be received by the Paying
Agent on or prior to the applicable Regular Record Date or at least 15 calendar
days prior to Maturity, as the case may be. Such election shall remain in effect
unless and until changed (where permitted by the Indenture) by written notice to
the Paying Agent, but the Paying Agent must receive written notice of any such
change on or prior to the applicable Regular Record Date or at least 15 calendar
days prior to Maturity, as the case may be. Until the Securities are paid or
payment therefor is provided for, the Company will, at all times, maintain a
Paying Agent in The City of New York capable of performing the duties described
herein to be performed by the Paying Agent and, to the extent permitted by the
Indenture, the Company may be the Paying Agent. The Company has initially
appointed the Trustee as Paying Agent. The Company will notify the Holder hereof
in accordance with the Indenture of any change in the Paying Agent or its
address. All currency exchange costs related to this Security, if any, will be
borne by the Holder of this Security by deductions from payments otherwise due
such Holder hereunder.
Unless otherwise indicated above, and except as provided
below, payment of interest on this Security (other than interest payable at
Maturity) will be made by check (unless otherwise provided above, from an
account at a bank located outside the United States if such check is payable in
a currency other than U.S. dollars) mailed to the Holder hereof at the
registered address of such Holder; provided
<PAGE>
6
that, if the Holder hereof is the Holder of U.S.$10,000,000 or more in aggregate
principal amount of Securities of like tenor and term (or a Holder of the
equivalent thereof in a Specified Currency other than U.S. dollars determined as
provided below), such Holder shall be entitled to receive interest payments in
immediately available funds, but only if complete and appropriate instructions
have been received in writing by the Paying Agent on or prior to the applicable
Regular Record Date. Simultaneously with any election by the Holder hereof to
receive payments in respect hereof in the Specified Currency (if other than U.S.
dollars), such Holder may, if so entitled, elect to receive such payments in
immediately available funds by providing complete and appropriate instructions
to the Paying Agent, and all such payments will be made in immediately available
funds to an account maintained by the payee with a bank located outside the
United States or as otherwise provided above. Unless otherwise specified above,
and except as provided below, the principal hereof (and premium, if any) and
interest hereon payable at Maturity will be paid to the Holder in immediately
available funds (unless otherwise provided above, payable to an account
maintained by the payee with a bank located outside the United States if payable
in a Specified Currency other than U.S. dollars) upon surrender of this Security
at the corporate trust office or agency of the Paying Agent maintained for that
purpose in the Borough of Manhattan, The City of New York (or at such other
location as may be specified above), provided that this Security is presented to
the Paying Agent in time for the Paying Agent to make such payments in such
funds in accordance with its normal procedures. The Company will pay any
administrative costs imposed by banks in making payments in immediately
available funds, but any tax, assessment or governmental charge imposed upon
payments hereunder, including, without limitation, any withholding tax, will be
borne by the Holder hereof.
Unless otherwise specified above, if this Security is
registered in the name of the Depositary or its nominee, (i) payments of
interest (other than at Maturity) will be made in same-day funds in accordance
with arrangements between the Trustee and the Depositary and (ii) any principal,
premium, if any, and interest due at Maturity will be paid by the Trustee by
wire transfer in immediately available funds to an account specified by the
Depositary.
References herein to "U.S. dollars" or "U.S. $" or "$" are to
the coin or currency of the United States as at
<PAGE>
7
the time of payment is legal tender for the payment of public and private debts.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH BELOW, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to below by manual signature, this Security
shall not be entitled to any benefit under the Indenture referred to below or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, Union Pacific Resources Group Inc. has
caused this instrument to be duly executed under its corporate seal.
Dated:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.
TEXAS COMMERCE BANK UNION PACIFIC RESOURCES
NATIONAL ASSOCIATION, GROUP INC.
as Trustee
By: By:
Authorized Signatory
Attest:
Secretary
<PAGE>
8
UNION PACIFIC RESOURCES GROUP INC.
MEDIUM-TERM NOTE, SERIES A
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
(FLOATING RATE)
SECTION 1. General. This Security is one of a duly authorized
issue of Securities of the Company (herein called the "Securities"), issued and
to be issued in one or more series under an Indenture (herein called the
"Indenture"), dated as of March 27, 1996, between the Company and Texas Commerce
Bank National Association, as trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture) to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated above, which series constitutes one
series of Securities, initially limited in aggregate principal amount to
$400,000,000.
SECTION 2. Currency Exchanges and Payments. Unless otherwise
provided above, if the Specified Currency set forth above is other than U.S.
dollars, the amount of any U.S. dollar payment to be made in respect hereof will
be determined by the Exchange Rate Agent specified above or a successor thereto
(the "Exchange Rate Agent"), based on the indicative quotation in The City of
New York selected by such Exchange Rate Agent at approximately 11:00 a.m., New
York City time, on the second Business Day preceding the applicable payment
date, that yields the largest number of U.S. dollars upon conversion of the
Specified Currency. Unless otherwise provided above, such selection shall be
made from among the quotations of at least three banks agreed to by the Company
and the Exchange Rate Agent appearing on the bank composite or multi-contributor
pages of the Reuters Monitor Foreign Exchange Service, or if not available, the
Telerate Monitor Foreign Exchange Service. If such quotations are unavailable
from either such foreign exchange service, such selection shall be made as
specified above. If payment is to be made in a Specified Currency and such
Specified Currency is unavailable due to the imposition of exchange controls or
to other circumstances beyond the Company's control, or is no longer used by the
government of
<PAGE>
9
the country issuing such Specified Currency or for the settlement of
transactions by public institutions of or within the international banking
community, the Company will be entitled to make payments in U.S. dollars on the
basis of the noon buying rate in The City of New York for cable transfers in the
Specified Currency as certified for customs purposes by the Federal Reserve Bank
of New York (the "Market Exchange Rate") for such Specified Currency on the
second Business Day prior to the applicable payment date, or on such other basis
specified above. In the event such Market Exchange Rate is not then available,
the Company will be entitled to make payments in U.S. dollars (i) if such
Specified Currency is not a composite currency, on the basis of the most
recently available Market Exchange Rate for such Specified Currency or (ii) if
such Specified Currency is a composite currency, including, without limitation,
ECU, in an amount determined by the Exchange Rate Agent to be the sum of the
results obtained by multiplying the number of units of each component currency
of such composite currency, as of the most recent date on which such composite
currency was used, by the Market Exchange Rate for such component currency on
the second Business Day prior to such payment date (or if such Market Exchange
Rate is not then available, by the most recently available Market Exchange Rate
for such component currency or as otherwise provided above).
Unless otherwise specified above, if this Security is
denominated in a Specified Currency other than U.S. dollars or ECU and the
Holder hereof shall have elected to receive payments of principal (and premium,
if any) and interest, if any, on this Security in such Specified Currency as
described above, and such Specified Currency (or if this Security is a Currency
Indexed Note, the Denominated Currency) is unavailable as of the due date for
any such payment because of the imposition of exchange controls or other
circumstances beyond the Company's control, or is no longer used by the
government of the country issuing such Specified Currency or Denominated
Currency or for the settlement of transactions by public institutions of or
within the international banking community, then all payments due on such due
date with respect to this Security shall be made in U.S. dollars. Unless
otherwise specified above, the amount so payable on any date in such Specified
Currency or Denominated Currency shall be converted into U.S. dollars at a rate
determined by the Exchange Rate Agent on the basis of the most recently
available Market Exchange Rate.
<PAGE>
10
Unless otherwise specified above, if this Security is
denominated in or indexed to ECU and the Holder hereof shall have elected to
receive payments of principal (and premium, if any) and interest on this
Security in ECU as described above, and ECU are unavailable as of the due date
for any such payments because of the imposition of exchange controls or other
circumstances beyond the Company's control, or are no longer used in the
European Monetary System, all payments due on that due date with respect to this
Security shall be made in U.S. dollars. The amount so payable on any date in ECU
shall be converted into U.S. dollars at a rate determined by the Exchange Rate
Agent as of the second Business Day prior to the date on which such payment is
due on the following basis: The component currencies of ECU for this purpose
shall be the currency amounts that were components of ECU as of the last date on
which ECU were used in the European Monetary System. The equivalent of ECU in
U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of
such component currencies. The U.S. dollar equivalent of each of such component
currencies shall be determined by the Exchange Rate Agent on the basis of the
most recently available Market Exchange Rate or as specified above.
If the official unit of any component currency of a composite
currency is altered by way of combination or subdivision, the number of units of
that currency as a component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a single
currency, the amounts of those currencies as components shall be replaced by an
amount in such single currency equal to the sum of the amounts of the
consolidated component currencies expressed in such single currency. If any
component currency is divided into two or more currencies, the amount of that
currency as a component shall be replaced by amounts of such two or more
currencies having an aggregate value on the date of division equal to the amount
of the former component currency immediately before such division.
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder hereof, and the
Exchange Rate Agent shall have no liability therefor.
In the event of an official redenomination of the Specified
Currency or the Denominated Currency (including,
<PAGE>
11
without limitation, such an official redenomination of the Specified Currency or
Denominated Currency is a composite currency), the obligations of the Company
with respect to payments on this Security shall, in all cases, be deemed
immediately following such redenomination to provide for the payment of that
amount of redenominated currency representing the amount of such obligations
immediately before such redenomination. Unless otherwise specified herein or set
forth above, in no event shall any adjustment be made to any amount payable
hereunder as a result of (i) any change in the value of the Specified Currency
or Denominated Currency relative to any other currency due solely to
fluctuations in exchange rates or (ii) any redenomination of any component
currency of any composite currency (unless such currency itself is officially
redenominated).
SECTION 3. Interest Rate Calculations. As set forth above,
this Security may have either or both of the following: (i) a maximum
limitation, or ceiling, on the rate at which interest may accrue during any
interest period ("Maximum Interest Rate"); and/or (ii) a minimum limitation, or
floor, on the rate at which interest may accrue during any interest period
("Minimum Interest Rate"). In addition to any Maximum Interest Rate that may be
set forth above, the interest rate on this Security will in no event be higher
than the maximum rate permitted by applicable law.
Unless otherwise specified herein or set forth above, all
percentages resulting from any calculation of the rate of interest hereon will
be rounded upward, if necessary, to the nearest one hundred-thousandth of a
percent (.0000001), with five one-millionths of a percentage point rounded
upward, and all currency amounts used in or resulting from such calculation will
be rounded to the nearest one-hundredth of a unit (with five one-thousandths of
a unit being rounded upwards).
The rate of interest hereon will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (the "Interest Reset Period"), as
or unless otherwise set forth above. Unless otherwise set forth above, the date
or dates on which interest will be reset (each an "Interest Reset Date") will
be, if this Security resets daily, each Business Day; if this Security (unless
the Base Rate set forth above is the Treasury Rate) resets weekly, the Wednesday
of each week; if the Base Rate set forth above is the Treasury Rate, and this
Security resets weekly, the Tuesday of each week
<PAGE>
12
(except as provided below); if this Security resets monthly, the third Wednesday
of each month (unless the Base Rate set forth above is the Eleventh District
Cost of Funds Rate, in which case interest will reset on the first calendar day
of each month); if this Security resets quarterly, the third Wednesday of each
March, June, September and December; if this Security resets semi-annually, the
third Wednesday of the two months of each year set forth above; and if this
Security resets annually, the third Wednesday of the month of each year set
forth above; provided that the interest rate in effect from the Original Issue
Date (or the date on which interest otherwise begins to accrue interest (if
different from the Original Issue Date)) to the first Interest Reset Date will
be the Initial Interest Rate as set forth above. If any Interest Reset Date
would otherwise be a day that is not a Business Day, such Interest Reset Date
shall be the next succeeding Business Day, except that if the Base Rate set
forth above is LIBID or LIBOR, if such Business Day is in the succeeding
calendar month, such Interest Reset Date shall be the next preceding Business
Day. If the Base Rate set forth above is the Treasury Rate, and an auction of
direct obligations of the United States ("Treasury bills") falls on a day that
is an Interest Reset Date for this Security, such Interest Reset Date shall be
the next succeeding Business Day.
Unless otherwise set forth above, the interest payable hereon
on each Interest Payment Date and at Maturity shall be the amount of interest
accrued from and including the Original Issue Date (or the date on which
interest otherwise begins to accrue (if different from the Original Issue Date))
or from and including the last interest Payment Date to which interest has been
paid to, but excluding, such Interest Payment Date or date of Maturity, as the
case may be; provided that if the interest rate of this Security is reset daily
or weekly, interest payable hereon will be the amount of interest accrued from
and including the Original Issue Date (or the date on which interest otherwise
begins to accrue (if different from the Original Issue Date)) or from and
excluding the last date to which interest has been paid, as the case may be, to,
and including, the Regular Record Date immediately preceding such Interest
Payment Date, except that at Maturity the interest payable will include interest
accrued to, but excluding, the date of Maturity.
Unless otherwise set forth above, accrued interest hereon will
be calculated by multiplying the principal
<PAGE>
13
amount hereof by an accrued interest factor. Unless otherwise set forth above,
such accrued interest factor will be computed by adding the interest factors
calculated for each day in the interest period for which accrued interest is
being calculated. Unless otherwise set forth above, the interest factor for each
such day is computed by dividing the interest rate applicable on such day by
360, if the Base Rate set forth above is the CD Rate, Commercial Paper Rate,
LIBID, LIBOR, Federal Funds Rate, Prime Rate, J.J. Kenny Rate or Eleventh
District Cost of Funds Rate, or by the actual number of days in the year, if the
Base Rate set forth above is the Treasury Rate or the CMT Rate. The interest
rate applicable to any day that is an Interest Reset Date is the interest rate
as determined, in accordance with the procedures hereinafter set forth, with
respect to the Interest Determination Date (as defined below) pertaining to such
Interest Reset Date. The interest rate applicable to any other day is the
interest rate for the immediately preceding Interest Reset Date (or, if none,
the Initial Interest Rate, as set forth above).
Unless otherwise set forth above, interest will be payable, if
this Security resets daily or weekly or monthly (unless the Base Rate set forth
above is the Eleventh District Cost of Funds Rate), on the third Wednesday of
each month or on the third Wednesday of March, June, September and December of
each year, as set forth above; if this Security resets quarterly, on the third
Wednesday of March, june, September and December of each year, or if the Base
Rate set forth above is the Eleventh District Cost of Funds Rate, on the first
calendar day of each month or the first calendar day of each March, June,
September and December; if this Security resets semi-annually, on the third
Wednesday of the two months of each year set forth above; and if this Security
resets annually, on the third Wednesday of the month of each year set forth
above, and in each case, at Maturity (each such day being an "Interest Payment
Date"). Unless otherwise set forth above, if an Interest Payment Date (other
than at Maturity) would otherwise be a day that is not a Business Day, such
Interest Payment Date shall be the next succeeding Business Day, except that, if
the Base Rate set forth above is LIBID
<PAGE>
14
or LIBOR and such day would fall in the succeeding calendar month, such Interest
Payment Date will be the preceding Business Day. Any payment of principal (and
premium, if any) and interest required to be made on this Security on a date of
Maturity that is not a Business Day, will be made on the next succeeding
Business Day except that, if the Base Rate set forth above is LIBID or LIBOR and
such day would fall in the succeeding calendar month, such payment will be made
on the preceding Business Day (in each case with the same force and effect as if
made on such date of Maturity, and no additional interest shall accrue as a
result of any such delayed payment).
If the Base Rate set forth above is the CD Rate, the
Commercial Paper Rate, the Federal Funds Rate, the Prime Rate, the J.J. Kenny
Rate or the CMT Rate, the Interest Determination Date pertaining to an Interest
Reset Date for this Security (the "Interest Determination Date"), unless
otherwise set forth above, will be the second Business Day preceding such
Interest Reset Date. If the Base Rate set forth above is LIBID or LIBOR, the
Interest Determination Date pertaining to an Interest Reset Date for this
Security, unless otherwise set forth above, will be the second London Business
Day (as defined below) preceding such Interest Reset Date. If the Base Rate set
forth above is the Treasury Rate, the Interest Determination Date pertaining to
an Interest Reset Date for this Security, unless otherwise set forth above, will
be the day of the week in which such Interest Reset Date falls on which Treasury
bills of the Index Maturity set forth above are 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,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Interest Determination Date pertaining to the Interest Reset Date
occurring in the succeeding week. If the Base Rate set forth above is the
Eleventh District Cost of Funds Rate, the Interest Determination Date pertaining
to an Interest Reset Date for this Security, unless otherwise set forth above,
will be the last working day of the month immediately preceding such Interest
Reset Date on which the Federal Home Loan Bank of San Francisco (the "FHLB of
San Francisco") publishes the monthly Eleventh District Cost of Funds Index (as
defined below).
Unless otherwise set forth above, 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 any such day is not a Business Day, the next succeeding Business Day or
(ii) the Business Day preceding the applicable Interest Payment Date or date of
Maturity, as the case may be.
<PAGE>
15
The Company will appoint, and enter into an agreement with, an
agent (a "Calculation Agent") to calculate the rate of interest of the
Securities of this series which bear interest at a floating rate. Unless
otherwise set forth above, Chemical Bank will be the Calculation Agent. Upon the
request of the Holder hereof, the Calculation Agent will advise such Holder of
the interest rate then in effect and, if determined, the interest rate that will
become effective on the next Interest Reset Date. All determinations to be made
by the Calculation Agent shall be at its sole discretion and, in the absence of
manifest error, shall be conclusive for all purposes and binding on holders of
the Notes, and the Calculation Agent shall have no liability therefor.
Subject to applicable provisions of law and except as
specified herein, with respect to each Interest Determination Date, the rate of
interest shall be the rate determined by the Calculation Agent in accordance
with the provisions of the applicable heading below.
Determination of CD Rate. If the Base Rate set forth above is
the CD Rate, this Security will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the CD Rate and the Spread and/or
the Spread Multiplier, if any, set forth above. Unless otherwise set forth
above, the "CD Rate" means, with respect to any Interest Determination Date, the
rate on such date for negotiable certificates of deposit having the Index
Maturity set forth above as made available and subsequently 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 made available by 3:00 p.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 set forth above as made available
and subsequently 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", or any successor publication of the Federal Reserve Bank of New
York ("Composite Quotations") under the heading "Certificates of Deposit". If by
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date the rate for such Interest Determination
<PAGE>
16
Date has not yet been made available in either H.15(519) or Composite
Quotations, then the CD Rate for 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 of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United States
money center banks of the highest credit standing (in the market for negotiable
certificates of deposit) having a remaining maturity closest to the Index
Maturity set forth above in a denomination of U.S. $5,000,000; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the rate of interest in effect on such Interest
Determination Date.
Determination of Commercial Paper Rate. If the Base Rate set
forth above is the Commercial Paper Rate, this Security will bear interest for
each Interest Reset Period at the interest calculated with reference to the
Commercial Paper Rate and the Spread and/or the Spread Multiplier, if any, set
forth above. Unless otherwise set forth above, the "Commercial Paper Rate"
means, with respect to any Interest Determination Date, the Money Market Yield
(calculated as described below) on such date of the rate for commercial paper
having the Index Maturity set forth above, as made available and subsequently
published by the Board of Governors of the Federal Reserve System in H.15(519)
under the heading "Commercial Paper". If such rate is not so made available
prior to 3:00 p.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 on such Interest Determination Date of the rate for
commercial paper of the Index Maturity set forth above as made available and
subsequently published by the Federal Reserve Bank of New York in Composite
Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City
time, on the Calculation Date pertaining to such Interest Determination Date the
rate for such Interest Determination Date has not yet been made available in
either H.15(519) or Composite Quotations, then the Commercial Paper Rate for
such Interest Determination Date shall be calculated by the Calculation Agent
and shall be the Money Market Yield of the arithmetic mean of the offered rates
as of 11:00 a.m., New York City time, on such Interest Determination Date of
three
<PAGE>
17
leading dealers of commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the Index Maturity set forth above,
placed for industrial issuers whose senior unsecured 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 rate of interest in effect for
the applicable period will be the rate of interest in effect on such Interest
Determination Date.
"Money Market Yield" shall be a yield (expressed as a
percentage) calculated in accordance with the following formula:
D x 360
MONEY MARKET YIELD = ----------- x 100
360-(D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the period for which interest is being calculated, as set
forth on the face hereof.
Determination of LIBID. If the Base Rate set forth above is
LIBID, this Security will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBID and the Spread and/or Spread
Multiplier, if any, set forth above.
Unless otherwise indicated above, LIBID will be determined by
the Calculation Agent in accordance with the following provisions:
(i) With respect to any Interest Determination Date,
LIBID will be, as specified above, either LIBID Reuters (as
defined below) or LIBID Telerate (as defined below), subject
to the last sentence of this paragraph. "LIBID Reuters" means
the arithmetic mean of the bid rates for deposits in the
Designated Deposit Currency (as defined below) having the
Index Maturity set forth above, commencing on the second day
on which dealings in deposits in the Designated Deposit
Currency are transacted in the London interbank market
("London Business Day") immediately following such Interest
Determination Date, that
<PAGE>
18
appear on the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service for the purpose of displaying
London interbank bid and offered rates of major banks) (the
"Reuters Screen LIBO Page") as of 11:00 a.m., London time, on
such Interest Determination Date, if at least two such bid
rates appear on the Reuters Screen LIBO Page. "LIBID Telerate"
means the rate for deposits in the Designated Deposit Currency
having the Index Maturity set forth above, commencing on the
second London Business Day immediately following such Interest
Determination Date, that appears on the display designated as
page "3750" on the Telerate Service (or such other page as may
replace the 3750 page on that service or such other service or
services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank bid
and offered rates for deposits in the Designated Deposit
Currency) (the "Telerate Page 3750") as of 11:00 a.m., London
time, on such Interest Determination Date. If neither LIBID
Reuters nor LIBID Telerate is specified in the applicable
Pricing Supplement, LIBID will be determined as if LIBID
Telerate had been specified. If fewer than two bid rates
appear on the Reuters Screen LIBO Page, or if no rate appears
on the Telerate Page 3750, as applicable, LIBID in respect of
such 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 bid rates appear on the Reuters Screen
LIBO Page, or on which no rate appears on Telerate Page 3750,
as applicable, LIBID will be determined on the basis of the
bid rates at which deposits in the Designated Deposit
Currency, having the Index Maturity set forth above, are
quoted at approximately 11:00 a.m., London time, on such
Interest Determination Date to prime banks in the London
interbank market by four major banks in the London interbank
market selected by the Calculation Agent (the "LIBID Reference
Banks") commencing on the second London Business Day
immediately following such Interest Determination
<PAGE>
19
Date and in a principal amount equal to an amount of not less
than U.S. $1,000,000 (or the equivalent in the Designated
Deposit Currency) that is representative for a single
transaction in such market at such time. The Calculation Agent
will request the principal London office of each of such LIBID
Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, LIBID in respect of
such Interest Determination Date will be the arithmetic mean
of such quotations. If fewer than two quotations are provided,
LIBID in respect of such Interest Determination Date will be
the arithmetic mean of the rates quoted in the applicable
Principal Financial Center (as defined below) on such Interest
Determination Date by three major banks in such Principal
Financial Center selected by the Calculation Agent for loans
in the Designated Deposit Currency to leading banks, having
the Index Maturity specified above, commencing on the second
London Business Day immediately following such Interest
Determination Date and in a principal amount equal to an
amount of not less than U.S. $1,000,000 (or the equivalent in
the Designated Deposit Currency) that is representative for a
single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this
sentence, LIBID will be LIBID in effect on such Interest
Determination Date.
Determination of LIBOR. If the Base Rate set forth above is
LIBOR, this Security will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread and/or Spread
Multiplier, if any, set forth above. Unless otherwise indicated above, LIBOR
will be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to any Interest Determination Date,
LIBOR will be, as specified above, either LIBOR Reuters (as
defined below) or LIBOR Telerate (as defined below), subject
to the last sentence of this paragraph. "LIBOR Reuters" means
the arithmetic mean of the offered rates for deposits in the
Designated Deposit Currency having the Index Maturity set
forth above, commencing on
<PAGE>
20
the second London Business Day immediately following such
Interest Determination Date, that appear on the Reuters Screen
LIBO Page as of 11:00 a.m., London time, on such Interest
Determination Date, if at least two such offered rates appear
on the Reuters Screen LIBO Page. "LIBOR Telerate" means the
rate for deposits in the Designated Deposit Currency having
the Index Maturity set forth above, commencing on the second
London Business Day immediately following such Interest
Determination Date, that appears on Telerate Page 3750 as of
11:00 a.m., London time, on such Interest Determination Date.
If neither LIBOR Reuters or LIBOR Telerate is set forth above,
LIBOR will be determined as if LIBOR Telerate had been
specified. If fewer than two offered rates appear on the
Reuters Screen LIBO Page, or if no rate appears on the
Telerate Page 3750, as applicable, LIBOR in respect of such
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 on the Reuters
Screen LIBO Page or on which no rate appears on Telerate Page
3750 as applicable, LIBOR will be determined on the basis of
the rates at which deposits in the Designated Deposit Currency
having the Index Maturity set forth above are offered at
approximately 11:00 a.m., London time, on such Interest
Determination Date by four major banks in the London interbank
market selected by the Calculation Agent (the "LIBOR Reference
Banks") to prime banks in the London interbank market,
commencing on the second London Business Day immediately
following such Interest Determination Date and in a principal
amount equal to an amount of not less than U.S. $1,000,000 (or
the equivalent in the Designated Deposit Currency) that is
representative for a single transaction in such market at such
time. The Calculation Agent will request the principal London
office of each of such LIBOR Reference Banks to provide a
quotation of its rates. If at least two such quotations are
provided, LIBOR for such Interest Determination Date will be
the arithmetic mean of such quotations. If fewer than
<PAGE>
21
two quotations are provided, LIBOR for such Interest
Determination Date will be the arithmetic mean of the rates
quoted in the applicable Principal Financial Center, on such
Interest Determination Date by three major banks in such
Principal Financial Center selected by the Calculation Agent
for loans in the Designated Deposit Currency to leading banks,
having the Index Maturity specified above, commencing on the
second London Business Day immediately following such Interest
Determination Date and in a principal amount equal to an
amount of not less than U.S. $1,000,000 (for the equivalent in
the Designated Deposit Currency) that is representative for a
single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this
sentence, LIBOR will be LIBOR in effect on such Interest
Determination Date.
"Designated Deposit Currency" means the currency (including a
composite currency), if any, set forth above as the Designated Deposit Currency.
If no such currency is set forth above, the Designated Deposit Currency shall be
U.S. dollars. "Principal Financial Center" means, unless otherwise specified
above, the capital city of the country that issues as its legal tender the
Designated Deposit Currency, except that with respect to U.S. dollars, Deutsche
marks and ECUs, the Principal Financial Center shall be the City of New York,
Frankfurt and Luxembourg, respectively.
Determination of Treasury Rate. If the Base Rate set forth
above is the Treasury Rate, this Security will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the Treasury Rate
and the Spread and/or the Spread Multiplier, if any, set forth above. Unless
otherwise set forth above, the "Treasury Rate" means, with respect to any
Interest Determination Date, the rate for the most recent auction of Treasury
bills having the Index Maturity set forth above as made available and
subsequently published by the Board of Governors of the Federal Reserve System
in H.15(519) under the heading "U.S. Government Securities--Treasury bills--
auction average (investment)" or, if not so made available by 3:00 p.m.,
New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate (expressed as a bond equivalent,
rounded to the nearest
<PAGE>
22
one-hundredth of a percent, with five one-thousandths of a percent rounded
upward, on the basis of a year of 365 or 366 days, as applicable, and applied on
a daily basis) for such auction or 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 set forth above are not made available
or published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date or if no such auction is held in a particular week, then
the Treasury Rate shall be calculated by the Calculation Agent and shall be a
yield to maturity (expressed as a bond equivalent, rounded to the nearest
one-hundredth of a percent, with five one-thousandths of a percent rounded
upward, on the basis of a year of 365 or 366 days, as applicable, and applied on
a daily basis) of the arithmetic mean of the secondary market bid rates, as of
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 set forth above; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting bid rates
as mentioned in this sentence, the interest rate for the applicable period will
be the interest rate in effect on such Interest Determination Date.
Determination of Federal Funds Rate. If the Base Rate set
forth above is the Federal Funds Rate, this Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
Federal Funds Rate and the Spread and/or the Spread Multiplier, if any, set
forth above. Unless otherwise set forth above, the "Federal Funds Rate" means,
with respect to any Interest Determination Date, the rate on such date for
Federal Funds as made available and subsequently published by the Board of
Governors of the Federal Reserve System in H.15(519) under the heading "Federal
Funds (Effective)" or, if no so made available by 3:00 p.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 made
available and subsequently published by the Federal Reserve Bank of New York in
Composite Quotations under the heading "Federal Funds/Effective Rate." If such
rate is neither made available in either H.15(519) nor in Composite Quotations
by 3:00 p.m., New York City time, on the Calculation Date Pertaining to such
Interest Determination Date, then the
<PAGE>
23
Federal Funds Rate for such Interest Determination Date will be calculated by
the Calculation Agent and will be the arithmetic mean of the rates as of 9:00
a.m., New York City time, on such Interest Determination Date for the last
transaction in overnight Federal Funds 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 mentioned in this sentence, the rate of
interest in effect for the applicable period will be the rate of interest in
effect on such Interest Determination Date.
Determination of Prime Rate. If the Base Rate set forth above
is the Prime Rate, this Security will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Prime Rate and the
Spread and/or the Spread Multiplier, if any, set forth above. Unless otherwise
set forth above, the "Prime Rate" means, with respect to any Interest
Determination Date, the rate on such date as made available and subsequently
published by the Board of Governors of the Federal Reserve System in H.15(519)
under the heading "Bank Prime Loan." If such rate is not so made available by
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Prime Rate will be calculated by the
Calculation Agent and 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. "Reuters Screen USPRIME1 Page" means the
display designated as page "USPRIME1" on the Reuters Monitor Money Rates Service
(such term to include 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). If fewer than four such rates but more than one such rate
appear on the Reuters Screen USPRIME1 Page for such Interest Determination Date,
the Prime Rate will be calculated by the Calculation Agent and will 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 four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than two such rates appear on the
Reuters Screen USPRIME1 Page, the Prime Rate will be calculated by the
Calculation Agent and will be the arithmetic mean of the prime rates quoted on
such Interest Determination Date as
<PAGE>
24
furnished in The City of New York by at least three 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.
$500,000,000 and being subject to supervision or examination by federal or state
authority, selected by the Calculation Agent to provide such rate or rates;
provided, however, that if the banks or trust companies selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the rate of
interest in effect for the applicable period will be rate of interest in effect
on such Interest Determination Date.
Determination of J.J. Kenny Rate. If the Base Rate set forth
above is the J.J. Kenny Rate, this Security will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the J.J. Kenny
Rate and the Spread and/or Spread Multiplier, if any, set forth above. Unless
otherwise set forth above,the "J.J. Kenny Rate" means, with respect to any
Interest Determination Date, the per annum rate on such date equal to the Index
made available and subsequently published by Kenny Information Systems or its
successor, based upon 30-day yield evaluations at par of bonds, the interest on
which is excludable from gross income for federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the "Code"), of not less than five
"high grade" component issuers selected from time to time by Kenny Information
Systems, including without limitation, issuers of general obligation bonds;
provided, however, that the bonds on which the index is based shall not include
any bonds the interest on which is subject to an "alternate minimum tax" or
similar tax under the Code, unless all tax-exempt bonds are subject to such tax.
If such rate is not made available by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such J.J. Kenny Interest Determination Date, the
J.J. Kenny Rate shall be the rate quoted by a successor indexing agent selected
by the Company equalling the prevailing rate for bonds rated in the highest
short-term rating category by Moody's Investors Service, Inc. and Standard &
Poor's Corporation in respect of issuers selected by such successor indexing
agent most closely resembling the "high grade" component issuers selected by
Kenny Information Systems that are subject to tender by the holders thereof for
purchase on not more than seven days notice and the interest on which is (A)
variable on a weekly basis, (B) excludable from gross income for Federal income
tax purposes under the Code, and (C) not subject to an "alternate minimum
<PAGE>
25
tax" or similar tax under the Code, unless all tax-exempt bonds are subject to
such tax; provided, however, that if a successor indexing agent is not
available, the J.J. Kenny Rate with respect to such Interest Determination Date
will be the J.J. Kenny Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the Initial Interest Rate).
Determination of Eleventh District Cost of Funds Rate. If the
Base Rate set forth above is the Eleventh District Cost of Funds Rate, this
Security will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Eleventh District Cost of Funds Rate and the
Spread and/or Spread Multiplier, if any, set forth above. Unless otherwise set
forth above, the "Eleventh District Cost of Funds Rate" means, with respect to
any Interest Determination Date, the rate equal to the monthly weighted average
cost of funds for the calendar month preceding such Eleventh District Cost of
Funds Interest Determination Date as set forth under the caption "Eleventh
District" on Telerate Page 7058 as of 11:00 a.m., San Francisco time, on such
Interest Determination Date. If such rate does not appear on Telerate Page 7058
on any related Interest Determination Date, the Eleventh District Cost of Funds
Rate for such Interest Determination Date shall be the monthly weighted average
cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Eleventh District Cost of Funds
Rate Index") by the FHLB of San Francisco as such cost of funds for the calendar
month preceding the date of such announcement. If the FHLB of San Francisco
fails to announce such rate for the calendar month next preceding such Interest
Determination Date, then the rate of interest in effect for the applicable
period will be the rate of interest in effect on such Interest Determination
Date.
Determination of CMT Rate. If the Base Rate set forth above is
the CMT Rate, this Security will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the CMT Rate and the Spread
and/or Spread Multiples, if any, set forth above. Unless otherwise set forth
above, the "CMT Rate" means, with respect to any Interest Determination Date,
the rate displayed on the Designated CMT Telerate Page (as defined below)
under the caption ". . . Treasury Constant Maturities. . . Federal Reserve Board
Release H.15. . . Mondays Approximately 3:45 p.m." under the column for the
<PAGE>
26
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 rate for the week, or the month,
as applicable, ended immediately preceding the week in which such 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 Calculation
Date pertaining to such Interest Determination 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 Calculation Date pertaining to such Interest Determination
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 such
Interest Determination Date as may then be published by either the Federal
Reserve Board 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
Calculation Date pertaining to such Interest Determination Date, then 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 closing offer side prices as of approximately 3:30 p.m., New
York City time, on such 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 as
selected by the Calculation Agent (from five such Reference Dealers selected by
the Calculation Agent and 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 approximately equal to the Designated CMT Maturity Index
and a remaining term to maturity of not less than such Designated CMT Maturity
Index minus one year and in an amount of at least $100 million. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the CMT
Rate for such Interest Determination Date will be calculated
<PAGE>
27
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 such Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and 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, on of the lowest)), for Treasury Notes with an original
maturity of the number of years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closest to the Designated CMT
Maturity Index and in an amount of at least $100 million. If three or four (and
not five) of such Reference Dealers selected by the Calculation Agent are
quoting as described above, then CMT Rate will be based on the arithmetic mean
of the offer prices obtained and neither the highest not 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 will be the CMT Rate in effect on such Interest Determination Date. If
two Treasury Notes with an original maturity as described in the third 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" means the display on the Dow Jones
Telerate Service on the page specified above (or any other page as may replace
such page on the 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, the
Designated CMT Telerate Page shall be 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to
maturity of the Treasury Notes (either 1,2,3,5,7, or 10 years) specified under
Index Maturity above with respect to which the CMT Rate will be calculated. If
no such maturity under Index Maturity is specified, the Designated CMT Maturity
Index shall be 2 years.
Inverse Floating Rate Notes. Any Floating Rate Note may be
designated above as an "Inverse Floating Rate Note," in which event the interest
rate on such Floating Rate Note will be equal to (i) in the case of the period,
if any, commencing on the Original Issue Date (or the date on
<PAGE>
28
which interest otherwise begins to accrue (if different from the Original Issue
Date)) up to the first Interest Reset Date, a fixed rate of interest established
by the Company as described above and (ii) in the case of each period commencing
on an Interest Reset Date, a fixed rate of interest specified above minus the
interest rate determined by reference to the Base Rate as adjusted by the Spread
and/or Spread Multiplier, if any; provided, however, that (x) the interest rate
thereon will not be less than zero and (y) the interest rate in effect for the
ten days immediately prior to the date of Maturity of such Inverse Floating Rate
Note will be that in effect on the tenth day preceding such date.
SECTION 4. Redemption. If so specified above, the Company may
at its option redeem this Security in whole or from time to time in part on or
after the date designated as the Initial Redemption Date above at either a price
based on a constant percentage of the Principal Amount of this Security as
specified above or at prices declining from the premium specified above, if any,
to par together, in each case, with accrued interest to the Redemption Date. The
Company may exercise such option by giving to the Holder hereof a notice of such
redemption at least 30 but not more than 60 days prior to the Redemption Date.
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof in accordance with
the terms of the Indenture. Unless otherwise specified above, if less than all
of the Securities with like tenor and terms so this Security are to be redeemed,
the Securities to be redeemed shall be selected by the Trustee by such method as
the Trustee shall deem fair and appropriate.
SECTION 5. Optional Repayment. If so specified above, this
Security will be repayable prior to Stated Maturity at the option of the Holder
on the Optional Repayment Dates specified above at the Optional Repayment Prices
specified above together with accrued interest to the Optional Repayment Date.
Unless otherwise specified above, in order for this Security to be so repaid,
the Company must receive, at least 30 but not more than 45 days prior to an
Optional Repayment Date this Security with the form below entitled "Option to
Elect Repayment" duly completed. Exercise of this repayment option shall be
irrevocable, except as otherwise provided under Sections 6 and 7 below. The
repayment option may be exercised by the Holder of this
<PAGE>
29
Security for less than the aggregate principal amount of the Security then
outstanding provided that the principal amount of the Security remaining
outstanding after repayment is an authorized denomination. Upon such partial
repayment this Security shall be cancelled and a new Security or Securities for
the remaining principal amount hereof shall be issued in the name of the Holder
of this Security.
SECTION 6. Optional Interest Reset. If so specified above, the
Spread and/or Spread Multiplier, as the case may be, with respect to this
Security may be reset at the option of the Company, in the manner set forth
below (unless otherwise specified above), on the date or dates specified above
(each an "Optional Reset Date"). The Company may exercise such option by
notifying the Trustee of such exercise at least 45 but not more than 60 days
prior to an Optional Reset Date. Not later than 40 days prior to such Optional
Reset Date, the Trustee will give to the Holder of this Security a notice (the
"Reset Notice") setting forth (i) the election of the Company to reset the
Spread or Spread Multiplier, (ii) such new Spread and/or Spread Multiplier and
(iii) the provisions, if any, for redemption during the period from such
Optional Reset Date to the next Optional Reset Date or, if there is no such next
Optional Reset Date, to the Stated Maturity of this Security (each such period a
"Subsequent Interest Period"), including the date or dates on which or the
period or periods during which and the price or prices at which such redemption
may occur during such Subsequent Interest Period. Upon the transmittal by the
Trustee of a Reset Notice to the Holder of this Security, such new Spread and/or
Spread Multiplier shall take effect automatically, and, except as modified by
the Reset Notice and as described in the next paragraph, this Security will have
the same terms as prior to the transmittal of such Reset Notice.
Notwithstanding the foregoing, not later than 20 days prior to
the Optional Reset Date, the Company may, at its option, revoke the Spread
and/or Spread Multiplier provided for in the Reset Notice and establish a Spread
and/or Spread Multiplier that is higher than the Spread and/or Spread Multiplier
provided for in the Reset Notice for the Subsequent Interest Period commencing
on such Optional Reset Date by causing the Trustee to transmit notice of such
higher Spread and/or Spread Multiplier to the Holder of this Security. Such
notice shall be irrevocable. All Securities with respect to which the Spread
and/or Spread Multiplier is reset on an Optional Reset Date and
<PAGE>
30
with respect to which the Holders of such Securities have not tendered such
Securities for repayment (or have validly revoked any such tender) pursuant to
the succeeding paragraph will bear such higher Spread and/or Spread Multiplier
for the Subsequent Interest Period.
If the Company elects to reset the Spread and/or Spread
Multiplier of this Security, the Holder of this Security will have the option to
elect repayment by the Company of this Security on any Optional Reset Date at a
price equal to the aggregate principal amount hereof outstanding on, plus any
interest accrued to, such Optional Reset Date. In order to obtain repayment on
an Optional Reset Date, the Holder must follow the procedures set forth in
Section 5 above for optional repayment except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date and except that, if the Holder has tendered this
Security for repayment pursuant to the Reset Notice, the Holder may, by written
notice to the Trustee, revoke such tender for repayment until the close of
business on the tenth day prior to such Optional Reset Date.
SECTION 7. Optional Extension of Maturity. If so specified
above, the Stated Maturity of this Security may be extended at the option or the
Company, in the manner set forth below (unless otherwise provided on the face
hereof), for the period or periods specified above (each an "Extension Period")
up to but not beyond the date (the "Final Maturity Date") set forth above. The
Company may exercise such option by notifying the Trustee of such exercise at
least 50 but no more than 60 days prior to the Stated Maturity in effect prior
to such exercise (the "Original Stated Maturity"). If the Company exercises such
option, the Trustee will give to the Holder of this Security no later than 40
days prior to the Original Stated Maturity a notice (the "Extension Notice")
relating to such Extension Period, setting forth (i) the election of the Company
to extend the Original Stated Maturity, (ii) the new Stated Maturity (which
shall then be considered the Stated Maturity for all purposes of this Security),
(iii) the Spread or Spread Multiplier applicable to the Extension Period and
(iv) the provisions, if any, for redemption during such Extension Period. Upon
the Trustee's transmittal of the Extension Notice, the Original Stated Maturity
of this Security shall be extended automatically, and, except as modified by the
Extension Notice and as described in the
<PAGE>
31
next paragraph, this Security will have the same terms as prior to the
transmittal of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to
the Original Stated Maturity of this Security the Company may, at its option,
revoke the Spread or Spread Multiplier provided for in the Extension Notice and
establish a Spread or Spread Multiplier that is higher than the Spread or Spread
Multiplier provided for in the Extension Notice for the Extension Period by
causing the Trustee to transmit notice of such higher Spread or Spread
Multiplier to the Holder of this Security. Such notice shall be irrevocable. All
Securities with respect to which the Stated Maturity is extended and with
respect to which the Holders of such Securities have not tendered such
Securities for repayment (or have validly revoked any such tender) pursuant to
the succeeding paragraph will bear such higher Spread or Spread Multiplier for
the Extension Period.
If the Company elects to extend the Stated Maturity of this
Security, the Holder hereof will have the option to elect repayment of this
Security by the Company on the Original Stated Maturity at a price equal to the
aggregate principal amount hereof outstanding plus interest accrued to such
date. In order to obtain such repayment, the Holder hereof must follow the
procedures set forth in Section 5 above for optional repayment except that the
period for delivery of this Security or notification to the Trustee shall be at
least 25 but not more than 35 days prior to the Original Stated Maturity and
except that, if the Holder hereof has tendered this Security for repayment
pursuant to an Extension Notice, such Holder may, by written notice to the
Trustee, revoke such tender for repayment until the close of business on the
tenth day prior to the Original Stated Maturity.
SECTION 8. Optional Renewal. If so specified above, this
Security may be renewed by the Holder of the Security on an Interest Payment
Date (specified above) occurring in or prior to the twelfth month following the
Original Issue Date (the "Initial Maturity Date") in accordance with the
procedures described below.
On the Interest Payment Date occurring in the sixth month
(unless a different interval (the "Special Election Interval") is specified
above) prior to the Initial Maturity Date (as specified above) of a Renewable
Note (the "Initial Renewal Date") and on the Interest Payment Date
<PAGE>
32
occurring in each sixth month (or in the last month of each Special Election
Interval) after such Initial Renewal Date (each, together with Initial Renewal
Date, a "Renewal Date"), the term of this Security may be extended to the
Interest Payment Date occurring in the twelfth month (or, if a special Election
Interval is specified the last month in a period equal to twice the Special
Election Interval) after such Renewal Date, if the Holder of this Security
elects to extend the term of this Security or any portion hereof as provided
below. If the Holder of this Security does not elect to extend the term of any
portion of the principal amount of this Security during the specified period
prior to any renewal Date, such portion will become due and payable on the
Interest Payment Date occurring in the sixth month (or the last month in the
Special Election Interval) after such Renewal Date (the "New Maturity Date").
A Holder of this Security may elect to renew the term of this
Security, or if specified above, any portion thereof, by delivering a notice to
such effect to the Paying Agent not less than 15 nor more than 30 days prior to
such Renewal Date (unless another period is specified above as the "Special
Election Period"). Such election will be irrevocable and will be binding upon
each subsequent Holder of this Security. An election to renew the term of this
Security may be exercised with respect to less than the entire principal amount
of this Security only if so specified above and only in such principal amount,
or any integral multiple in excess thereof, as specified above. Notwithstanding
the foregoing, the term of this Security may not be extended beyond the maturity
specified above.
If the Holder of this Security does not elect to renew the
term of this Security, this Security must be presented to the Trustee (or any
duly appointed paying agent) and, if this Security is issued in definitive form,
as soon as practicable following receipt of this Security the Trustee (or any
duly appointed paying agent) shall issue in exchange herefor in the name of the
Holder (i) a Security, in a principal amount equal to the principal amount of
this Security for which no election to renew the term thereof was exercised,
with terms identical to those specified on this Security (except that such
Security shall have a fixed, nonrenewable maturity on the New Maturity Date) and
(ii) if an election to renew is made with respect to less than the full
principal amount of this Security, a replacement Security, in a principal amount
equal to the principal amount of such exchanged Security for which the
<PAGE>
33
election to renew was made, with terms identical to such exchanged Security.
SECTION 9. Sinking Fund. Unless otherwise specified above,
this Security will not be subject to any sinking fund.
SECTION 10. Discount Securities. If this Security is a
Discount Security, unless otherwise specified above the amount payable in the
event of redemption by the Company, repayment at the option of the Holder or
acceleration of maturity, in lieu of the principal amount due at the Stated
Maturity hereof, shall be the Amortized Face Amount of this Security as of the
date of such redemption, repayment or acceleration. The "Amortized Face Amount"
of this Security shall be the amount equal to (i) the Issue Price (as set forth
above) plus (ii) that portion of the difference between the Issue Price and the
principal amount hereof that has accrued at the Yield to Maturity (as set forth
above) (computed in accordance with generally accepted United States bond yield
computation principles) at the date as of which the Amortized Face Amount is
calculated, but in no event shall the Amortized Face Amount of this Security
exceed its stated principal amount.
SECTION 11. Modification and Waivers. The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities of each series to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time outstanding
of each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of Securities of each
series at the time outstanding, on behalf of the Holders of all Securities of
such series, to waive certain existing defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
<PAGE>
34
SECTION 12. Obligations Unconditional. No reference herein to
the Indenture and no provision of this Security or of the Indenture shall alter
or impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, premium, if any, and interest on this Security at the
times, place and rate, and in the coin or currency, herein prescribed.
SECTION 13. Defeasance. The Indenture contains provision for
defeasance and covenant defeasance at any time of the indebtedness of this
Security upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Security.
SECTION 14. Authorized Denominations. The Securities of this
series are issuable only in global or certificated registered form, without
coupons. Unless otherwise set forth above, Securities denominated in U.S.
dollars will be issued in denominations of U.S. $1,000 and any integral multiple
of U.S. $1,000 in excess thereof. Securities denominated in a specified currency
other than U.S. dollars will be issued in the denomination or denominations set
forth above. As provided in the Indenture and subject to certain limitations
therein set forth and to the limitations described below, if applicable,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
SECTION 15. Registration of Transfer. As provided in the
Indenture and subject to certain limitations as therein set forth, the transfer
of this Security is registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of the Company in
any place where the principal of, premium, if any, and interest, on this
Security are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to those of the Company, the Trustee and the
Security Registrar requiring such written instrument of transfer duly executed
by, the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities of this series, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may
<PAGE>
35
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name this Security is registered as the owner
hereof for all purposes.
SECTION 16. Events of Default. If an Event of Default with
respect to Securities of this series shall occur and be continuing, the
principal of the Securities of this series may be declared due and payable in
the manner and with the effect provided in the Indenture. In the event that the
principal of the Securities of this series is so declared to be due and payable,
if this Security is a Discount Security, unless otherwise specified above, the
amount of principal of this Security that becomes due and payable upon such
declaration shall be equal to the Amortized Face Amount as defined in Section 10
hereof. Upon payment (i) of the aggregate applicable amounts of principal of the
Securities of this series so declared due and payable and (ii) of interest on
any overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and interest, if any,
on the Securities of this series shall terminate.
SECTION 17. Defined Terms. All terms used in this Security
which are defined in the Prospectus Supplement dated March __, 1996 or in the
Indenture and are not otherwise defined in this Security shall have the meanings
assigned to them in the Indenture.
SECTION 18. GOVERNING LAW. THIS SECURITY SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
36
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entities
JT TEN - as joint tenants with right of
survivorship and not as tenants in common
UNIF GIFT MIN ACT - __________ Custodian _________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
------------
<PAGE>
37
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________/_________________/________________________________________________
Please print or type name and address, including zip code of assignee
________________________________________________________________________________
the within Security of UNION PACIFIC RESOURCES GROUP INC. and all rights
thereunder and does hereby irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said Security on the books of the within-named Company, with
full power of substitution in the premises.
Dated ________________________
SIGNATURE GUARANTEED ___________________________________________________________
NOTICE: The signature to this assignment must correspond
with the name as it appears upon the face of the within
Security in every particular, without alteration or
enlargement or any change whatsoever.
<PAGE>
38
OPTION TO ELECT REPAYMENT
The undersigned owner of this Security hereby irrevocably
elects to have the Company repay the principal amount of this Security or
portion hereof below designated at (i) the Optional Repayment Price indicated
above, if this Security is to be repaid pursuant to the Optional Repayment
provision hereof or (ii) 100% of the principal amount of this Security to be
repaid plus accrued interest to the Optional Reset Date, if this Security is to
be repaid pursuant to the Optional Interest Reset provision hereof, or to the
Original Stated Maturity, if this Security is to be repaid pursuant to the
Optional Extension of Maturity provision hereof.
Dated: ___________________
________________________________________________________________________________
Signature
Sign exactly as name appears on the front of this Security [SIGNATURE GUARANTEED
- required only if Securities are to be issued and delivered to other than the
registered Holder]
Principal amount to be repaid, if amount to be repaid is less than the principal
amount of this Security (principal amount remaining must be an authorized
denomination)
$____________________________
Fill in for registration of Securities if to be issued otherwise than to the
registered Holder:
Name:___________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
(Please print name and address including zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER
____________________________________________
